What CFOs Need to Know About the Hidden Costs of Static Planning
As CFOs of every organization lean towards becoming business leaders, their awareness of missed opportunities which is caused due to static planning processes has intensified. CFO’s who are not up to the mark in guiding their companies by active planning processes are able to see negative impact on their organization’s ability to generate profit and grow.
Dependence on spreadsheets and legacy on-premises applications limit the organizations static planning. This kind of legacy planning environment is highly inflexible and brittle, it limits collaboration and fails to deliver the insight which is required towards the decision making process.
In quite a lot of organizations the planning process requires distributing spreadsheets manually, usually done by emails which entails various department leaders to fill in the relevant information. And this is where everything can go wrong as there is no version control and errors can be very easily made.
“You have highly skilled finance professionals who are spending 80% of their time gathering data, validating and reconciling data, and formatting data,” said Maneesh Chhabra, Director, Value Engineering and Enterprise Marketing, Adaptive Insights, a recognized leader in cloud EPM. “It can take organizations weeks to pull together period end variance reports or do forecasts, and that is too long. Information isn’t like fine wine. It doesn’t get better with age.”
HOW STATIC PLANNING IMPEDES PROGRESS
Static planning takes up resources to complete tasks that are dreary and don’t add any value.
According to Sean Rollings, VP, Product Marketing, Adaptive Insights. “In the short term, static planning ties up capacity in FP&A and other operational areas,” Rollings said. “They aren’t working on planning collaboratively and performing strategic analysis that will further the business, and that is a bad place for a planner or analyst to be.”
THE PERILS OF GUT-BASED DECISION MAKING
Due to the fact that an accurate, complete and timely data is not provided, finance professionals are coercing executives to rely on their instincts to make significant business decisions and although knowledge of the industry is required information, reliance on instincts solely can prove to be risky for a business.
CONCLUSION: THE FUTURE OF PLANNING IS ACTIVE
Evolving and competitive finance organizations are realizing that static planning alone will no longer be sufficient in a real-time data-centric business environment.
New and latest active planning model is upcoming which is centered around cloud-based tools to develop accurate planning models faster, reduce errors, foster collaboration and drive improved decision making process. Foremost finance organizations are using active planning which help free up finance’s time and capacity from low value work such as data collection, validation and formatting.
The important factor to successfully transition to an active planning model is a thoughtful change management wherein all the concerned parties understand the value of centralized planning tools and how they can contribute. Adaptive Insights’ Rollings said. “The ability to do innovative planning and analytics
and performance measurement will engage more people — including sales, marketing, operations, and HR — in the process of planning, moving away from the static models of the past.”
A genuine benefit of active planning can be derived only when every member in the organization is working together on a continuously updated plan that encompasses clean, valuable and trusted data.