Charting the Path to Modern Planning

Business agility is a requirement for business success.

Not convinced? Ask literally every business that was ambulatory in 2019 and remains up and running today. Business agility, to a great extent, proved a defining characteristic of market leaders at a time when most businesses were under existential threat from pandemic-related lockdowns, supply chain disruptions, and economic upheaval.

Those that survived and thrived through the global pandemic (not to mention its lingering impacts) say a more intense focus on business agility made them more adaptable to change, noted a 2020 report by Accenture.

And for a growing number of those successful enterprises, becoming more adaptable has meant charting a path to modern planning, the foundation for agility.

Traditional Planning: Built for a World Long Gone

Many organizations still try to get by with the planning environment and tools they’ve used for years, often a manual, spreadsheet-based affair that leads to wasted hours, version control nightmares, and siloed data. (Finance teams stuck in static traditional planning spend up to 83% of their time on nonstrategic tasks like data collection and consolidation.)

Stakeholders are familiar with traditional planning, despite its inefficiencies and limitations. But in most organizations, traditional planning never reaches its full potential. Decisions take too long for organizations to act with agility. Silos hinder visibility into what’s really happening with the business. Great ideas fail to translate into positive impacts on the business. Finance executives are prevented from ascending to their role as strategic advisors to the business.

At a time when everything’s changing, traditional planning just can’t keep up. Some organizations attempt to make spreadsheet-based planning more collaborative, but they can’t escape the fact they’re using a largely desktop-bound tool invented decades ago. The truth is, traditional planning worked until it didn’t. And the business world it was designed for—predictable, quarterly, even comfortable—is long gone.

What Defines Modern Planning?

How does modern planning differ from traditional planning? Where traditional planning is episodic, siloed, and typically built around spreadsheets or on-premise legacy planning systems, modern planning is continuous, company-wide, and cloud-engineered.

Let’s look at how those three characteristics define a new way to plan.

It’s continuous. Traditional planning is static and retrospective. For the past 100 years, businesses forecasted the future largely by studying past expenses and revenues. It worked well enough in a more predictable age, but planning this way today would be like trying to speed down the interstate while looking in your rearview mirror. Not recommended.

Instead of trying to run a business from retrospective plans filled with obsolete information and outdated assumptions, modern businesses are opting for a process of continuous recalibration. Continuous planning is broad and multidimensional, and it facilitates coordinated acceleration across the organization.

A foundational element of continuous planning is the rolling forecast. Unlike traditional forecasts, which are time-consuming and can be riddled with data gaps, rolling forecasts offer continuous performance insight where actuals are rolled forward monthly at whatever regular cadence makes sense for your business. (At the worst of the pandemic in 2020, some organizations adjusted forecasts monthly or even weekly.)

Why? Because rolling forecasts give businesses exactly what they need. “In a period of great uncertainty and change,” notes a 2021 Global Survey report, “rolling forecasts are noteworthy for providing much-needed agility.”

Just as essential to modern planning is the ability to model what-if scenarios. Long assumed to be the sole domain of highly trained finance analysts, scenario planning is now accessible to decision makers across the organization. The combination of powerful modeling and predictive analytics allow managers to sketch out different versions of the future, weighing multiple courses of action before choosing the best path forward. Scenarios can be simple—quick adjustments of expected revenue to gauge impact on operating cash flow—more detailed, expansive, or even more nuanced, such as projecting the impact of declining customer retention on net promoter scores.

It’s company-wide. The old adage—that silos are for grain—applies to virtually every aspect of the planning process. Traditional planning partitions the planning process in numerous ways, nearly all of them damaging. For instance, top-down planning sets strategy and goals without the benefit of visibility across functions, whereas stakeholders “at the bottom” make siloed decisions based on siloed data. That gap means organizations can’t produce a unified picture of business drivers, activity, and performance. And it’s that unified picture that unlocks agility.

This is why high-performing organizations are taking the best practices of modern FP&A planning and extending them to the rest of the enterprise. Gartner calls this xP&A (for extended planning and analysis), noting that by 2024, 70% of all new FP&A initiatives will become xP&A projects. Simply put, however, xP&A is company-wide planning.

Company-wide planning encompasses all aspects of planning in the enterprise, including:

• Workforce planning, which goes well beyond simple headcount planning to enable finance and HR to work together to build a workforce dynamically aligned to meet changing business conditions and needs.
• Operational planning, which combines financial and operational data so daily decision makers gain visibility into how change happens within an organization.
• Sales and demand planning, which are subsets of operational planning, and which arm sales organizations and supply chain organizations with insight into business interdependencies that can impact their own success. This allows an organization to align sales resources in ways that drive revenues, and creates efficiencies in the supply chain that protects customer satisfaction and maximizes profitability.

With company-wide planning, all individual plans are connected, and they all roll up to the corporate plan. This eliminates surprises and provides the kind of holistic view of the business that has been denied decision makers for decades.

It’s cloud-engineered. Today’s enterprises are far-flung operations. Managing these distributed organizations involves consolidating and distributing complex, fast-changing information about the business. In an environment like this, spreadsheet planning proves too manual and prone to error, and outdated legacy planning systems and ERP software offer little predictive capability. All this stems from being designed to serve small groups of users.

Modern planning solutions, in contrast, are engineered to be delivered via the cloud, making them accessible to all. They’re designed specifically to accommodate and scale with the escalating demands of the modern enterprise. These platforms recalibrate continuously using data from myriad systems and applications. They use sophisticated AI and machine learning predictive planning processes such as multidimensional what-if scenario planning. Prebuilt integrations allow for rapid deployment, and an intuitive user experience encourages broad adoption and genuine, productive collaboration. And as hosted cloud applications, they’re continually and automatically updated, relieving internal resources from the onerous administrative headaches and costs that for years defined on-premise software.

A modern planning environment gives finance, and the business as a whole, more time to analyze business-wide trends and drivers, map key correlations, identify insights, and make data-driven recommendations. It enables agility at a time when adapting to change may be the most critical ability of all.

Read our new eBook, "The Complete Guide to Modern Planning: why it works, how to get started, and who’s winning with it already."