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Why planning data should extend beyond finance

As disruption from the global COVID-19 pandemic continues, businesses are assessing their ability to pivot quickly when market conditions change. And in many cases, their business agility is being put to the ultimate stress test. These extraordinary moments are a reminder that “business as usual” won’t guarantee the agility needed to survive and thrive in an unpredictable environment.

As disruption from the global COVID-19 pandemic continues, businesses are assessing their ability to pivot quickly when market conditions change. And in many cases, their business agility is being put to the ultimate stress test. These extraordinary moments are a reminder that “business as usual” won’t guarantee the agility needed to survive and thrive in an unpredictable environment.

Companies hoping to tap into and ultimately realize their true resilience have no choice but to plan for a range of scenarios—usually the best case, worst case, and most likely outcomes.

GET ALL THE INSIGHTS IN OUR LATEST WHITE PAPER: “Practical Steps for Business Agility”

And the only way to achieve this is by implementing an active planning model.

What is active planning?

Active planning is based on nimble and data-driven financial modeling. It’s powered by cross-departmental collaboration that allows stakeholders throughout the company to tap common, comprehensive data fed by ERP, CRM, and other core enterprise systems.

Active planning is a next-level shift compared to its predecessor, static planning. Spreadsheets and legacy business planning tools perpetuate static planning processes, which result in poor collaboration, questionable and siloed data, and stale historic snapshots. Static planning environments often pigeonhole finance into the role of gatekeeper. This prevents finance from emerging as a more strategic force in the business by analyzing performance and trend data to deliver insights, detect previously unknown risks, and identify new opportunities.

Realizing this requires an active planning model—one built around five key initiatives that every company can follow to achieve business agility. In a recent blog, we unpacked the first of these: identifying your key KPIs. Now let’s take a look at the second.

Why nonfinance data belongs in your business planning

Financial data offers only a sliver of the overall picture of a business. And building your active planning model solely on data from finance makes it challenging to gain critical insights and make sound, reliable recommendations. (Making decisions based on limited, siloed data is, again, a hallmark of static planning.)

A modern, active planning model makes a different argument. As you begin your modern planning and business agilityjourney, you’ll start to identify areas of overlap and key business drivers that thread throughout different areas of the company—not only from a department perspective, but a function perspective as well.

By folding in financial planning, sales and marketing, and workforce planning data, you can identify more nuanced relationships, patterns, and problem or opportunity sources much more clearly. For example, if sales are down, you can better determine if it’s due to high turnover, unqualified leads, or some other driver. Once you successfully incorporate cross-departmental operational data and transactional data into a common data set, you gain a panoramic view that allows you to make nuanced and specific observations about the state of your entire company.

This also aligns people across departments and functions. When you work from a common data set, everyone is buying into and working from the same, shared source of truth and moving toward the same goals. When a problem arises, it’s easier to quickly course-correct thanks to data-driven forecasts and clearly mapped correlations. Less friction, less guessing, and less time wasted.

Start piecemeal, then scale

You might feel overwhelmed by this idea of a streamlined, modern planning model driven by real-time data that harmoniously syncs all departments and stakeholders. It will take time to achieve that end state, and implementing an active planning model is very much a process (hence the purpose of this blog series). So start small and then scale accordingly.

Begin by focusing on ingesting the operational data and KPIs that are highly visible and impactful. Think about pulling in data from your workforce planning, sales operations, or project planning environments. Then begin drawing those more nuanced correlations and insights that stretch across departments and functionalities.

Be steadfast in your conviction to unearth the “so what?” and work collaboratively with your key stakeholders (department heads, decision-makers, planners, etc.) to rally them around this mission. Using your KPI model and core KPI reports as guides. Help stakeholders see these critical company dynamics (all supported by their real-time data) so they can fully embrace and own not only this new agility planning model but also their newly formed plan. (Shared ownership of the numbers is a big benefit of active planning.)

Let’s walk through an example

In a COVID-19 world, many organizations focused on cutting expenses as they responded to revenue shocks, supply chain disruptions, and delayed payments as their customers experienced their own disruptions. But as organizations begin to recover, they’re likely to want to increase revenues to achieve some level of parity with their pre-pandemic business—and ultimately eclipse it. Here’s an example of how using company-wide data can help grow revenues for a new product.

Strategic objective: Increase sales revenue across new product line by 15%.

Top-level finding: Actual sales revenue is 24% lower than plan, costing the business up to $1.6 million in lost sales.

Supporting findings: Sales rep turnover is 19% higher than average in the southwest region. Fee earners account for an average 6% of total revenue productivity each. Product return rate is 4% higher than average across the new line.

Implication: We need to model possible causes of turnover to increase retention.

We should adjust sales-per-territory KPIs by 2.5% for other territories and hire five FTEs into southwest sales to cover the shortfall. We should also reevaluate quality control across the new product line and model the impact of inaction on customer satisfaction to anticipate longer-term issues.

This example illustrates what a comprehensive view of the business can mean to identifying the drivers of a business problem—and helping to identify ways to solve it.

A multifaceted effort

Broadening your planning data beyond finance is one piece of a multifaceted effort to amplify your business agility. In previous blog entries, we covered the three key tasks necessary to lay the groundwork for implementing an active planning model. In subsequent blogs, we’ll highlight the remaining initiatives needed to boost your active planning efforts to achieve all the benefits of true business agility.

GET ALL THE INSIGHTS IN OUR LATEST WHITE PAPER: “Practical Steps for Business Agility”

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