Ten key Trends in Budgeting, Planning and Forecasting (part 1)

 

Budgeting, planning, and forecasting processes need to keep up with the pace of change in your business and industry and market conditions, especially in challenging times like we have, and are still, experiencing. Successful companies are addressing this through the implementation of modern, agile and flexible processes which facilitate easier planning for ever-changing business conditions. Scenario planning and what-if analysis are critical, particularly when there is significant uncertainty in what lies ahead, and generally aging Excel based processes don’t cut it anymore.

In the good old days, organisations could get away with once-a-year budget with the occasional tweak when things changed, but these times are different and change can be dramatic and sudden and people are starting to realise that ‘business as unusual’ is the new normal.

Modern Budgeting, Forecasting and Reporting Platforms that allow finance teams to model and analyse performance are needed to make a business resilient and future-proof.

Below we look at the 10 key trends in this area, summarised from our experience working with our customers to deliver agile and flexible processes to meet their need, and through our keeping abreast of the latest developments in the industry.

1. Exploring different possibilities through scenario management

The global health and economic crisis is causing unprecedented market changes. In response, organizations require the capability to explore all possible impacts on the business with the highest degree of accuracy. This is particularly true for those in charge of planning the next steps.

Decision-makers and finance teams should be able to collaborate and model various possible scenarios and perform what-if analysis according to different hypotheses of the changing environment’s evolution and its impact on their business.  An innovative modern environment that embeds simulation capabilities within the same data environment used to plan and analyse, can empower business leaders with knowledge that is vital for rapid and fact-based decision-making about the best way forward.

2. Rethinking budgeting from the ground up

The COVID-19 pandemic and related market uncertainty have emphasized the need for greater cost control within businesses of all sizes and industries around the world. People in charge of budgeting, planning, and forecasting processes are being challenged to drive their organizations forward while keeping a closer eye on financial expenditure than ever before.

In these circumstances, a traditional budgeting approach is no longer fit for purpose. Relying solely on historical spending and performance data to determine future activities is not appropriate in a changing world with new risks and new opportunities and it has never been more important to scrutinize legacy ways of working.

Companies need to apply a fresh approach to budgeting which combines human and artificial intelligence with driver-based planning and predictive analytics. The ability to accurately see, model, and forecast the impact of decisions across the organization, rather than just one department, is essential.

Strategic and operational decisions can have fallout effects on everything from resource capacity to headcount availability, each, in turn, affecting the financial bottom line.

3. Platforms are the way forward

To enable trends 1 and 2 an integrated collaborative platform essential.  The concept of platforms is common amongst the most disruptive and successful companies, and this trend will continue to change the world during 2021.

Platforms create value by integrating technologies, thereby eliminating inefficiencies, and providing a foundation for new solutions that were not practical with unintegrated technologies.

This is also true for Budgeting, Planning, and Forecasting processes. The growing need for more flexible, end-user driven business planning and forecasting capabilities, able to offer more precise and accurate simulation, requires a next-generation approach to business thinking.

Combining analysis, reporting, planning, and simulation in a single interactive environment, Decision-Making Platforms are at the forefront of this transformation, connecting finance and operations by aligning the organizational need for governed planning and analysis processes with the needs of business users for quick and effective access to  information. In a nutshell, that means bridging the gap between BI and Enterprise Performance Management.

4. Insight-driven organisations

Increasing numbers of companies are making substantial changes to their BP&F processes to generate better insights. Senior executives are taking heed of this evolution, since it is a fundamental way to make transformational changes across the business.

Integrating BI with Planning and Predictive Analytics allows organizations to promote insightful planning and reveal unexpected pathways that lead to better business performance.

From reporting to discovery to prediction and planning, modern BP&F platforms empower organisations with a comprehensive set of functionalities designed to appeal to every type of business user.

They also provide a single version of truth that keeps users aligned with common data sets, definitions, KPIs, metrics, and objectives. In a nutshell, one of the main focuses for leading organizations will be achieving more meaningful insights to become increasingly insight driven.

5. Standardisation and Automation

Standardization and automation are among the fundamental cornerstones on which organizations will direct their technology efforts. Budgeting, planning, and forecasting processes are at the center of this trend.

Standardisation lays the foundation for everything else, by releasing swathes of time, buying the breathing space that the finance function needs to make better decisions and that can be extended to any planning needs.

Standardising and automating even simple tasks has proven to be an effective place to start improving productivity and this trend will continue in the coming years, involving more complex tasks.

To achieve this, organizations increasingly need to integrate financial and operational planning processes in a single end-to-end platform, linking strategy-level planning with their day-to-day, field level outcomes.

A modern decision-making platform enables effective standardization and automation by unifying BI & CPM in one environment based on one dataset and one definition of metadata, delivering a common user experience across all applications. By automatically managing consolidation, allocation, initialization, and data flows, Board streamlines BPF processes at an enterprise-wide level.