Adaptive Insights

Workday Adaptive Planning Tips & Tricks: Excel Substitute

March 3, 2021 by Michelle Song Leave a Comment

We have something different for today’s Workday Adaptive Planning Tips & Tricks post – an Excel tip! Our Adaptive Planning users also use Excel, so we thought they’d find this helpful.

Have you ever wanted to get rid of spaces in some of your Excel cells? Maybe you do not want a cell to have separate words and instead want to use an underscore character. Or maybe you are in a situation where you want to adjust a prefix for a certain range of cells. You can use Excel’s find and replace functionality, but this approach could lead to a time consuming effort if you want to pick and choose the cells where it applies.

Excel’s SUBSTITUTE function can help you solve this problem. The SUBSTITUTE function is used to find a specific set of characters and replace it with something else while also giving you the ability to define details within cells.

The syntax of the function is:

=SUBSTITUTE (text, old_text, new_text)

text
- This is the source that will be changed; this is typically a cell reference.
old_text
- This is the subtext that will be replaced.
new_text
- This is what will replace the old subtext

If the cell in A5 consists of “Happy Birthday” then it can be updated to “Happy_Birthday” via the following:

=SUBSTITUTE (A5, “ “, “_”)

In addition, the parameter that defines the new text can also be a cell reference. This gives you the ability to quickly change the results of a large set of data by simply updating a single cell.

This approach will allow you to quickly find and replace characters within specific cells instead of having to manually go through a set of cells via Excel’s find and replace functionality.

The team at Revelwood has been recognized by Adaptive for its thought leadership in the space, commitment to its Adaptive Insights practice, and its rapid achievements of milestones. Visit Revelwood’s Knowledge Center for our Adaptive Insights Tips & Tricks or sign up here to get our Adaptive Insights Tips & Tricks delivered directly to your inbox. Not sure where to start with Adaptive Insights? Our team here at Revelwood can help! Contact us info@revelwood.com for more information.

FP&A Done Right: Achieve More Reliable Financial Forecasting

February 26, 2021 by Revelwood Leave a Comment

This is a guest blog post from our partner Workday Adaptive Planning, written by Gary Cokins. Cokins is an internationally recognized expert, speaker and author in enterprise and corporate performance management systems. In this piece Cokins outlines three steps for more reliable forecasting.

When a company fails to meet its financial targets, business leaders want to know why. Was it the pandemic? Did sales underperform? Did operations overspend? Were their purchases more expensive than expected? Was productivity below established standards? Did finance develop a forecast that was wrong from the start?

Determining the causes of budget variances is an effective way to avoid similar missteps in the future, as well as during times of disruption. But many businesses struggle to understand the causes of variances and to define a process that will turn out accurate forecasts every quarter.

Finance and business teams must work together to identify the activities or data gaps that led to a missed forecast projection and caused price, cost, and efficiency variances. Whether poor decisions were made, the business landscape changed, or customer needs evolved, digging into the root cause starts with building relationships based on trust and transparency.

Companies need to continuously answer these three questions: What? So what? and Then what? Answering the first question—What happened?—requires good reporting with visibility. Answering the second question—So what?—involves separating the signal from the noise and determining what is relevant from the reporting. Arguably, answering the third question—Then what?—is the most important and critical part, because only these decisions impact the future.

Here are three tips that will help your finance team set performance targets and standards that company leaders can be confident in.

Step #1: Bring everyone to the table

Hitting a financial forecast isn’t just about meeting sales goals. Employee turnover, travel expenses, marketing costs, and other operational expenditures must be accurately projected to create a viable financial forecast.

But finance teams can’t analyze all these variables on their own. They need to work closely with sales, HR, marketing, operations, and executive teams to get a clear view of past performance, changes on the horizon, and potential risks and opportunities.

Centralizing financial information in a single shared database reduces the time it takes for finance teams to gather this information, giving them more time to focus on analyzing causes of variances and speculating on potential outcomes. Collaborative financial planning software also helps keep information up-to-date by making reporting easier for other departments.

It may take time to get the whole company on board with a new data collection, integration, and delivery process, but the payoff that comes with more reliable reporting is worth the effort.

Step #2: Plan for multiple outcomes

It’s impossible to know for certain what the future might hold. No one has a crystal ball for this. But there are ways to view the planning horizon. One way is to create multiple projections that account for different scenarios. This can include sensitivity analysis by changing some of the variables, such as the forecast sales volume and mix, to calculate projected profits. This can keep your company running on all cylinders—regardless of what comes its way.

Project for at least two possible outcomes—one optimistic and another cautious—so you can create proactive response plans. Look closely at the assumed factors and variables that are most likely to impact your projections. For instance, a change in the price of raw materials, in labor rates, or the emergence of a new competitor could create pricing pressure, which might lead to a decline in revenues.

Scenario planning can also help companies navigate regulatory changes that come with political transition or turmoil. According to a survey by KPMG, 77% of U.S. CEOs say they are focusing more on scenario planning to manage change in the current political environment.

However, with the increasing responsibilities falling on FP&A teams, many feel they don’t have enough time for this type of proactive planning. Sixty percent of CFOs estimate that ad hoc analysis, such as running a new scenario for the forecast, takes up to five days, according to a survey we published a few years back.

Planning and budgeting software can help FP&A teams speed up the time it takes to outline the financial implications of different scenarios and outcomes. The right tool lets teams run reports with the click of a few buttons, giving them more time to consider the risks, opportunities, and assumptions to create comprehensive response plans.

Step #3: Collect customer data

Understanding changing customer preferences, needs, and demands can also help improve the accuracy of financial projections—and boost a company’s overall financial health. However, a third of U.S. CEOs say the depth of their customer insights is limited by a lack of quality customer data, according to KPMG. So it’s no surprise that nearly two-thirds expect to invest in data analytics technology in the next three years.

“The whole idea of knowing what the customer wants before they want it is sort of the brass ring,” Tom Hayes, president and CEO of Tyson Foods, told KPMG. “We have real-time data from the shelf back to our supply chain. It takes out a lot of waste and helps us to more accurately forecast—a great benefit for products with a short shelf life.”

Taking the right steps to figure out where a missed forecast and associated assumptions went wrong will help keep business performance on target year after year.

This blog post was originally published on the Workday Adaptive Planning blog.

Workday Adaptive Planning Tips & Tricks: Interactive Dashboards – Dynamic Planning with Embedded Sheets

February 24, 2021 by Dave Miersch Leave a Comment

More often than not, clients of Revelwood will make use of multiple sheets in Workday Adaptive Planning to support different aspects of their planning process(es). When using several sheets to make changes to key drivers, assumptions and scenario drivers, clients often ask the question, “How can I quickly and easily see how the changes I make on one sheet impact the rest of my budget?” One tried and true method was using multiple screens or windows with multiple sheets or reports open to see how the model changes. While this method works, it can be cumbersome and as many of us are working remotely for the foreseeable future, it likely becomes problematic if we do not have access to all those great monitors at home.

Another more dynamic solution is using the newer functionality of embedded sheets within Dashboards.

Within Dashboards, users now have the ability to add any Standard, Modeled, or Cube sheet you have created within Adaptive Planning to enter data without ever having to navigate away from our dashboard view(s). These sheets act as usable copies of your existing sheets allowing changes to be made and instantly reflected on related charts and dashboards.

In the below example, we have three Dashboards. Sales Volume & Margin by Month, budgeted Sales Revenue vs Prior Year Actuals and budgeted Sales Volume vs Prior Year Actuals.

Interactive dashboards in Workday Adaptive Planning

While in edit mode, navigate to the dashboard selector and simply drag and drop the “Sheet” option into your dashboard window. An additional drop-down menu will then be available to select all available sheet options to choose from.

Learn about interactive dashboards in Workday Adaptive Planning

Select the appropriate sheet you want to use to make changes and analyze the overall model impact and you’re all set! You now have your previously created and defined sheet embedded within your dashboard.

In my example, we have added our “Bottle Release Schedule” sheet which is essentially our sales unit planning sheet.

Understanding interactive dashboards in Workday Adaptive Planning

Making any changes and saving them within the Dashboard will automatically funnel through to dependent charts and dashboards. We are going to add 1,000 units sold in the month of April 2021 in rows 1 and 3, click save in the sheet, and then see how those changes impact our entire model in real time.

Dynamic planning with embedded sheets in Workday Adaptive Planning

We can quickly see that making those changes has added 2,000 units to our total sales volume as well as $300,000 in additional revenue.

Any sheet created within Adaptive can be pulled into dashboards for more fluent and flexible planning and reporting in one view. While some functionality is limited vs using the sheet itself, having the ability to make changes and immediately see the impact without managing multiple windows can be a valuable tool in the heart of budget season.

The team at Revelwood has been recognized by Workday Adaptive Planning for our thought leadership in the space, commitment to our Workday Adaptive Planning practice, and our rapid achievements of milestones. Visit Revelwood’s Knowledge Center for our Workday Adaptive Planning Tips & Tricks or sign up here to get our Workday Adaptive Planning Tips & Tricks delivered directly to your inbox. Not sure where to start with Workday Adaptive Planning? Our team here at Revelwood can help! Contact us info@revelwood.com for more information.

Workday Adaptive Planning Tips & Tricks: Excel Reporting Using a Report Template

February 17, 2021 by Revelwood Leave a Comment

Many users of Workday Adaptive Planning utilize OfficeConnect for their Excel reporting. But not all users will have access to OfficeConnect, depending on your organization. But there is another great option for Excel reporting called a Report Template.

What is the difference between OfficeConnect and a Report Template?

Templates are Excel files which can be added to regular reports, including repeating reports. Instead of running an HTML report, you can have a custom Excel report. Below are some nice features, as once you use it, it will become a favorite for reporting.

Report Templates allow:

Custom formatting data from Adaptive such as background color, font color, and font type.
Calculations on the data, along with including graphs and notes.
Use with repeating reports.
A saved Excel file attached to a report.
Macros can be added to templates.

Here is a quick tutorial on how to create an Excel report using a report template.

Locate the Adaptive Planning HTML report which has the data you want for your Excel report.
a. Here is an HTML Report.
b. Locate the report in the Reports screen.
Right click on the report and choose Run as Excel, and the file will download.
Open the downloaded Excel file. You will see the Excel data on the first sheet.
a. The report is the same as the report in Step 1 but in Excel.
On this sheet, you can change fonts, and add conditional formatting, calculations, etc. If you want to add other sheets for more reporting, you can use formulas to reference data on the first sheet.
a. In this example, we have changed fonts style and added conditional formatting for the % Var column.
b. In this example, we added another sheet and created a graph and ratios using formulas to reference the first sheet (report data). You can add multiple sheets to create a customized report or a report book. You can also hide sheets. For example, the Report Info tab Adaptive includes in all excel reports or the first sheet with the data.
Return to the report in Adaptive Planning.
a. Right click on the same HTML report and select Attach Template.
b. Click Choose File button and select the excel file you just created which has your updated report with formatting, formulas, graphs, etc. Click OK. Once the file is selected click Open.
c. The file icon will change colors from blue to green, so you know the report has been properly attached.
Run the report and it will automatically download as an Excel file. Your existing report has been generated and has applied all applicable prompts. For example, the month of data will change per the prompt option selected.

You now have an Excel report! And can run it anytime!

FP&A Done Right: The Role of KPIs in Driver-Based Budgets

February 12, 2021 by Revelwood Leave a Comment

This is a guest blog post from our partner Workday Adaptive Planning, on why finance teams should focus on KPIs and business drivers.

Gone are the days when business leaders were narrowly focused on just the net cash flow or balance sheet. Modern finance pros are asked to track not only a lengthy list of metrics, but also KPIs beyond the traditional finance arena. The old adage is, “You get what you measure.” When managers are held accountable for attaining or exceeding KPI targets defined by the executive team, their actions and decisions become aligned to the executives’ strategy.

Why the focus on KPIs and business drivers? Well, more leaders are realizing that to stay competitive and agile, their formulated strategies need to be managed and executed and that traditional budgets are no longer cutting it. Creating detailed, upfront financial projections for the next year and allocating budgets and planning inventory to cost centers no longer makes sense in today’s rapidly changing business environment. Instead, staying nimble and strategically savvy means embracing active planning and driver-based budgets. These driver-based budgets are categorized by:

Budgeting and planning in smaller batches with horizon-adjusted precision
Allocating resources in a fast and flexible manner
Tying budgets and planning inventory to outcomes rather than cost centers

Identify the KPIs that drive your financial results

Most organizations have a company-wide set of standardized and consistent metrics they track. But what are the KPIs that truly impact the company’s financial performance?

The answer will vary from industry to industry and company to company, but identifying the right drivers means considering the entire operational arc of the business. For instance, you might have drivers from:

Pipeline or funnel: prospective customer leads, first meetings, opportunities, sales generated pipeline, add-on revenue, channel sourced pipeline
Sales: total customers, ramped representatives, average revenue per deal, current quarter pipeline, new logos, future quarter pipeline
Customer success: customer satisfaction score, at-risk customer retention, cancellations, billable hours, time to value, average hold time
Finance: manufacturing costs, freight and distribution, free net cash flow, revenue per headcount, cost per headcount
Marketing: website visits, event attendees, new vs. returning leads, social followers, database size, earned media

Shift the conversation

“Did you hit your numbers?” That’s a question anyone who’s worked in a static planning environment has probably encountered. But with a driver-based budget and active planning, the psychology around targets actually shifts. Instead of thinking in operational silos and individual or department wins, the conversation becomes more integrated thinking about end-to-end business processes across the silos. Rather than hitting a static target, people are working to make sure certain drivers are meeting or exceeding expectations, to help fuel future success and growth at the organization.

Sometimes, that subtle but powerful shift can be hard for executives to wrap their heads around. But once the C-suite is sold on driver-based budgeting, the results usually speak for themselves. And many execs find that the forward-looking approach of driver-based budgets and KPIs actually aligns better with how they operate: with an eye toward the future, rather than toward the past.

Stop forecasting to the end of year

With an annual plan or budget, fiscal year end Dec. 31 is the end line. But business doesn’t actually come screeching to a halt at the end of the fiscal calendar year, and all of the effort required to put together an annual budget can be so onerous and complicated that it might take months in advance to assemble. That means some teams are racing toward an artificial deadline with little to no visibility into what the budget will bring even a few months into the future. Sounds like a nightmare, right?

We’re not arguing to do away with the annual plan. But with a driver-based approach, it’s easier to also create a rolling financial forecast—a roadmap for the next quarter or six months or 12 months, no matter what point you’re at in the fiscal calendar. Creating a rolling financial forecast isn’t nearly as time-intensive or intimidating as you might think when you have the input variables and parameter supported by an automated system. Because this forecasting happens more frequently and because it’s based on drivers and KPIs—rather than every single granular data point at the finance team’s fingertips—a rolling financial forecast can be both quick and sophisticated.

Are you ready to dramatically increase the agility, alignment, and accuracy of your company’s budget? It starts with shaking free of the status quo—static planning, traditional budgets, myriad metrics—and focusing on the business drivers and KPIs that will actually shape the future financial performance.

This blog post was originally published on the Workday Adaptive Planning blog and appeared here.

Check out more FP&A Done Right posts here:

FP&A Done Right: Predictions of “Extraordinary” Growth This Year

FP&A Done Right: Collaborate More When Planning

FP&A Done Right: Achieve More Reliable Financial Forecasting

FP&A Done Right: xP&A and Modern Finance Planning

January 15, 2021 by Revelwood Leave a Comment

This is a guest blog post from our partner Workday Adaptive Planning, written by Matt Shore. Shore, vice president and product strategist, explains xP&A and why it matters.

xP&A stands for extended planning and analysis—taking the best of modern finance planning and extending it across the enterprise. But it’s not new. For years, it has been known as company-wide planning.

Finance leaders whose organizations have been made more agile and strategic with modern planning and analysis have known for years that their approach to planning can transform other parts of the business. Now, as they work to recover from the global COVID-19 pandemic, that awareness is more valuable than ever.

Growing recognition around expanding the use of FP&A best practices beyond finance recently earned an industry imprimatur from Gartner, whose 2020 Strategic Roadmap for Cloud Financial Planning and Analysis Solutions report said, “By 2024, 70% of new financial planning and analysis projects will become extended planning and analysis (xP&A) projects, extending their scope beyond the finance domain into other areas of enterprise planning and analysis.”*

We agree that bringing continuous, comprehensive, and collaborative planning to every part of an enterprise has not only arrived, it’s ascendant.

We’ve been advocating the concept since back when we began working with customers to harness the platform and processes of modern planning from financial planning to sales, workforce, and operational planning. Our solutions for enterprise planning are defined by powerful automation, enterprise-class scalability, intelligent planning assisted by machine learning, always-on cloud availability, and award-winning ease of use.

These requirements have essentially served as design standards for planning solutions from Workday, where we’ve always believed that the promise of enterprise planning can only be realized by linking finance and operations in a holistic and seamless way.

Extended planning, orchestrated by finance

Finance is the natural steward of enterprise data, so it makes sense that finance should orchestrate company-wide planning. According to Gartner, “The office of finance is uniquely positioned to drive continuous company-wide financial planning and analysis (FP&A) initiatives. Finance’s connection to all other business domains means that these initiatives will be capable of driving higher-quality decisions and outcomes.”*

In fact, Gartner says, “By 2024, 50% of new financial planning and analysis implementations, upgrades and replacements will be sourced from core financials vendors, due to superior integration and product bundling.”*

This capability has never been more critical. For operations, where plans are generally refreshed more frequently and based on greater volumes of data, understanding the financial impact of every decision can ultimately mitigate the risk of executing those decisions. And seamless access to current operational data and actuals can also improve the confidence of the C-suite in the firm’s business projections. And these days, who doesn’t need a bit more confidence?

Company-wide planning done right: Meeting the needs of xP&A

Developing a solution for planning across the enterprise isn’t a small undertaking. It requires three fundamental capabilities.

A flexible and scalable modeling platform

Those who’ve built models with traditional planning software are accustomed to limits on dimensions, or they know too well the experience of waiting (and waiting) on results. To solve this, and to enable modeling at enterprise scale, we developed Elastic Hypercube Technology—our groundbreaking, patent-pending modeling engine that doesn’t force organizations to make compromises that slow insight or limit the number of scenarios a team can evaluate. For company-wide planning, this means creating models for virtually any kind of functional use. You can model and plan at the work-group level and then combine those plans into a comprehensive, holistic model of the business. It’s modeling for an xP&A world.

The ability to seamlessly plan-execute-analyze business processes

Planning isn’t done in a vacuum, particularly in an xP&A context. For true company-wide planning, plans must be integrated to gain a comprehensive view of the business. Our federated planning architecture enables each function or business unit to have its own planning instance while preserving the ability to bring all the pieces together into a holistic plan. With federated planning, a change to one plan automatically updates all related plans. This architecture also makes it easy to dovetail planning with the applications organizations use to execute those plans (such as financial management or human capital management solutions), and then analyze data and results to support faster, smarter decision-making. Company-wide planning also requires a single source for truth, with plans and applications sharing the same data across planning and execution, just as Workday applications do today. As Gartner notes, “Suite-based applications consume data from a single source and share the same metadata and master data. This means that overall company-wide financial reporting and governance is substantially enhanced.”*

Easy adoption and use

Traditional planning platforms are notoriously difficult to implement and use. This has kept them locked away in the office of finance, their complex environments all but dooming them to be used by just a handful of highly trained analysts. For xP&A to take root in the form of company-wide planning, it was necessary to recognize that in business, everybody plans. So planning has to be easy. Here’s just one way we’ve improved ease of use: Active dashboards, announced at Adaptive Live earlier this year, blend driver-based planning with interactive analytics to help users assess the impact of their changes in real time. And rich data access rules ensure administrators can be very specific about what data users can view or edit, making it that much easier to safely enable more stakeholders to be active participants in company-wide planning.

The journey to company-wide planning: xP&A in action

For most companies, the journey to company-wide planning begins in finance. Many companies, after seeing the success they’ve had there, expand planning to other departments like HR for workforce planning and sales for sales planning, with both plans linked back to the corporate model. This federated planning environment allows each entity and function to plan the way it needs to, but all plans are seamlessly connected to a holistic corporate plan. This helps create a more agile, competitive organization where decisions are made based on insight rather than instinct.

Customer surveys show that Workday Adaptive Planning customers are prime examples that company-wide planning is indeed the future. Demonstrating classic use cases for xP&A, they’ve extended their modern planning environment into areas as varied as inventory and shop floor space planning, sales rep ramp modeling, and product pricing planning. Many others are using our workforce planning solution to model their optimal workforce, and still more are relying on their planning environment to design a return-to-work strategy at a time of unprecedented disruption.

Take Rubrik, a rapidly growing global provider of cloud-based data management and protection solutions. Rubrik initially deployed Workday Adaptive Planning in finance to streamline budgeting and accelerate quarterly close. Building on that success and to achieve a more accurate and timely top-line plan, the company extended its use of Workday Adaptive Planning to sales finance and sales operations to automate bookings, improve seller capacity and productivity, and plan and manage territories and quotas.

Ajay Sabhlok, vice president of IT business applications at Rubrik, describes the company’s xP&A pivot to company-wide planning as a significant step forward.

“To automate planning in a comprehensive manner across the company,” says Sabhlok, “is setting the foundation for growth.”

In the end, that’s what company-wide planning is all about. In a world where the future is harder and harder to predict, agility is everything. As thousands of Workday customers already know and as many more throughout the industry are coming to realize, finance is showing the entire enterprise how to plan for what’s next. No matter what you call it—xP&A, company-wide planning, or something else—one thing is certain. This is the future of planning.

*Gartner, 2020 Strategic Roadmap for Cloud Financial Planning and Analysis Solutions, Robert Anderson, John Van Decker, 21 February 2020.

This blog post was originally published on the Workday Adaptive Planning blog.

FP&A Done Right: Rolling Forecasts for More Strategic FP&A

December 4, 2020 by Revelwood Leave a Comment

This is a guest blog post from our partner Workday Adaptive Planning, written by Bob Hansen. Hansen makes the case for dynamic planning, which is better suited for complexity.

When it comes to FP&A forecasting, most companies base their long-range forecasts on static planning processes, rather than more relevant, dynamic plans that reflect the complexities of the business.

Relying on a forecast that doesn’t enable continuous monitoring of company performance, instead of implementing a modern, rolling forecast approach, is like using an old-school road map to guide you on a cross-country trip: Why use a paper map when you can get to your destination worry-free with a car GPS system?

Rolling forecasts—forecasts that are updated typically on a quarterly or monthly basis—can be a game changer. Especially today, amid a global pandemic. They allow organizations to better align with their strategy, perform more-effective business analysis, and derive greater ongoing value from their budgeting and planning processes. Rolling forecasts make organizations nimbler, able to seize potential opportunities, or better prepared for upcoming roadblocks.

Rolling toward a more strategic focus for FP&A

There is an increasing expectation that strategic guidance—which can be generated through rolling forecasts—emanates from the FP&A team. A CFO Indicator report affirmed that need. The survey found that CFOs expect that time spent by the FP&A team on strategic tasks will double by 2020—growing from 11-25% today to 25-50%.

Furthermore, CFOs are looking for their teams to develop the technical and strategic capabilities that support executing approaches such as rolling forecasts. According to the CFO Indicator survey, if the FP&A team could improve only one skill, 29% of CFOs want that skill to be dashboard design and report building, 25% want it to be predictive analytics capabilities, and 19% want strategic modeling of what-if scenarios.

Fortunately, with the increasingly user-friendly experience of dashboard technology, the skills gap is narrowing, which allows more FP&A teams to start instituting rolling forecasts.

FP&A … so little time

So rolling forecasts are a no-brainer? In theory, yes. Yet the near-universal challenge lies in freeing up finance teams to move toward this new approach. There is a significant gap between what CFOs want their teams to be doing and how they actually spend their days. Often-cited research by APQC shows that only 40% of 130 finance executives from very large organizations rated their FP&A capabilities as effective.

Further, our research shows that 75% of CFOs want their teams to have a significant and strong impact on their organization, yet only 46% expect that their team will have that kind of impact this year. The chief reason continues to be a lack of time for strategic planning.

The clear benefits of rolling forecasts

Despite these time-crunch challenges, the benefits of getting to rolling forecasts are clear. The APQC survey showed that organizations that use rolling forecasts are better aligned with unfolding business strategy, are more effective at business analysis, derive greater value from their budgeting and planning processes, and have more reliable forecasts than those that do not use them. The survey revealed that 94% of businesses that use rolling forecasts described their business analysis as effective. Only 50% of those that do not use rolling forecasts described their analysis that way.

Finance leaders need to clearly promote the many benefits of rolling forecasts and how they can directly impact business results. For example, you can produce a cash flow forecast at the end of a rolling financial forecast process—resulting in a consolidated balance sheet and an accurate view of cash flow for the entire enterprise. Getting C-suite buy-in helps pave the way to get the resources and time needed to develop relevant and robust rolling forecasts.

Moving to rolling forecasts is possible at organizations that have executive support and invest in new, cloud-based finance software. These solutions offer easy-to-navigate dashboards and scores of time-saving hacks that can free finance pros from transactional busywork and allow them to focus on more strategic activities that improve business performance.

Like a state-of-the-art GPS, rolling forecasts can go a long way toward helping you get where you want to go—and position FP&A to be a driver of the business, not stuck in the back seat.

This blog post was originally published on the Workday Adaptive Planning blog and appeared here.

FP&A Done Right: Five Tips for Budgeting in the Age of COVID

November 13, 2020 by Revelwood Leave a Comment

This is a guest blog post from our partner Workday Adaptive Planning, written by Gary Cokins. Cokins explains why traditional budgeting is not a fit for the volatility, complexity and uncertain times businesses face today.

The pandemic is causing boards of directors and C-suite executives to take a new look at net cash flow. Traditional budgeting is simply too slow and too rigid to keep up with the rapidly changing business environment caused by COVID-19. There is too much volatility, complexity, and uncertainty right now.

Gone are the days when budgets could be one-and-done—tied to a fixed point in time and too inflexible to adjust to quickly changing business opportunities and challenges. In today’s world, a startup can be up and running and profitable in three months and disrupt its competitors. Consider Uber and Airbnb as examples. If your company takes nearly as long to create an annual budget, which is typically out-of-date a few months later, it will be extremely difficult to fight off the upstarts or keep up with your established competitors.

The solution? A flexible and continuous budgeting and forecasting process, often referred to as a rolling financial forecast, that helps you anticipate change and focus on outcomes rather than outputs and that is derived from the drivers to determine planned spending.

Here are five tips to modernize your budget process:

1. Just say no to one-and-done

Now more than ever, December’s fiscal year-end numbers often bear little resemblance to July’s realities—meaning budgets and forecasts must become more streamlined, accurate, and responsive. Annual budgeting won’t go away, but spending weeks and months processing data and reconciling spreadsheets that are out of date soon after the consolidated master budget is published doesn’t cut it anymore.

Modern budget solution:

Increase the frequency of budgets and forecasts to reflect shifting business conditions
Make decisions and plans based on data-backed insights rather than old and stale information
Change how resources, employees, and assets are allocated throughout the year and how the budget incorporates real-time opportunities and challenges

2. Focus on business drivers, not cost centers

Traditional budgeting focuses on allocating resources to cost centers, but business objectives (projects, products, and service lines) result from end-to-end cross-functional processes across the org chart. So if you determine the level of resources and spend based on forecast demand, then budgets and rolling forecasts can reflect performance that is company-wide rather than specific to a cost-center department.

Modern budget solution:

Enable organization-wide access to reports and data, allowing everyone to have visibility into the enterprise’s performance, including into individual departments
Review forecasts against budgets to eliminate confusion among competing departments
Provide real-time information for the needed insights to support better decision-making at all levels of the organization
Use drivers to determine the level of needed capacity (i.e., types and numbers of employees) to match your supply of capacity with demand

3. Create rolling financial forecasts

More than ever, fluctuating market conditions make accurate forecasts of future demand load (e.g., customer orders and sales) extremely challenging. Rolling financial forecasts help manage investments or financing determined by cash flow. They provide visibility into business performance using time horizons that reflect the speed of your business.

Modern budget solution:

Generate rolling financial forecasts that accommodate real-time shifts in market conditions
Enable self-service reporting so everyone in the organization can measure their performance against company-wide KPIs
Help everyone in the organization understand the downstream effects of their resource allocation decisions

4. Look forward, not back

Most budgets and forecasts are outdated before you push “publish” or soon after. And some factors are impossible to take into account (natural disasters, pandemics, broken supply chains, work stoppages). The rearview-mirror orientation of traditional budgeting (e.g., last year’s actuals create this year’s budgets) often results in increased “actuals” as managers exhibit “use-it-or-lose-it” behavior by spending needlessly to attain their prior fiscal year budget. Traditional budgets can’t keep up with the speed of modern business. One needs to look forward through the windshield.

Modern budget solution:

Respond faster to shifts in market conditions with real-time access to financials
Adjust outdated budgets and forecasts as change occurs
Move leadership discussions toward insight, planning, and action, rather than using the budget as a cost control mechanism to punish those with unfavorable cost variances

5. Use the right tools for the job

Creating a budget process that keeps up with the pace of today’s business requires a comprehensive, collaborative, and continuous planning platform—one that gives you robust, accessible reporting and modeling capabilities; dashboards with indicators and their targets that provide visibility into overall company performance; and automated tools that streamline budgeting and forecasting processes.

Modern budget solution:

Enable comprehensive planning that aligns the actions and priorities of everyone across the organization around common KPIs
Create opportunities for collaboration by giving everyone access to the data they need and deserve
Adjust and update budgets and forecasts on a continuous basis so you can navigate volatile market conditions in real time

Don’t let traditional budgeting lock you into outdated assumptions and fixed targets. Those outdated targets handcuff managers when the organization changes directions. Some managers view the fiscal year budget as a “contract” that they will not deviate from to minimize unfavorable variances from their allotted cost center budget expenses. This short-term focus jeopardizes the longer-term view. The modern FP&A professional knows the truth: Aligning budgets and rolling financial forecasts with comprehensive plans lays the groundwork for proactive rather than reactive planning—a significant strategic advantage in today’s highly competitive environment.

This blog post was originally published by Workday Adaptive Planning and appeared here.

Workday Adaptive Planning Tips & Tricks: CAPEX Planning – Your Tool for Growth

November 11, 2020 by Mary Luchs Leave a Comment

CAPEX (capital expenditures) planning is a key feature in Workday Adaptive Planning and gives the Office of Finance and senior executives greater visibility into the company’s financial risk, while also providing a tool for measuring corporate growth. Before we go into the specifics of CAPEX in Adaptive Planning, let’s take a step back and get an understanding of CAPEX.

Capital Expenditures: Overview

Capital expenditures are expenditures within a company that are not expensed on the income statement. They are considered to be investments into the company. Companies with higher capital expenditures are said to be investing more heavily into the future of their organizations.

CAPEX to Operating Cash Ratio

The CAPEX to operating cash ratio analyzes a company’s ability to acquire long term assets using cash flows. In other words, it indicates how much of a company’s cash flows is going towards capital expenditures. It is a great tool for measuring a company’s emphasis on growth. A higher CAPEX to operating cash ratio is an indicator of high growth in a company. A company whose ratio is too high could be taking on too much financial risk. While it is beneficial to invest in CAPEX, overspending in this area can compromise a company’s ability to pay off debts or cover other operating expenses. It is vital for the Office of Finance to have accurate, up to date visibility into CAPEX data in order to assess the company’s level of risk and make appropriate adjustments.

CAPEX and Depreciation

Depreciation is important to consider for asset management, especially for companies who are putting a lot of money towards their assets in the form of capital expenditures. A company must consider how their CAPEX depreciates when looking at their assets. This is a helpful tool to consider:

CAPEX > Depreciation → Growing assets

CAPEX < Depreciation → Shrinking assets

Accumulated depreciation of capital expenditures is indicated on the Balance Sheet, so it is important to consider how this impacts the net income of the company. Depreciation reduces the taxable income of a company, which is impactful especially for companies in a high growth phase who are investing heavily in capital. In addition to the CAPEX to operating cash ratio, depreciation can also be considered when analyzing a company’s growth.

Capex Planning in Workday Adaptive Planning

In addition to having a basic balance sheet and a P&L sheet, you should create a CAPEX sheet in Adaptive Planning. The CAPEX sheet offers a more specific look at capital expenditures than the balance sheet and the P&L sheet, allowing for more targeted analysis. Generating a CAPEX sheet also allows you to drill into expenses and depreciation for budgeting and forecasting purposes on a more granular level.

In conjunction with the balance sheet, the CAPEX sheet is important for budgeting cash and analyzing capital investments. In Adaptive Planning, the CAPEX model consists of calculated accounts in a modeled sheet. These calculated accounts include capital values and their coinciding depreciation accounts. Each modeled account is performing the same calculation based on the asset class selected by the user. Asset class is a text selector column based on the categories of capital expenditures that are specific to your business. Companies vary greatly in the ways that they calculate capital value and depreciation, but all businesses can benefit from CAPEX planning.

How to do CAPEX planning in Workday Adaptive Planning

Adding a CAPEX sheet to your Adaptive Planning implementation gives you a powerful tool for understanding the investments in your company. When you can analyze this data at a granular level, you can better assess if your company has too much financial risk, or if you are invested at an appropriate level.

Adaptive Insights

Read more Workday Adaptive Planning Tips & Tricks:

Step #1: Bring everyone to the table

Step #2: Plan for multiple outcomes

Step #3: Collect customer data

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Read more Workday Adaptive Planning Tips & Tricks:

Read more Workday Adaptive Planning Tips & Tricks:

Identify the KPIs that drive your financial results

Shift the conversation

Stop forecasting to the end of year

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Extended planning, orchestrated by finance

Company-wide planning done right: Meeting the needs of xP&A

A flexible and scalable modeling platform

The ability to seamlessly plan-execute-analyze business processes

Easy adoption and use

The journey to company-wide planning: xP&A in action

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Rolling toward a more strategic focus for FP&A

FP&A … so little time

The clear benefits of rolling forecasts

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1. Just say no to one-and-done

2. Focus on business drivers, not cost centers

3. Create rolling financial forecasts

4. Look forward, not back

5. Use the right tools for the job

Read more guest blog posts from Workday Adaptive Planning:

Capital Expenditures: Overview

CAPEX to Operating Cash Ratio

CAPEX and Depreciation

Capex Planning in Workday Adaptive Planning

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