Planful's virtual user conference is over, but they didn't run out of customer stories to tell (replays are available).
Quite the contrary: Planful keeps sending use cases our way. That's important - Planful Perform made the argument that planning must change. But how?
I already sliced and diced that: Perform 2021 - inside the Planful Predict announcements, and how planning must change.
The underlying theme? As I see it: how finance and workforce teams are responding to the pace of change - and why they need more agile planning to succeed in these market conditions.
How realistic is this? To understand what's possible versus what's Powerpoint, we need customer stories from the front lines of planning change. Our team logged them, including my 1:1 with Trintech, 'Your financial planning is only as good as your data.' In that interview, Trintech's VP of Finance Josh Ezagui makes a vivid case for finance leaders as data storytellers - and how modern planning is integral.
Steinway & Sons - from spreadsheet-based planning to Planful
But can modern planning help companies navigate economic disruptions? Because otherwise, we might need to start over. To find out, I hopped on a video call with Ruzzi Jiang, Director of Planning and Special Projects at Steinway & Sons.
When Jiang joined Steinway & Sons in August of 2018, they were already using Planful for some functions, including templates for financial reporting and consolidation. Jiang's team was starting to use Planful for budgeting, forecasting, and strategic planning. Since then, Steinway & Sons' use of Planful accelerated - in time to put Planful to the pandemic test. And what is Jiang's role in this? As he told me:
My job responsibility is to one, do the annual strategic planning for the company. I prepare the budget for the management, and lead our divisional teams to prepare our annual budget, strategic plan and forecasts. So those are very critical; those have to be used in our daily operations, to measure our current performance monthly.
Jiang also handles corporate development projects such as acquisitions, security offerings, and other operational projects like capital planning, and supporting strategic decisions such as investment and asset diversification. So when the pandemic hit, Jiang already had a full plate:
The evening we finished our 2020 budget, we were called to do a new forecast. I believe it was early March 2020. In the US, I think a lot of us didn't expect how hard this pandemic would hit us. This 2020 budget was our second year of fully using Planful to do our ground-up budgeting process.
That's a big change from Excel-based planning:
Before, I was at a bank doing the forecast for a company. You mostly have Excel to do that at a high level. But when you work at a company, everything needs to be useful for operational purposes; everything has to be ground-up. Planful is a great tool, and the right tool for that.
Pandemic planning disruptions - "It was a great test of the Planful system"
For the 2020 budget, Jiang's team created a system that incorporated revenue input from salespeople, tracking average sales prices per unit, costs of goods sold and OPEX, driving down into their profitability metrics. Well, that changed fast:
When we spun up the budget, the pandemic hit us really hard. Literally on the same day the budget was approved and done, we had to totally re-do the forecast for the remainder of the year. We had a turnaround of two weeks to do that. So it was a brutal time.
But that adversity also forced a creative response:
During that time, we found new ways of doing a forecast. Everybody found new ways of doing it. It was a great test of the Planful system, because it worked. And we did turn it around in weeks.
The reforecasting was necessary, but how did that impact the business? Jiang:
We are a pretty capital-intensive manufacturer... That's one of the goals of that forecast, to make sure that we can navigate through this. Pianos take a long time to make; we have to compare our older quarter books, and compare that to our current expenses.
If cost-cutting must happen, you need precision:
We also have to look at how much we have to cut our production, so we don't tie up too much cash into our inventory. It's basically worst-case scenario tests, like stress tests for our company. We found where our limit is, and based on the worst-case scenario sales figures, this is where we need to cut costs. This is where we need to control spending. This is where we can postpone CAPEX, and this is how we want to navigate through this storm, and come out with a better financial situation than before.
Here's the happier part: people stuck at home decided to buy pianos.
We did another forecast in June when sales had recovered. I'm sure you've seen in the news, there is increased spending on home improvement. Pianos are part of that fortunately, so sales dramatically picked up in the middle of the pandemic. So we did a reforecast, and re-planned our production.
Now you need a new plan again; at least it's not a worst-case scenario:
The key for us is to plan our production, and know where we are burning cash, to make sure our business comes out in the right financial situation.
People don't necessarily click and immediately buy a piano, but Steinway & Sons found digital tools enhance the sales process:
We typically don't sell pianos online; our pianos are priced at a pretty premium price point. But our salespeople found great ways to interact with customers via Zoom, or any other Internet channels. They've been able to conduct sales through Internet channels.
The wrap - top planning tips for finance teams
I asked Jiang: did this experience change how his team does planning going forward? Jiang responded:
One thing I have to say is, I don't feel so intimidated by doing a forecast and planning anymore. It's not just me - it's all our teams. We had two fire drills last year. Having gone through that, all of our teams, here in the corporate division, have become more of a well-oiled machine... We're now looking for more ways to use Planful for both day-to-day analysis, and planning and budgeting.
Jiang presented at Planful Perform 2021 (see his replay: How Steinway Orchestrates Business Rhythm Using Spotlight and Dynamic Planning). For those who missed his talk, what were the takeaways?
One takeaway is Planful's Spotlight Excel plug-in, it's a great tool they have developed. It's a great resource for the junior people on all the finance teams to conduct any kind of analysis in their company. It's a very intuitive tool that's embedded in Excel. You can do a lot of analysis quickly on a recurring basis. Basically, you can automate a lot of your analysis. It saves you a lot of time; instead of spending a lot of time putting together reports and checking numbers, you can spend more time doing analysis and solving real business problems.
That's one takeaway. Two is Planful's Dynamic Modeling has a lot of usage. We use Dynamic Modeling to create extra models, to have more details in our sales forecasts that feed into our core module in Planful. But there are many other ways you can use it.
I asked Jiang if his team was looking into Planful's predictive solutions, including Planful: Projections, announced at Perform 2021. He said they are on the radar, but right now, his team is still focused on using Dynamic Planning models to add more detail into their ground-up budgeting process, "without over-complicating our core financials." Once they complete that, Jiang says they'll be taking a closer look at how predictive planning can factor in. He also wants to pull in more CRM data into Planful to better analyze lead generation - right now, that data is spread across different CRM systems.
Jiang's full plate means he wasn't able to take in all of Planful Perform himself (he flew out to present his session live). He's planning to catch some key sessions on replay. Still, Jiang was able to further his cause:
I did have a very good interaction with all the teams at Planful... Everyone has been very helpful. We had a great conversation about the product. One thing I wanted to see is: other ways to use Planful to centralize some of our operational statistics, and other ways to analyze our data. So the Planful team had a few suggestions. And there, they have already started following up with me.
Virtual or on-the-ground, those are the connections we have to make - if we want to make better planning a reality. Let's see where this leads for Steinway & Sons.