Why Modern Planning Software Is Essential in Times of Uncertainty

For true business agility, companies can no longer rely on spreadsheets, manual processes, and legacy financial planning and analysis (FP&A) technology.

Many signs are pointing to another round of worldwide economic uncertainty. As CFOs and financial planning and analysis (FP&A) teams learned during the COVID-19 pandemic, surviving in an ever-changing environment requires business agility. But to think fast and move first, companies can no longer rely on spreadsheets, manual processes, and legacy technology. They must embrace a new planning model or risk being left behind.

Modern planning software unlocks the ability to continually anticipate change and quickly operationalize a coordinated response at scale. It helps organizations stay ahead of the competition, even throughout radical instability and disruption. On the other hand, traditional planning in most organizations never gets there. Decisions take too long. Silos impair visibility. Great ideas don’t translate into impact. 

The root cause is pace. The planning function in most organizations simply can’t keep up with today’s rate of change. And it keeps finance leaders from realizing their full potential as strategic advisors to the business. In contrast, high-performance planning—modern planning—has evolved to become a strategic success lever, empowering the entire enterprise to anticipate and respond to a faster and more dynamic rate of change.

Planning During Uncertainty: How to Prepare

In short, agility is now a determining factor for success. It’s going to be the difference between the businesses that survive and the businesses that wish they had. Organizations still on legacy tools should seriously consider investing in a modern planning solution as soon as possible. Yet given the current economic environment, many organizations have decided to delay investment decisions until economic and market conditions stabilize. This is risky.

A modern cloud planning software will provide the capabilities required to augment and drive insight, enable quick, strategic decisions, and provide time to value to minimize investment risk. Most importantly, it will minimize the risk of an organization making blindsided decisions during volatile times. 

Business Planning During Uncertain Times

Another benefit of a modern cloud planning solution is establishing FP&A as a trusted advisor to C-suite execs. For example, during the COVID-19 crisis, the FP&A team for a leading healthcare system took advantage of its modern planning solution by generating multiple use case scenarios for its CFO and finance committee to better guide the team on making competitive business decisions.

Read on as we present the four essential capabilities of a modern planning system.

1. Scenario Planning

One of the most important capabilities that any FP&A team requires is an agile planning process. This includes the ability to quickly generate accurate what-if scenarios, which can provide visibility into critical metrics and key performance indicators, such as cash or balance sheet ratios, as different business drivers are adjusted.  

For example, most organizations need to quickly ascertain what the financial impact will be on different business scenarios including hiring delays, workforce reorganizations, sales pipeline changes, funding shifts, and more. A modern cloud planning solution will support this with virtually unlimited scenario versions for richer insights, speed, and accuracy on a continual basis.

During the pandemic, Workday Adaptive Planning customers processed up to 30 times more forecasts and scenarios and 15 times more modeling and recalibrating, compared to before COVID-19.

2. Rolling Forecasts for Continuous Planning

Most organizations perform some sort of forecasting throughout the year, usually on a semiannual or quarterly basis. This cadence is usually fine during stable economic conditions. However, during volatile times, a more continuous rolling forecast process is needed to incorporate the very latest financial and operational data.

This is critical to drive key decisions at any moment during the year as market conditions fluctuate as well as view impacts to the business, such as cash levels, workforce costs, or revenue based on adjusted business drivers or updated actuals. Generating new on-demand forecast versions is a necessity. 

A modern cloud planning solution can deliver these capabilities without the challenges of modeling new forecast versions that most old-school planning tools have. One study found that companies with continuous planning processes are 1.5 times more likely to accelerate their reforecasts to one week and four times better at responding to market changes.

3. Reporting and Analytics

Keeping up with the number of reports and depth of analysis FP&A teams must provide planning stakeholders is challenging. It becomes an even more daunting exercise during times of economic volatility due to a higher demand for up-to-date financial information.

To be truly effective, all planning stakeholders need interactive, self-service reporting capabilities. As important, all users need the ability to “drill down” on any data residing within a report or dashboard, such as product sales, headcount information, balance sheet ratios, or cash metrics, that could highlight revealing information impacting a best-case or worst-case scenario. 

Constantly changing market and economic conditions dictate decisive analytics and decision-making. A modern cloud planning solution will provide these capabilities, as well as increase confidence in plan data.

4. Integration With Back-End Systems

Finally, a modern planning platform must be system-agnostic with seamless integration with any enterprise resource planning (ERP), customer relationship management (CRM), data warehouse, or other external source system. This enables access to the most up-to-date data (both financial and nonfinancial) as market conditions continuously evolve. 

Additionally, a modern cloud planning solution that can also handle unlimited dimensionality and very large data volumes, and performs to meet the complexities and scalability requirements of the organization, will be hugely beneficial and pay extreme dividends, allowing businesses to plan, align, and pivot companywide with confidence.

Companies That Remain on Legacy Tools Will Be Outperformed

As global economic conditions continue to evolve rapidly, organizations must navigate a constantly changing world. Now is not the time to “stay the course” with old-school planning processes and technology. Organizations should consider the level of business risk by not investing in a modern cloud planning solution. 

A unified, modern planning solution supports timely scenario analytics, continuous rolling forecasts, robust modeling, real-time reporting, and analytics. These capabilities enable deeper, better insights and the ability to scale and perform companywide, the foundational features of business agility.

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