Unifying Planning and Analytics

Why should your organisation unify planning and analytics and why doesn’t everybody do it?

Many organisations today still use spreadsheets or specialised legacy systems for budgeting and planning; however, these systems were never designed for analytics or reporting.

Those same organisations, if they are using analytics at all, are often relying on their IT to support stand-alone BI solutions.

Today, planning and analytics tools are playing an increasingly critical role in transforming the way organisations gather, store, analyse and interpret data for strategic business decision making.

In the information age we are now living in, managers must   start viewing information as an important strategic resource that if used intelligently will improve their business’s performance and competitive advantage.

The volume, variety, velocity, and veracity of data affecting the organisation’s operations and bottom line continues to increase on daily basis and not all of this data is relevant for strategic decision making.

Data is also dispersed across many ‘point solutions’ that address specific operations of the business. These systems are critical however, to get a complete and overall picture of what is happening in the business, relevant data from these various systems must be integrated into a single source of the truth which is then used for both planning, reporting and analysis.

As an example, we have a client who has a fleet of over 150 trucks and ~300 pieces of equipment and that use sophisticated tracking software and sensors to capture data about routes, speeds, cycle times, etc. A second ‘system’ built into the vehicles which captures engine performance, and a third to measure loads. The financial data on fuel, insurance and other costs associated with the vehicles are yet in a fourth system.

Meaningful data from all these systems needs to be identified, extracted, and integrated into a single complete picture.

The base data used for planning and forecasting, in many cases, is the same as the recent historical actual data used for reporting and analytics.

Managers must be able to identify and separate the relevant data from their systems and find methods on how best to  connect to data from the other systems. The next step in the process is to then “Declutter” by sorting out ‘the clean from the dirt’ and then integrate into a common “Datahub” which can then be used for both planning, reporting and analysis.

Basing decisions on information that is not correct, not current, or not complete is a sure recipe for failure. On the contrary, when the business possesses relevant facts and knows how to use them, improved product innovation, customer relations and operational excellence will be achieved.

Fully knowing and understanding full potential inherent in business planning and analytic tools is the starting point for those companies that strive to repair the broken link between business planning and forecasting and actual performance.

Investments in planning (budgeting and forecasting) and analytic tools if not well researched and planned for can actually cost the company financially, time, resources etc.

As I mentioned above, not all data is important. Remember data collection and storage can be a very costly and time-consuming exercise.

What must you do then to ensure you’re not wasting your time and other resources on non-essential data?

As a manager, you must first establish your company’s competitive parameters within its operating markets and doing so will then help you decide which information to focus on.

To successfully execute your company’s strategies, your strategy should be based on information. In other words, information should be used to as a strategic resource to determine your company strategy.

This means business analytics supporting strategy not only at the functional level but also at the strategic level. In some organisations, business analytics supports strategy performance only at the functional level, monitoring the individual function’s achievement of targets.

There is nothing wrong with this. The problem arises when there is no feedback to the strategic level.

It is therefore important to define targets based on the company’s strategy and the process is made easier if the managers have access to relevant facts that can be used to determine the kind of information relevant for the strategy development and monitoring of performance.

In organisations where business analytics tools give feedback to the strategic level and information is used as a strategic resource, if one department learns to improve its processes through the use of information, the strategy team receives the news and spreads the message throughout the organisation as best practices.

Use of information should both be a bottom-up and top-down process. For example, information should flow down from the top via strategy maps and back up via scorecards and business performance management solutions.

When there is this flow of information up and down, deviations from targets can be measured and analysed and in turn the strategy is adapted and changed to accommodate changes in the market and within the organisation itself.

Dialogue between the strategy and business analytics functions is therefore highly encouraged.

When there is dialogue, there is improved coordination of efforts which can lead to the identification of the organisation’s critical success factors, development of KPIs and the definition of who is responsible for the various KPIs.

Aligning planning and analytics and strategy and in turn linking business analytics and strategy can help provide information about which products create the business’s income over its entire lifetime and information about relevant product attributes to develop for the different customer segments.

Furthermore, investing in business intelligence and analytics and using information as a strategic resource can also provide management with the relevant information and knowledge about which business processes to strengthen and develop in relation to the company’s strategy and competitor’s strengths and activities.

 

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