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enterprise performance management

FP&A Done Right: 3 Steps to Help you Plan for What’s Coming

August 21, 2020 by Revelwood Leave a Comment

FP&A Done Right

This is a guest blog post from our partner Workday Adaptive Planning, written by Bob Hansen. Read it to learn why static planning no longer works and how to make your business agile.

Throughout the world, businesses of every size are feeling firsthand the impacts of instability. In a time of uncertainty, surviving and thriving comes down to how promptly your business can identify disruptive changes and proactively respond to them.

That’s not so easy when your business is mired in static planning—characterized by long planning cycles, immediately obsolete plans, siloed efforts, and hard-to-find errors. Manual, spreadsheet-based planning, budgeting, and forecasting may have worked well enough in a more predictable age. But as we’re discovering that age is long gone.

Even traditional market forces have proven challenging. Technological advances, ever-increasing customer expectations, and smarter, data-driven decision-making put pressure on finance teams to find new ways to operate with agility.

But how do you plan in a way that allows you to respond to such events, from the predictable to the unlikely?

The answer begins — and ends — with active planning.

Why static planning is a disadvantage

The static, traditional planning models finance teams relied on for decades aren’t just a questionable choice in times of disruption—they can leave your business at a grave disadvantage. Businesses hampered by outdated planning processes are often left scrambling to react to changes while more agile competitors outpace, outperform, and outmaneuver them. Look around you: The companies that are performing well at this minute have pivoted—sometimes substantially—in a matter of weeks, sometimes days. Their business agility has become their defining attribute for success.

It’s safe to conclude that many of these agile businesses aren’t weighed down by manual, episodic, and siloed planning. Rather, they’ve likely embraced a more modern approach to planning—planning that’s collaborative, comprehensive, and continuous. These businesses consistently minimize risk, maximize performance, and create competitive advantages because their planning empowers greater business agility.

The difference between static and modern—or active—planning can be stark. Legacy planning tools are typically bogged down by versioning headaches and siloed, instantly perishable data. In contrast, active planning models allow teams to broaden planning data beyond finance, pulling in real-time operational and transactional data from ERP, HCM, and other slices of the enterprise stack—all to make better, data-driven decisions quickly.

Laying the groundwork for business agility

As many companies recognized even before the current crisis, agility is a business imperative—and this more modern approach to planning is the key to achieving it. These three milestones will get you started on your journey to achieving an active planning model.

I. Assess the status quo

Before you map out where you’re going, you need to understand where you are. Take inventory of the current state of your company, more specifically the business planning obstacles keeping you from implementing a more modern and streamlined planning environment. More than likely, these obstacles will pertain to people, processes, or technology, or some combination thereof.

Assessing where you are means getting granular.

  • What do your current business planning processes look like?
  • How long does it take you to create a budget? A forecast? An annual plan?
  • Where are opportunities for improvement?
  • Who are your planning stakeholders?
  • What technology do you have in place, and how well is it serving you?
  • What data challenges need attention?
  • What are the bottlenecks?
  • What could be automated that isn’t?
  • Are there any opportunities for automated data integration?
  • What are you lacking in workforce planning?

Answering questions like these will help you get a clear sense of what you’re working with and where you can improve.

II. Get organizational alignment

Being a change agent is no easy task. That’s why you’ll need to recruit a savvy senior-level advocate to help champion active planning as a worthy and necessary cause. Along with your senior advisor, you’ll need a task force representative of other departments outside of finance, including operations, sales, and HR. Don’t forget to include IT to help you navigate technology needs and coordinate various data sources.

The next move is to align these key people with the business agility cause you’re championing.

How? Build a business case.

You can do this by quantifying the impact that the organization’s current status quo has on the company. What are manual processes and bottlenecks costing your business in time and money? What opportunities are passing you by? Conversely, what would those measurement strategies and KPI models look like if you implemented an active planning model? Try to unearth more nuanced ROI measures—for instance, how cutting budget time in half could give your people more time to run critical what-if scenarios—to really drive home the meaningful change that a modern agility planning model would bring.

Once your team is in place and your pain points recognized and quantified, you can map out a plan for your initial project. Consider focusing your initial effort on a function within finance so you’ll have control over the rollout. Develop a multi-phased plan that clearly communicates goals (both for implementing active planning and for this inaugural project), a concise and actionable plan, and the key metrics for your KPI model. The ability to effectively communicate the why behind this initiative will help secure any executive buy-in you need for the how. A comprehensive and well-thought out plan will go a long way toward achieving that.

III. Expand across the business

As noted above, there’s a strong case for beginning the rollout of your active planning model in finance and focusing on low-hanging fruit to bring early and easy wins. You’re motoring along, mapping projects, tracking and communicating progress, analyzing KPI reports, and making necessary tweaks. Once a rhythm and familiarity are in place, broaden your scope beyond finance. Initiate planning projects that engage HR, sales, or marketing. This is where you begin to extend the use and impact of active planning company wide.

The key in this phase is to strengthen cross-departmental communication and collaboration. Don’t fall into the trap of relying on your technology or tools to do the heavy lifting. It will be easier to realize and maintain success with regular stakeholder one-on-ones, identifying lessons learned along the way, uncovering opportunities for more ingenuity and improvement, and communicating success and congratulations when they’re warranted.

Doing this will help elevate the role of finance to a strategic force within your organization by orchestrating planning throughout the business. Finance will no longer be known primarily for gathering budget numbers and issuing reports. Instead, your business will look to finance to drive the change and innovation needed to not only weather times of uncertainty, but to thrive in them.

Map your way forward

These three pillars lay the groundwork for creating a more agile planning environment—one that will help you plan for what’s coming, whatever that may be. But since it’s merely a foundation, you’ll want to build on it. Stay tuned for additional insights that can help you derive even greater value from your modern planning environment.

Because the only thing certain about the future is that it will reward business agility. With this foundation and the insights we’ll share in subsequent blogs, you’ll be much better equipped to map your way forward into that tomorrow.

This blog post was originally published by Adaptive Insights and appeared on the Adaptive Insights blog.

Read more guest blog posts from Workday Adaptive Planning:

FP&A Done Right: Reforecasting in a COVID-19 World — Best Practices You Can Implement Now

FP&A Done Right: What FP&A Must do Differently to Make Planning a Success

FP&A Done Right: Modernize your Budget Process to Anticipate Change

Home » enterprise performance management » Page 8

Filed Under: FP&A Done Right Tagged With: Adaptive Insights, business agility, cloud financial performance management, enterprise performance management, financial agility, Financial Performance Management, Planning & Forecasting, Revelwood, static planning, Workday Adaptive Planning

FP&A Done Right: Reforecasting in a COVID-19 World – Best Practices you Can Implement Now

August 7, 2020 by Revelwood Leave a Comment

FP&A Done Right

This is a guest blog post from our partner Adaptive Insights, written by Bob Hansen. The article shares insights from Workday’s internal finance leaders on how they are adjusting to the impact of COVID-19.

COVID-19 has hit the entire world with unprecedented disruption, and you are no doubt feeling it in your plans and forecasts. Ironically, just as you likely completed your 2020 revenue, headcount, hiring, opex, and capex forecasts, COVID-19 rendered them moot.

In a recent webinar, we asked finance professionals where they’re focusing their attention in terms of scenario planning and reforecasting. More than a third of attendees (34%) are interested in planning for the top line to accommodate unexpected changes in sales or demand. Nearly one in three (31%) want to better understand and game out their cash position. Nearly a quarter (22%) are focused on how to plan for workforce factors like headcount, hiring, capacity, and utilization. For 13%, the priority is determining a way forward for opex, capex, and discretionary expenses.

Taken as a whole, these concerns paint a picture of businesses working hard to anticipate what the future holds when they realize many of their prior assumptions no longer apply.

So where to go from here? How can you chart a new course when time is of the essence and the waters are murky? The good news is that Workday Adaptive Planning can help.

The need for more granularity and flexibility

As we’ve been helping customers adapt and respond to the current climate, we’re seeing an increased need for two things across the board: more granular forecasts and a finer time horizon.

These two dominant asks point to the demand for business agility. As Kinnari Desai, senior director of FP&A at Workday, points out, “Flexibility and the ability to react quickly are the two most important things.”

For CFOs and their teams, navigating an uncertain future requires up-to-the-minute, data-driven forecasting that can be done monthly, weekly, or even daily. With the COVID-19 pandemic sending waves of disruption throughout every aspect of an operation, businesses need a real-time view into their cash flow to make the right decisions in the moment.

At Workday, our team of finance professionals has gathered timely and actionable tips for dealing with revenue shocks and workforce and capacity planning when income is hard to predict, and strategies for emerging from this pandemic in a position of strength.

Focus on 3 elements of driver-based top-line modeling

Along with the right attitude, a flexible planning environment, and a good dose of business agility, it’s vital to boil down your most important business drivers and optimize your plan to those key drivers.

When implementing driver-based top-line modeling, Desai says to focus on three key elements.

  1. Align around the metrics that matter. Query your senior managers across the business on which metric or metrics are the most important in these times so you know what to optimize for when you run what-if scenarios.
  2. Identify your largest business drivers. Focus on adjusting those levers to realize the largest financial impact (rather than trying to optimize for every single lever).
  3. Home in on the top two to three meaningful scenarios. By now, you probably have a sense of the impact the pandemic has made on your business, so focus your energy and recommendations on the three most likely or meaningful scenarios. Don’t waste your time, cycles, and sanity spinning 10 or more scenarios that are only slightly different from one another. Iterate and refine the scenarios that will matter the most.

You can use Workday Adaptive Planning to tee up your top-line model without a lot of versioning headaches, number crunching or toggling between spreadsheets. Top-line modeling also helps ensure you and your leadership are marching toward the same goal—something that’s never been more crucial.

Understand the value of the common data model

As these changes impact your data model, as you encounter unforeseen expenses, and as you face the prospect of making critical decisions on an accelerated timeline, the true value of a common data model becomes clear. “At Workday, our common data model really helps us,” explains Desai. “At the end of the day, having the same data model being used in your planning system and your ERP system (and if it’s one and the same, that’s even better) is very important to react quickly and understand the data. I can’t emphasize enough the value of the common data model when you need to know what’s really happening in the business right now.”

Working from a single source of truth, notes Desai, you can better explore data, understand the source of that data, and identify viable, numbers-backed opportunities. Say you’re exploring the idea of moving all your new hires out by a quarter. Historically, that may have been done on a quick Excel workup or even a back-of-the-envelope calculation, with decisions based on a glance at the actual data. But neither of those comes close to what anyone would legitimately describe as “data-driven.” With Workday Adaptive Planning and a common data model, we’re seeing customers forecast quickly, adjust variables in real time, and identify the right moment for taking specific action.

From our own experience at Workday, we realized that to move quickly, we had to iterate multiple times. And we realized that revenue, headcount, and cash flow are all driver-based. A single source of truth is making those iterations easier because those drivers are always accurately represented.

Another key advantage: The platform also helps you isolate and measure the impact of specific variables, instead of the detail just disappearing in a never-ending stream of formulas and sheets. For example, many companies now face (hopefully) one-time expenses like supporting a remote workforce. (We created a special “COVID-19” project code so we could track these one-off expenses, like the relief package Workday provided its employees, separate from typical ongoing business expenses.) Operating on a common data model helps you trace the impact of that expense and present true business-related actuals-to-forecast variance.

Keep management in a forecasting feedback loop

Especially in a time like this, the most valuable role of FP&A is to provide expert insight and well-modeled scenarios to senior management early on so they can make informed decisions on issues like expense reduction, hiring, workforce deployment, customer payment options, and more. The faster they can understand and digest those scenarios and the data, the better suited your organization will be to see the other side of this with minimal lasting damage.

This new pace will most likely not let up anytime soon, so now more than ever, you need to utilize Workday Adaptive Planning to ensure your models, plans, and forecasts reflect the latest expectations and data. You have to be able to make changes on the fly and be ready with an answer when you’re asked, rather than spending the next two to three days calculating it.

So to help ensure your leadership is up to speed, turn to our platform to:

  • Build your Active Dashboard to showcase the top business drivers for quick reference and fast, high-level adjustments
  • Drill down into a specific number, or into specific areas of the company to better help understand relationships and correlations across departments or business units. Top-line numbers don’t always provide the insights you need, but discovering what’s behind the numbers can help you see, say, where that opex increase is really coming from
  • Automate as much as you reasonably can, including ingesting data instead of copying and pasting into reports, to free yourself of the manual minutiae and save time to serve as the strategic force you are

How quickly can you get Workday Adaptive Planning up and running?

This is a question we’re hearing frequently these days as FP&A professionals realize their spreadsheets and legacy planning systems have left them at a disadvantage—and they’re looking for something that will give them greater agility fast.

Depending on what you want with your initial build, getting up and running could take as little as a couple of weeks. As with anything, the timeline depends on a variety of considerations.

  • Workday Adaptive Planning is vendor-agnostic and easily integrated with most any other system. You’re going to want to pipe in any data source you’re currently using that’s valuable to your plan
  • There’s no real limit to the amount of data you can sync with Workday Adaptive Planning. Just determine what makes sense for your business—and if your need is urgent, decide what data is critical now and what can wait for later
  • Workday Adaptive Planning lets you plan as far into the future as you like. This is a significant differentiator from some tools like Salesforce, which allow you to forecast relatively near term or the quarterly pipeline but remains a transactional element. With Workday, you can look past the near term
  • If you’re still dependent on external files for your planning, no worries. OfficeConnect is a helpful add-on that lets you interact with live numbers in your Excel, PowerPoint, and Word documents

Change is always a constant. Yet unprecedented changes such as those we’re seeing today require more insight and support. That’s why we’ll be rolling out more webinars and education for you to learn how to get the most from Workday Adaptive Planning—and keep your business agile and responsive in these uncertain times.

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

Read more blog posts from our partner Adaptive Insights:

FP&A Done Right: Tips for Scenario Modeling During COVID-19

FP&A Done Right: What Must FP&A Do Differently to Make Planning a Success

FP&A Done Right: 3 Words for a COVID-19 World — “Flexible Budget Variance”

Home » enterprise performance management » Page 8

Filed Under: FP&A Done Right Tagged With: Adaptive Insights, Budgeting Planning & Forecasting, business drivers, cloud financial performance management, COVID-19, driver-based modeling, enterprise performance management, forecasting, Planning & Reporting, Revelwood, Workday Adaptive Planning

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