Budgeting Planning & Forecasting

IBM Planning Analytics Tips & Tricks: Planning Analytics Forecasting – Configuring the Forecast Settings

February 23, 2021 by Nina Inverso Leave a Comment

This is part one of a three-part series on IBM Planning Analytics new Forecasting feature.

The new IBM Planning Analytics Forecasting feature allows you to quickly populate future time periods based on past data values. This feature is especially useful to prepopulate a data set for you or your team to then adjust as you see fit. Configuring the forecast settings only takes a few minutes, and the results can be powerful.

Open the PAW book that contains your forecast view.
Click anywhere on the view to activate it. Then click the Forecast icon in the ribbon at the top of the screen. This will open the Forecast window on the right-hand side of your screen.
There are two tabs used to configure the forecast:
- Set up forecast
  - Use the drop-down lists to select the forecast period start and end elements.
  - Click the checkbox next to “Save statistical details as comments” if you want to disable this feature. By default, information pertaining to the forecast is saved as a comment within the view.
- Advanced
  - Click the switch next to “Auto-detect” to disable seasonality. This feature is enabled by default.
  - Optionally, use the drop-down list to select one or more time periods for the model to ignore.
  - Use the drop-down list to select a confidence interval. This is set to 95% by default.
  - iv. Edit the table to configure the version dimension, hierarchy, and elements that should be used to store the model’s predictions.

Configure forecast settings in Planning Analytics

Configuring forecast settings in Planning Analytics

In our next blog post, we will review how to preview your Planning Analytics Forecasting model.

IBM Planning Analytics, which TM1 is the engine for, is full of new features and functionality. Not sure where to start? Our team here at Revelwood can help. Contact us for more information at info@revelwood.com. And stay tuned for more Planning Analytics Tips & Tricks weekly in our Knowledge Center and in upcoming newsletters!

IBM Planning Analytics Tips & Tricks: Planning Analytics Forecasting – Configuring the Time Dimension

February 16, 2021 by Nina Inverso Leave a Comment

The new IBM Planning Analytics Forecasting feature allows you to quickly populate future time periods based on past data values. This feature is especially useful to prepopulate a data set for you or your team to then adjust as you see fit. Because it is time-based, the feature requires that a time dimension has been set up in a specific way.

Ensure that the cube where you want to forecast includes a time dimension.
Make sure the dimension type is set to TIME.
a. Sign into PAW and open a new book. In the navigation pane, right-click on the Dimensions section, and click Edit settings.
b. Click on the Dimensions Attributes Mode button in the upper right-hand corner of the window.
c. Enter TIME as the DIMENSION_TYPE if blank.
Make sure you have a flat hierarchy available.
a. In the navigation pane, right-click on the dimension name, and click Create hierarchy.
b. Enter a new hierarchy name and click the CREATE button.
c. Use the dimension editor to add base-level time elements to the new hierarchy. The easiest way to accomplish this is by copying element names from an existing hierarchy in the dimension.
Your time dimension is now ready to use in a Planning Analytics Forecasting model.

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

IBM Planning Analytics Tips & Tricks: Dimension Attribute Types

February 9, 2021 by Marc Assenza Leave a Comment

Did you know that IBM Planning Analytics dimensions can have defined types and that these defined types are necessary for certain Planning Analytics features to operate correctly? For example, the new predictive forecasting functionality within Planning Analytics Workspace (PAW) requires the use of a designated Time dimension.

To view your dimension definitions in Planning Analytics Workspace, right-click on Dimensions and click “Edit settings” from the context menu.

IBM Planning Analytics Tips: Dimension Attribute Types

The dimensions view will open in Dimensions Security Mode. To see the dimension types, switch to Dimensions Attributes Mode.

IBM Planning Analytics Tricks: Dimension Attribute Types

Attributes for each dimension are then presented. Not every dimension needs to have a defined dimension type, but some dimensions need to be defined to use specific functionality. The following types can be defined:

GEOGRAPHY – Used in Planning Analytics Workspace to allow the visualization of your data using geographic maps.
TIME – Contains specified and recognized intervals of time utilized within a budgeting, planning, forecasting, and reporting structure.
CALCULATION – Contains formulas used to perform intended operations against your data.
METRIC – Contains a group or groups of elements that will be used to measure a business’s Key Performance Indicators (KPI’s).
METRIC INDICATORS – Provides further information in relation to Key Performance Indicators (KPI’s), an example of this is trend.
VERSIONS – Contains data from multiple uses of an element, such as current budget for a department for this year compared against the department’s budgets for prior years.
GENERIC – Used when there is no precise type of dimension type required. These general members can include things like products and customers. Please note this can be changed at any point if you determine the dimension should have had or needs to be a defined type.
HIERARCHY – This type of dimension is representative of the business reporting structure and can be used in tandem with workflow within an application.

This approach can be used with functionality associated with visualizations, predictive modeling, and other uses of Planning Analytics.

IBM Planning Analytics Tips & Tricks: The Waterfall Chart

January 19, 2021 by Lee Lazarow Leave a Comment

IBM Planning Analytics Workspace (PAW) includes various visualizations that can be used to view your data. One of these visualizations entails a chart called a waterfall chart. This type of chart will help you show the components of a summarized number and is very helpful in determining which values are beneficial to the total and which values are detrimental.

The image below shows an exploration and its corresponding waterfall chart.

IBM Planning Analytics Tips & Tricks: The Waterfall Diagram

The chart shows information about each region while also defining each region as a positive (green) or negative (red) amount, which makes it easy to determine what is adding to the total and what is reducing the total.
The chart makes it easy to compare regions against each other, which allows you to quickly see that the Northeast gross profit is much larger than the West.
The chart allows users to look at the pieces as a rough percentage of the total, which lets you see that the Northeast accounts for more than half of the total.

PAW also allows you to customize various aspects of the chart, including colors for each bar.

Understanding the waterfall diagram in IBM Planning Analytics

The combination of an exploration and a waterfall chart can be used as the starting point for a user friendly dashboard in PAW.

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.

IBM Planning Analytics Tips & Tricks: Convert Existing View Directly to Reports

November 24, 2020 by Nina Inverso Leave a Comment

Did you know that Planning Analytics for Excel (PAx) provides the ability to convert an existing view directly to a report in Excel? Without opening the view as an Exploration, you can start building your report directly from the Task Pane.

Just right-click on the view in the Task Pane to display the available options.

IBM Planning Analytics Tips & Tricks: Convert Existing View to Reports

You will see the following options by hovering over the Quick report, Dynamic report, and Custom report items:

How to convert existing views into reports in Planning Analytics

In this example, each of the items does the following:

On this sheet: This will open the existing Planning Analytics view as a Quick report on the current Excel sheet at cell $A$1.
On new sheet: This will open the view as a Quick report on a new sheet at cell $A$1.
At current location: This will open the view as a Quick report at the cell that is currently active.
At specified location: This will open a pop-up window that allows you to input the cell at which you would like the Quick report to appear. You can then enter the cell address and click OK to generate the Quick report, as shown in the following image.

Learn how to convert existing views to reports in Planning Analytics

IBM Planning Analytics Tips & Tricks: PAx Task Pane Workbook Tab

November 17, 2020 by Nina Inverso Leave a Comment

Did you know that Planning Analytics for Excel (PAx) automatically keeps track of the Planning Analytics objects you have open in an Excel workbook?

Simply click on the Workbook tab of your Task Pane to view the list of Dynamic reports, Action buttons, Explorations, and Quick reports that are currently in use.

IBM Planning Analytics Tips & Tricks: PAx Task Pane Workbook Tab

These folders will be populated as you work with your Planning Analytics environment. Whether you manually add these items to a worksheet, or they are included in an existing view or report, they will appear here.

For example, clicking the Exploration button in the PAx ribbon will create an Exploration on a new worksheet.

The PAx task pane workbook tab in IBM Planning Analytics

This will also add an item to the Explorations folder on the Workbook tab of the Task Pane. When you right-click on the name of the new Exploration, you will see the following options:

Learn about the PAx task pane workbook tab in IBM Planning Analytics

Similar options appear for Dynamic reports, Action buttons, and Quick reports.

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.

IBM Planning Analytics Tips & Tricks: Planning Analytics Forecasting – Configuring the Forecast Settings

Read more IBM Planning Analytics Tips & Tricks:

IBM Planning Analytics Tips & Tricks: Planning Analytics Forecasting – Configuring the Time Dimension

Read more IBM Planning Analytics Tips & Tricks:

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