Data Driven Planning, Budgeting & Forecasting

Sustainability is a global trend, and the enterprise is following suit. Organizations are looking to optimize resources and eliminate all forms of waste. Peak financial accuracy is the end goal to increase competitiveness. In a market plagued with disruptions and shifting trends, all organizations, even the most traditional, are looking to improve their planning, budgeting, and forecasting capabilities to increase competitiveness and stay ahead of the curve. 

However, effective planning, and consequently, effective budgeting and forecasting demand a data-driven approach. Working without data is like driving with your eyes closed. 

The growing importance of data in planning, budgeting, and forecasting

We have come a long way from the days of double-entry bookkeeping, income statements, and balance sheets. Until the 2000’s organizations did not have access to the ever-growing volume of operational data sources. Information outside of corporate transactions was also almost non-existent and at most, unreliable. There was no access to insights from analytics such as sentiment analysis, econometric data, or social data. Today, the story is different.

The data is available, and workable!

Today, we are drowning in a data deluge. In 2019, we generated 2.5 Quintilian bytes of data every day. Clearly, to put this data to work, organizations need sophisticated tools to mine, store, clean, and process it. 

Thanks to rapid technological progress, today we have technologies such as cloud to store and work this data to generate more accurate projections and reduce budgeting errors. The cloud also gives us the computing power that powerful analytics demand. But, despite that, many organizations rely on traditional spreadsheets reporting – a system of reporting that was developed almost a century back! 

But traditional ways hold businesses back.

Almost 70% of businesses say that they rely on spreadsheet reporting across business units. But spreadsheet-based processes are inadequate and cannot ensure data consistency. The value of information needed to make decisions in today’s fast-paced business environment is then jeopardized. These spreadsheet driven processes also impede agility –essential for organizations to navigate the competitive business landscape today. 

Many organizations are reeling under the pressure of legacy systems as well. The difficulty in introducing automation and a rigid structure that opposes flexibility impacts an organization’s capacity to meet its growth requirements at speed.

The world is more competitive.

Organizations need to have technologies and processes in place that are insightful and provide next-level analysis. Given that planning, budgeting, and forecasting is a critical component of financial and operational performance, making it data-driven contributes to an organization’s overall success. This is especially more relevant since the business environment has become increasingly competitive with disruptive competitors making an entry into the most traditional industries (such as manufacturing). 

Clearly, this is the time for data.

Given the forces at play, most forward-thinking organizations know that they have to make planning, budgeting, and forecasting more dynamic. They have to base decisions on data inputs from across the enterprise to drive greater process efficiency and deliver deeper and clearer business insights. And these insights are not restricted to the finance department alone. Modern, data-driven planning and forecasting solutions can deliver enormous value to business functions such as marketing, supply chain, sales, HR, and operations. With insights into how each decision impacts other parts of the organization, organization activities can be better coordinated.

The challenge with traditional systems and manual processes is that they inhibit planning.

Look to become data-driven if your current system:

• Is prone to manual errors and suffers from version control issues
• Demands time. Almost 70% of staff time is spent on data collection and validation
• Needs frequent updating of forecasts and reports to analyze data from a different perspective to remain agile to changing market dynamics
• Is unable to give insights into root-cause since the data is not comprehensive 
• Makes teams and business units operate in silos 

Make complex calculations and multidimensional analysis and reporting an almost impossible task.

The role of technology in data-driven planning, budgeting, and forecasting

Organizations do not just need a data analysis tool. Given the growing volume and sources of data, organizations need to increase their capabilities to harvest, store, and analyze this data. For this, they need robust tools, technologies, and systems. 

Strong enterprise planning, budgeting, and forecasting tools radically transform the planning cycle. By increasing forecasting accuracy with the right planning and budgeting organizations can drive more predictable revenue growth. 

Robust data and analytics tools give deep insights that enhance strategic decision making, reduce errors, improve collaboration, and foster a more disciplined management culture. These ultimately deliver a competitive advantage. 

Clearly, organizations benefit greatly by being data-driven in their planning, budgeting, and forecasting efforts. But there is an ever-increasing volume of data, rising data sources, and growing value of unstructured data. This suggests the need for powerful analytics capabilities to decipher sophisticated budgeting models and forecasting scenarios. Organizations also need the power to run advanced analytics on large data sets.

And what about the people? You can call your organization truly data-driven when data is democratized and does not reside in the hands of a chosen few. For this, business users need a platform that provides a guided modeling environment to help them and analysts develop and deploy planning models. Having a driver-based plan and models are an important point of consideration. These help organizations develop the capability to create planning models that reflect business reality in great detail. With such a robust platform at your disposal, more business units can be connected in this data universe to make these insights deeper, more accurate, actionable, and relevant. 

What organizations need are planning tools and technologies that can radically transform the entire planning- cycle, from target setting and budget roll out all the way to reporting, analysis, and re-forecasting. They need the capability to analyze data, model business requirements, and collaborate on plans, budgets and forecasts fast and reliably to uncover hidden business insights and improve organizational performance. After all, an hour of planning can save you 10 hours of doing!

For More details, please checkout our recent webinar replay on Increase Cash Flow Efficiency Using IBM Planning Analytics..!! (Integrated Planning)