The 2 Most Common Budgeting, Planning and Forecasting ...

by Monique Morgan

Ask a sales manager what ABC means and the response, often with a smile, will be "Always Be Closing." This concept makes sense for the sales manager but unfortunately, many finance managers are "always closing" too ? and they're not smiling about it. The budgeting, planning and forecasting (BP&F) cycle is too often the most dreaded time of the year. A recent report from Ventana Research revealed that the BP&F process "typically eats up 10 ? 15% of the finance team's time, and it takes 5 ? 10 months to complete the full cycle in large organizations." So how does the finance team get anything else done if we're talking about a 10-month process?

Few organizations are insulated from the challenges of financial reporting and planning. The process continues to cause pain because there are many moving parts that finance managers and planners need to balance and many individuals who contribute to them. We've found that many of the finance team's concerns boil down to the following 2 issues, both of which can be addressed with a dedicated, comprehensive BP&F tool.

1) You've outgrown your current process. For some, planning consists of Excel spreadsheets and a notepad. We recently spoke to one $3 billion company that is still managing their planning this way! In a previous post, we looked at some of the indicators for when you need to move on from your current BP&F process: multiple versions of the same spreadsheets used by different people, time wasted consolidating spreadsheets rather than analyzing data, and limited visibility. These are all signs that it's time to graduate to a corporate performance management solution or dedicated BP&F software (like arcplan Edge), investing in a tool that is centralized, adaptive, and allows you to deliver the value that your business needs. Inefficient data collection and multiple versions of spreadsheets lengthen the BP&F cycle unnecessarily, reducing the value of the entire process.

2) You lack the ability to be strategic. Too often, finance managers are stuck in the manual data entry and consolidation phase of the finance cycle and have limited capacity for strategic planning and analysis. This may be because there aren't enough hours in the day, but more often than not, their current tool is simply not equipped to perform complex analyses. In his article "Putting the 'A' Back in FP&A," Ventana Research Director Robert Kugel emphasizes the importance of "consistently making better choices about next steps that produce the greatest strategic payoff," an outcome that is only possible with analytics that guide decision-making.

A good planning tool should include reporting and analysis capabilities. Gartner agrees. In its December 2011 report, "Six Needs of Growing Importance for?Corporate Performance Management," analyst Christopher Iervolino concludes that CPM solutions must include embedded analytics in order for CPM to be seen as a critical business asset. Your value as a planner greatly increases when you have the ability to perform "what-if" scenarios and rolling forecasts, which you can only do if your tools give you access to reporting and analytics.

There's no escaping the (sometimes dreadful) BP&F process, but perhaps it's time for your organization to explore upgrading to a CPM solution. With the right one, you'll see a return on your investment within a year. Look for solutions that are easy to use and maintain, adapt to your current process (instead of the other way around), and require minimal IT involvement.

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arcplan Edge, our dedicated budgeting, planning and forecasting solution, shortens budgeting cycles by as much as 60%. It embraces your Excel users by offering a familiar spreadsheet environment - one that is centralized on the Web and eliminates the multiple versions of spreadsheets you may be used to dealing with. Learn more about its integrated reporting and dashboards, workflow and analysis capabilities that give your planners more time to make strategic decisions in this brief video.

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