NextGen Connected Financial Planning through Cloud-based Platforms

It is often thought that financial planning is a tedious and time-consuming process. This is an outcome of the omnipresent spreadsheet that continues to monopolize planning across functions in a company. In turn, this has led to limited and imperfect silo-based planning and budgeting practices. Technology Planning too had been stagnant for over a decade. The problem is rooted in expensive IT infrastructure including hardware, software, and support. The reliance on IT to upgrade and maintain the infrastructure, data integration and assist with model creation with long implementation and update cycles have contributed to the sluggish development of financial planning, the lack of integration across finance and operations, and sub-optimal analytical capabilities. Due to these limitations, organizations have ended up allocating resources to departments and projects that haven’t been the most profitable with opportunities to generate additional revenue missed.

The next-gen technology of connected financial planning is here

Recent digital disruptions in cloud-based connected planning technologies address the limitations of traditional planning techniques. They cater to evolving customer and market demands, advanced analytical requirements, and an ever-changing regulatory environment.

Cloud-based platforms deliver real-time solutions that businesses can adopt to accurately strategize and optimize planning. Using these solutions, the financial planning function can respond to change quickly while staying aligned across the business and meet organizational objectives. A key outcome of using such a platform is that everyone in an organization gets connected and brought on to the same page to execute corporate planning strategy.

The cloud-based planning technology uses Hyperblock architecture – a hybrid of relational, vertical, and Online Analytical Processing (OLAP) databases – with an in-memory data store and multi-threaded calculation engine to enable real-time planning. In-memory engine enables the creation of detailed planning models that utilize all available data down to the transactional level (product SKU, stores, employees, etc.) for real-time impactful business decisions. Hyperblock connectors constantly monitor the model. When data is entered into the platform, only dependent and precedent cells are calculated. The architecture allows the system to know which downstream blocks will be affected by any change & updates only those specific cells. By tracking dependencies at the level of the line item, Hyperblock technology enables updates or changes to models of any size, from one to one trillion cells, in real-time.

The entire process is made faster along with capabilities such as models for “what-if” scenarios. The “what-if” analysis can be run in real-time by the Financial Planning & Analysis (FP&A) teams to adjust the impact of assumptions and their effects on business outcomes. The solution makes the FP&A team agile, ready to adjust and accommodate shifts in market conditions or customer demands.

With a Connected Financial Planning platform, FP&A teams spend less time on the mechanics of planning (collecting data, maintaining spreadsheets, and developing reports) and more on meaningful analysis and discussions with decision-makers. Strategic plans can flow into the long-term plan which can, in turn, flow into the annual plan, connected across business units, products, and geographies.

Using flexible driver-based planning models all functional areas – of Revenue planning, Production planning, Inventory planning, Procurement planning, Workforce planning, Direct costs planning, Overheads planning, Product costing, P&L planning, Capex planning, Balance sheet, and Cashflow & Consolidation – can be planned seamlessly. The results of one planning process can be automatically connected as input for the next planning process. The system is also scalable to connect other business processes within a single environment. This permits interdepartmental collaboration that sharpens plans and improves execution.Planning does not fit into a one-dimensional description around achieving a certain objective. Hence multi-dimensionality must be factored into plans. The Connected Planning Platform allows users to analyze data from multiple perspectives such as costs by geographic region, product line or sales channel, etc., without relying on time-consuming and complex pivot tables. This gives valuable time back to planners to evaluate data and focus on strategic initiatives.

Diagnostic and predictive analytical capabilities can be enabled as part of the solution to enhance the accuracy of the plan. Linear Programming and Advanced Statistical Modeling can be performed for baselining the forecasts and automated reports generated for analysis.

Data Maintenance is made easy by the solution. Automated data interfaces and standardized workflow-based collaboration make the process less time-consuming. The solution can be integrated across other systems such as CRM and ERP. Models can be maintained centrally and updated as required, using Agile methodology. As the solution offers self-service modeling with interactive dashboards, the planning process becomes smooth and simple.

Business are deriving tremendous benefits by migrating to a Connected Planning Platform

A snapshot of ITC Infotech customers who have implemented the Connected Planning Platform:

• A leading UK-based manufacturer of roofing and waterproofing products has improved forecast accuracy from 60% to 85% and achieved planning cycle time reduction from 4 months to 1 month. They were also able to successfully standardize and consolidate the budget using a global template across 200+ legal entities eliminating manual efforts in data preparation. This was achieved through a customized end-to-end workflow mechanism, especially for inter-company transactions. The company was also able to transition from annual planning to quarterly forecasting.
• A giant, US-based teleshopping and e-commerce retailer improved productivity and efficiency through end-to-end financial planning automation. For retailers dealing in multiple product lines, there are various crucial decisions around adding or subtracting lines, pricing, and structuring sales commissions. Under these circumstances, the Contribution Margin becomes a key determinant in decision making. The client successfully eliminated all issues and improved the contribution margin forecast.
• A leading UK-based beverage manufacturer has improved sales forecast by 30% and reduced S&OP planning cycle time by 60%.

Connected planning is the way forward. It can transform how companies operate by increasing productivity and breaking down siloed decision-making. It can enable companies to be sufficiently agile to deal with changes, respond quickly to disruption, propel business forward, and outmaneuver competitors.

About the author:

Abhiram Shankara
Lead Consultant, DATA

Shreya Mukherjee
Associate IT Consultant, DATA