The rapidly changing business landscape and uncertain future in current times demands the adoption of new working practices.
Many businesses have showcased this ability, with the shift to working from home and remote service delivery. Evolution of practices in the office of finance is also required, with a shift in emphasis to integrated planning beyond finance.
Gartner tells us that by 2024, 70 percent of new financial planning and analysis projects will become extended planning and analysis projects—where multiple inputs from across the organisation become the levers finance teams can use to make the right strategic planning decisions.
Progressive enterprises that are thriving in these unprecedented times have already adopted new norms with quick re-forecasting on supply chains, costs, and materials. These organisations can account for fluctuations in operations and resourcing and have a better fluctuation management mechanism for their workforce. They incorporate input from all of their departments, and a planned collaborative effort is made in which all teams present their ideas and feedback, helping to bring about an integrated strategy fulfilling the objectives.
A modernised flexible approach to engaging stakeholders at all levels with continuous collaborative planning achieves the goal of superior results.
Extended planning and analysis
No matter how proficient each team is, poor interdepartmental coordination can hinder the delivery of the financial strategy. Each business function possesses its own set of key performance indicators deriving from the organisation’s financial strategy. Therefore, performance-related data should be viewed and analysed at both a detailed and holistic view. CFOs require a view of the business landscape and performance through every asset, resource, threat, and change.
Let’s take the manufacturing sector as an example. With sometimes complex supply chains, businesses within this sector face substantial external drivers that impact commercial success. Changes across the supply chain need to be accounted for in financial planning and reporting. For example, if a supplier increases its prices for a part of a product, this will subsequently impact margins.
EPM software can support the office of finance in modelling and managing these changing forces and document the impact on financial statements. Such knowledge can in turn be communicated with the sales and marketing function to adjust the commercial strategy. Such transparency is only possible if data can be shared and analysed between the supply chain and financial planning departments. Today’s EPM systems can effectively integrate data between both supply chain management and financial planning systems.
Transitioning towards extended planning and analysis
Extended planning and analysis encourages collaborative planning amongst departments. Subsequently, forecast accuracy is enhanced and accountability can be shared. By following collaborative working practices, departments can communicate and account for prospective risks associated with financial plans. To complement extended planning and analysis methodologies, a robust planning system and framework needs to be established.
Multinational organisations suffer the most as they have to process data across their regional offices with multiple entities and a plethora of data. A centralised data management system for operational and financial planning can mitigate the risks of errors in reports and further strengthen the capabilities of teams with efficient processes.
When different departments forecast according to their need, for example, sales teams planning on customer orders and product teams focusing on SKUs, a centralised system can make it convenient for finance teams and the rest of the organisation to merge and plan on a holistic level.
Harnessing modern solutions
Inclusion of modernised planning solutions can overcome all the aforementioned challenges. They are designed in such a way to handle the complexities of large data sets required for integrated planning across the organisation. Professionals at all levels can participate actively, user-friendly workflows and operating systems empower them to remain engaged and contribute at the best level. So, whether it’s a store manager or the entire procurement team, everyone can have a positive impact.
Operational data is critical for extended planning and analysis, as it plays a vital role in financial plans and the base for forecasting and more accurate planning. Advanced software makes it easy for everyone to get information, collaborate and solve complex problems efficiently, resulting in a loop that ensures active monitoring and feedback from all teams, facilitating effective performance enhancement.
Proactive not reactive
A financial plan built on real-time accurate data can enhance your competitive positioning within the market. Extended planning and analysis coupled with scenario modelling mean that businesses are proactive, not reactive. EPM technologies can automate the process of updating financial plans as market forces or organisational drivers alter. Furthermore, conclusions built from collaborative planning often derive from comprehensive discussions, making them more robust in nature.
Embracing the change
During these unprecedented times; extended planning and analysis is more integral to business success than ever before. Although economies have been documented to be slowly recovering, the uncertainty of the pandemic presents businesses with a challenge to manage new financial risks. Teams external to finance must now contribute and collaborate to ensure that data is being pulled from all corners of the organisation to form financial plans.
Axiom’s EPM software provides a unified system that allows every department in your business to contribute to the financial planning process – to find out more, call us on +44 (0)1932 548 465 or email hello@verostone.com