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Widening the financial lens of your organization

Grant Halloran Profile picture for user Grant Halloran January 16, 2020
CFOs need to make smart, structured decisions to stay ahead of rapid change. Grant Halloran, CEO of Planful, explains how to put the 'P' back into Financial Planning and Analysis

Business leader shows agile lens concept to board meeting © - shutterstock

Technology-driven disruption has changed the way business leaders make decisions, even outside the tech sector. New service delivery models, emerging trends, and rapidly changing consumer expectations can overturn established ways of doing business virtually overnight. Companies that can operate nimbly by identifying opportunities and quickly making course corrections have an edge.

Business today is moving at unprecedented speed, and to keep up and get ahead requires access to accurate, relevant financial information. You have to understand how markets, demand, and competitors are changing. It also requires better, faster decision making. Imagine the decisions that go into developing a new product – think about how the availability of time and data limits the number of decisions you can make. What if you could make 12 decisions instead of four? What if you could make 52 instead of 12?

Continuous Planning is the way to multiply high-frequency decision-making opportunities and increase business agility to achieve a durable competitive advantage. A Continuous Planning approach enables greater data availability and brings more people from across the business into the decision-making process. At the same time, it widens the financial lens CFOs use in their role as strategic business advisors. It puts the ‘P’ back in ‘FP&A’.

Barriers to accelerating the planning process

One significant obstacle to speeding up the planning process and multiplying decision-making opportunities are the tools companies use for planning. For finance and other business units, spreadsheets are often the go-to solution. Spreadsheets can be incredibly valuable as an individual productivity tool, and for small companies, they may work well enough at first as a planning tool.

But spreadsheets weren’t built for company-wide planning and collaboration. Spreadsheets can create data and productivity silos that become barriers to real-time collaboration. Workbooks become too complex to handle … and interminable to open. Errors crop up in budgets, forecasts, and reports. Long budgeting cycles result in too much time collecting information – and not enough time planning for various outcomes.

In this scenario, the spreadsheet as a planning capability becomes a serious barrier to accelerating the planning process. Finance spends its time on manual tasks, such as consolidating and validating financial information across dozens or hundreds of spreadsheets, leaving them unable to pivot quickly enough when the market changes. To overcome the challenge, the business needs to automate core processes so that finance can focus on becoming the advisor to business planning.

Moving toward a higher financial IQ

A Continuous Planning platform can elevate the organization’s overall financial IQ and improve operations, but a joint effort is required across the business. It requires frequent communication, analysis, and iteration. The right platform provides these capabilities, facilitating direct feedback, collaborative decisions, and better alignment on goals company-wide.

Instead of a months-long process of collecting, massaging, and publishing a spreadsheet-based budget, companies with a Continuous Planning platform can update budgets in real time, create rolling forecasts, and access self-service management reporting. Reporting that used to take hours via spreadsheets can be generated in minutes with a platform that reconciles planning needs.

Planar Systems, a digital display manufacturer based in Oregon, discovered the benefits of Continuous Planning and increasing its financial IQ when the company implemented Planful’s FP&A platform. Before becoming a global organization via acquisition by Leyard, a company based in China, Planar had been tracking data across regions, divisions, and products using spreadsheets. That made conducting meaningful data analysis a time-consuming challenge.

With the Planful platform in place, Planar automated the process and streamlined workflows, using the structured and dynamic planning capabilities to track performance and provide insights for executive decision making. The company doubled revenue growth and kept overhead flat. After the acquisition, the FP&A platform also provided a single source of truth about business status, including revenue and profit drivers.

Two sides of the same planning coin

Finance needs structure. That’s why financial planning is constructed around general ledgers, journal entries, accounts, cost centers, debits and credits, etc. The data from those tools flow into more structured work products, including P&Ls, balance sheets, cash flow statements, and other outputs that are central to the finance function and subject to prescribed periodic updates.

While finance needs structure, other business units require dynamic planning tools – formats that work for their unique business use cases. Outside of finance, planning platforms have to be highly customizable so they take in data from a range of operating systems and can be updated and changed as often as needed, which can be as frequently as every day.

But while finance needs structure and other departments require bespoke solutions, they really are two sides of the same planning coin. A platform that provides both finance and the business with the capabilities they need to close, plan, report, and execute on a continuous basis, seamlessly integrates the dynamic planning businesses need with the structured processes finance requires.

‘P’ Is for Planning …

Frequent planning, analysis and refinement enables business leaders to make better decisions. That’s why Continuous Planning is a must – it creates a current, accurate, and complete data foundation. It also facilitates faster decisions, giving teams the time and space they need to make more accurate decisions.

San Francisco-based Digital Realty, a business that develops and manages data center infrastructure and real estate, takes a Continuous Planning approach to centralize operational and financial information. The company uses Planful’s FP&A platform to consolidate data sourced from a range of systems used by various business units, gaining what the vice president of corporate FP&A, Glenn Snyder, describes as “an unbiased view of the big picture.”

With greater insight, businesses like Planar and Digital Realty can adjust plans confidently and operationalize them more rapidly, while finance gets the speed and control over financial data they need to close the books faster and provide strategic guidance. So, if you’re a Finance leader ready to put the ‘P’ back in FP&A, look for a platform that enables automation and integration. That’s the way to achieve agility – and a competitive advantage.

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