No Cookie-Cutter Approach to Planning & Forecasting

I recently attended an event that had a large number of CFOs in attendance. The event covered a number of different topics that are impacting the office of finance and some key trends.

One of the sessions really stood out for me - tying financial and operational information together for better forecasting. A vendor introduced the topic, specifically regarding how companies should bring their operational information into the vendor’s planning software, where they could then give more insightful and timely analysis for their forecasts. On the surface, it seemed like the right idea; one source for building out holistic plans and forecasts, both short and long term.

Then reality set in as two companies shared their particular planning & forecasting process. The first was a retailer who performs real-time, daily forecasting - making changes and adjusting to each stores’ need. For their business they do not have the time to take data from their data warehouse and port it into another system.  In parallel there is still the need to report to investors, board of directors, annual report, etc, the state of the business, but not enough time for complete detailed forecasting.

The second company then mentioned that they were extreme the other way. They were a pharmaceutical company whose long term plans span 25 years - rather than a day for the retailer! They have a significant period of investment that needs to happen upfront and, when successful, they have 7+ years of ‘reaping of the rewards’ where they have a patented solution on the market. Here they are overlaying the complex needs of the development cycles for each drug to get their long term financial forecast.

The reality is most companies are somewhere in between. Tying together financial and operational plans is a directive for many organizations, and solutions like Tagetik deliver a great deal of value and insight. But the key take away for me was while it is ok to talk in generalities to a broad audience, when the rubber hits the road it is very important to understand your customers and what their specific needs are, and then adapt.

I will be sharing more thoughts in the near future, if interested, stay tuned!

What are your thoughts?  What does your forecasting cycle look like?

 

Tagetik unified Budgeting, Planning and Forecasting

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