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Should you do a midyear re-plan?

The time is now for businesses and organizations everywhere to be asking that question.

The midyear stretch offers a logical and timely opportunity to take a hard look at the strategic and financial landscape to determine whether it makes sense to do a midyear re-plan as you move into the second half of the year.

First, a word of caution. It’s important to distinguish between simply updating your forecast and creating a full-blown re-plan. The deciding factor: Is there a significant trigger that justifies a re-plan as opposed to just adjusting your forecast based on your current plan?

In other words, has there been a big enough change—or changes—during the first half of the year to warrant identifying a new measuring stick to track your performance against? That trigger could involve significant change in the competitive environment, a measurable shift in the overall economy, or a major strategic move by your company.

For instance, at Adaptive Insights we locked our annual plan for this year prior to moving forward with an initial public offering (IPO). Once the IPO was announced, it triggered a re-plan for us to take into consideration the additional costs related to public company readiness and becoming a public company.

If you do decide to move forward with a midyear re-plan, here are some key considerations to ensure you get the most value from the process.

Keep everyone in the loop

FP&A should never operate in a vacuum. Make sure you have consulted with senior leadership to discuss your rationale for the re-plan and the areas of focus. Identify the stakeholders who will need to be in the know, including your board of directors, your leadership team, and key business line leaders who will be impacted by changes.

Fix mistakes

Once the decision is made to do a re-plan, make the most of the opportunity. Look to identify and fix any errors that might have emerged in the annual plan. Also identify any relevant factors you may have missed with the original plan or unexpected shifts, such as those related to seasonality.

Don’t ‘move the goalposts’

Make sure your plan adjustments relate to the factors that triggered the re-plan, and do not overreach to simply mask underperformance or create a rosier-than-reality picture. If you’re simply not tracking to plan, then that reveals key issues that need to be addressed. Moving the goalposts midyear will only serve to worsen the problem.

Kick off your annual planning process

A midyear plan offers an opportunity to get a head start on the annual planning process that typically begins in earnest at the end of the third quarter. The re-plan process offers a chance to look 12 to 18 months out to identify any trends or issues that might impact your company. This can be particularly useful if you aren’t doing rolling forecasts that can provide ongoing updated insights to inform the annual planning process.

Consider key issues on the horizon

A midyear update may offer more clarity about how upcoming issues will impact your business. For instance, private companies face a Jan. 1 deadline for complying with new 606 revenue recognition regulations. You can use the re-plan process to get a clearer picture of how those changes will ripple through your planning, budgeting, and reporting processes so you can adjust accordingly.

Leverage your technology

Doing a re-plan is tough if you’re heavily reliant on Excel spreadsheets. With spreadsheets, a re-plan might be more trouble than it’s worth, and you might want to just continue to identify and report variances to the original plan. If you have an active planning solution, make the most of it. You should have all the current data you need at your fingertips, so you can build relevant scenario models and share re-plan details via easy-to-use dashboards.

The time is right to assess whether a re-plan is in order for your company. If you decide a re-plan makes sense, it can help provide the course correction your company needs to finish 2018 strong. Not only that, it also puts you in great position to start next year with real momentum.

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