Many organisations have forgotten why they plan. Often the exercise is purely about the numbers associated with the budget, but there is very much more to planning, reports Desmond Botha, Hyperion planning product manager at Global Technology Business Intelligence (GBI).
Planning is a forgotten, overlooked, even ignored discipline. It is typically associated with the budgeting process, but it can be of far greater value to any business, if they align it with strategy, acknowledge its importance ahead of the time, streamline its implementation and involve all key decision-makers.
Why should companies plan?
Firstly, a plan should have the buy-in of management at the highest level. As a seminal outcome, it should communicate the direction senior management wants the organisation to take. Everyone involved in the process should be aware of management`s expectations, which must be communicated clearly and unequivocally.
Accordingly, this is an ideal opportunity to get all decision-makers to collaborate and buy into the process. This boosts the chance of an accurate, strategic plan which is aligned with strategy and which serves the goals of the business.
In line with this, part of the process is the delegation of responsibility for budgets, forecast and other components of the plan, and the empowering of the people to deliver against this delegation.
Once all participants have been made aware of the direction and course the organisation is going, they should be able to negotiate and finally agree on targets, with the understanding that these targets are being put in place purely to help improve the performance of the organisation.
To ensure these targets can be met, the responsible decision-makers - note, not just the finance department - should allocate resources accordingly, keeping in mind any new business opportunities they identify. And it is highly likely that the detailed process of planning will unearth new opportunities. Communicating these additional business opportunities up the management chain is vital to the success of the project.
In addition to reaching set targets, all decision-makers need to be given and accept the responsibility to reign in and control costs.
Performance should continuously be measured and compared to the plan, with variances noted and reported. Any material events should immediately be incorporated in the plan to ensure the organisation does not lose sight of its goals and ability to reach them. The organisation should also use the plan as a basis for rewarding decision-makers for reaching targets and minimising costs.
Managing the process
It is clear there is a lot to manage. What should you focus on during this process to ensure value? By focusing on communication and collaboration between all affected parties, the following activities need to take place, mostly in parallel with each other.
* Develop model
* Define central business rules and process
* Set targets and high-level objectives
* Create plans
* Check validity of targets and objectives
* Enter bottom-up values
* Modify and adjust
* Review and communicate changes
* Analyse for gap between forecasts and targets
* Close gap
* Review, sign off and communicate
* Report and publish
Identifying value up-front
The planning process should deliver a lower cost of ownership with fast time to benefit. Organisations should constantly strive towards cycle time reduction. If it is easy for all decision-makers to deliver new forecasts based on events, such as a new business opportunity in the market, the organisation can immediately change course of action and ensure the necessary allocation and distribution of resources.
Key success factors for planning
* The process should be simple and easy enough to maintain that all decision-makers can be involved to ensure an accurate and relevant plan. The process should ideally be automated.
* Any and all participants should be able to do gap analysis against targets to ensure there are no missed opportunities.
* There needs to be tight version control to ensure all participants are using the same, consistent information.
* Accurate and reliable forecasts will lead to increased acceptance, risk reduction and better decisions throughout the organisation.
* An efficient process will focus the organisation on the activities that contribute the most to overall value.
* Setting common assumptions for the entire organisation will help ensure consistency of data, but decision-makers should be able to define their own assumptions as different parties in the organisation plan differently. For instance, sales and marketing prepare their detailed information based on different assumptions.
* Whoever manages the process should have working knowledge of their requirements and those of all other participants or decision-makers.
In conclusion, planning does not have to be complex; if managed correctly, it should and can be comprehensive and meaningful to all participants at the level of detail that enables correct decision-making.
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