This is a guest blog post from Rob Hull, founder, Adaptive Insights.
Scramble like hell to pull together a budget. Execute against that budget regardless of changes in the business. Repeat the budget scramble in 12 months.
If your corporate planning process still looks like this, then you’re likely stuck in static planning. By that I mean a planning, reporting, and analytics process that’s siloed, largely manual, almost always built around spreadsheets, and constrained by limited insights into the operations of the business.
Static planning may appear to have served you well for years; in fact, for decades it was the standard way for all businesses to plan. It worked, until it didn’t.
In the past few years, the world has gotten smaller, faster, and more data driven. And whether they know it or not, organizations that plan poorly are operating on borrowed time. That’s because the requirements for effective financial and operational planning, reporting, and analytics have risen sharply and suddenly, spurred by compounding changes that threaten to overwhelm businesses that can’t operationalize new strategies to navigate them. These changes include spiraling operational complexity, growing amounts of inscrutable data, disruptive new digital-native competitors, and ever-growing customer expectations.
Navigating constant change
Any one of these changes would prove challenging. All of them together require a significant leap for any business.
Take data growth. As my colleague Tom Bogan noted recently, 90% of all the world’s data didn’t even exist two years ago. So within two years—close to the end of 2020—your business will likely be trying to manage and make sense of twice the volume of data you’re working with today.
Static planning is a poor fit for this new age of data proliferation. Businesses that base their decisions on instinct, rather than data-driven insights, tend to be less agile. They respond sluggishly to changes in the business or market—if they respond at all. Compare that to data-driven businesses, which on average grow a healthy 30% annually. Very few businesses that rely on static planning will successfully navigate our rapidly changing business world. You can’t chart your way forward through constant, rapid change by being slow, rigid, and myopic in your decision-making process.
The good news is you can recover from your static planning environment before it’s too late—before your competitors outpace you or before events overtake you. You can be one of the nimble, data-driven businesses that are the leaders of tomorrow.
The answer is active planning
Active planning is different from static planning in three key ways.
- It’s collaborative. It allows everybody in the business to plan and escalates critical decisions to the right people while giving them the information and insight they need to make the right choice.
- It’s continuous. Instead of a painful annual planning process that quickly grows stale, active planning is ongoing and infused by a constant stream of trusted, always-current data.
- It’s comprehensive. Active planning enables a holistic view of the business, connecting together finance, sales, workforce, and other operational planning, reporting, and analytics and integrating them with ERP, HCM, CRM, and other operational data stores.
Organizations that implement active planning processes are four times more likely to be able to respond to a market change than those still stuck with static planning. That’s a decent definition of agility if ever I’ve heard one.
Active planning by 2020? Start now
If this sounds too good to be true, be assured there are thousands of companies that have abandoned static planning and embarked on their own journey to active planning. They’ve done it by replacing spreadsheets and rigid legacy planning platforms with cloud-based planning solutions built to handle large and varied volumes of frequently changing data, yet are accessible and easy to use by a wide range of business users. And, since they know that their organization and the demands on it will only grow in the future, they’ve chosen technology that scales quickly and painlessly across different systems, locations, and environments. Operating a business is growing more complex, so planning should accommodate that complexity while still being simple enough for virtually anyone to do.
With an active planning environment, you’ll find it far easier to model what-if scenarios so you’ll be ready to course-correct when change happens. You’ll be able to determine your optimal workforce mix while setting sales quotas and drawing territories that keep account reps motivated and productive. And you’ll be able to lower the risks associated with your business decisions because forecasts are based not just on historical trends, but also on real-world, even real-time data and the input of managers closest to each part of your business.
Modern business planning is now a strategic advantage, and in today’s business environment, you need all the advantages you can find. So it follows that outdated modes of planning amount to a competitive disadvantage. Every day you spend mired in static planning is another day you’re allowing your competitors to move ahead, extending the gap between where you are and where the future demands you must go.
2020 will be here before you know it. The 4,000-plus organizations we’ve worked with to adopt active planning will be far more prepared to succeed in a world of constant change. Will you?