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Planning Can Be Complex….and Why Not?

In the past, suppliers of planning, budgeting and forecasting (PBF) systems actively discouraged complexity in business applications. That’s because earlier generations of software and systems could not support an enterprise-wide environment. But with increasing computing power, for example, parallel processing, in-memory calculations, highly scalable databases and ever-more sophisticated calculation engines it is now feasible to build and maintain a centralised PBF model for even the most demanding and granular business plans.  And it’s just as well, because times have changed and today’s businesses competing in the digital economy need the ability to handle complexity, diversity and volume without having to worry that their system might run out of ‘steam’.

 

Planning can be complex...and why not? 

Many areas contribute to a new era of complexity but foremost amongst them is the new obsession with customer-centricity i.e. treating every customer as a unique prospect by fine-tuning product offerings (size, shape, colour, delivery timescales, price and rewards etc.) to meet their exact requirements. So in many sectors (banking, insurance, airlines and retail) calculating profitability does not only attach to customer and product groups but can even be unique down to the level of each deal.  More importantly, this complexity at the front-end ripples through to inventory, supply chain and demand planning in addition to revenue forecasts and financial plans.

Overlay this with normal business dimensions such as, geography, responsibility structures and divisional hierarchies and the sheer scale and complexity of business models in the modern era start to become apparent.

Adding to the challenge are multi-dimensional models that can quickly become lopsided, especially when product and customer dimensions extending to many thousands of members are combined with other much smaller dimensions. This can leave a lot of so called “sparsity” (vacant cells) in the business model which in the past caused business models to recalculate and perform slowly, but is no longer an obstacle for modern technology such as Tagetik.

Of course businesses have also had to change the way they are organised to plan for the realities of intense global competition. Businesses that are unable to synchronise financial and operational plans using the latest data for forecasts sales, marketing, financial and supply chain planning are putting themselves at a severe disadvantage. Yet integrated business planning with lots of participants working in a matrixed management structure presents additional levels of complexity and challenge.

Next generation user interfaces help to make applications more accessible and easier to use but vendors at the leading edge of complexity such as Tagetik have taken matters a stage further. Modern solutions such as these provide (i) a robust unified environment capable of supporting high-levels of user-participation across all of the functional areas of the business; (ii) a single business model with consistent data and meta-data (i.e. structural information such as the organisational hierarchy, account structure, time periods) and (iii) an environment that ensures that all participants across the organisation have visibility of the plans supported by collaborative tools such as workflow technology.

In the past organisations tried to keep PBF simple but smart CFOs know that in the future they will need vendors that can make the inevitable complexity look simple.

 

Unified budgeting, planning and forecasting

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