>Adapting and Planning Your Way Out of the Recession

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Mark A. Smith in his Information Management Blog titled “Adapting and Planning Your Way Out of the Recession” quotes Yogi Berra’s famous observation: “It’s tough to make predictions, especially about the future,” and points out that the economic events of the past two years  made forecasts obsolete in a very short period of time.

Furthermore, Adaptive Planning’s recent poll of US financial executives is hardly reassuring and confirms the lack of overall lack of enthusiasm over the economic outlook. The poll found that just under half (46%) expect a “W-shaped” (bumping along the bottom) recovery. A pick up in job creation is not in the cards until next year or later, according to 80% of the participants and 41 percent think employment growth won’t begin until the second half or later. 

There are mixed feelings about the business outlook for individual companies – half expect growing revenues but one fourth think they will fall and almost one-third expect to see staff reductions in the second half of the year. The trends in the survey over the past 18 months reflect the mood of the North American economy: things have stopped getting worse but they’re not getting better in any kind of hurry.

The survey also pointed to a key feature driving the North American and European economies:

The survey also pointed to a key feature driving the North American and European economies: uncertainty. I believe It is this lack of faith in the future that is a major factor (along with limited credit availability for small and midsize enterprises) “driving” the sluggish recovery in North America and Europe. It might be tempting to compare this period of uncertainty to the 1930s, except that today’s “great recession” conditions are far, far more benign than those that prevailed in those days (25% unemployment in the US, rapid trade deceleration, political instability on a worldwide scale, and so on).
Planning in a period of uncertainty is more difficult but also more important. Integrated business planning is all the more important at economic inflection points because of its focus on improving coordination between business units in their planning function and rapid replanning cycles. We may indeed be in a “W” shaped recession, so it’s especially important for companies to be able to better anticipate how they will navigate through these ups and downs. More importantly, those better able to get off their marks as the economic climate improves are likely to be more profitable and achieve better market position as the expansion unfolds.
Anyone can plan poorly. Any tool will enable your company to plan poorly. Having the right information technology can make planning a more effective process if it’s used to shorten your planning cycles, enhance forward-looking visibility, promote contingency planning and better coordinate the plans created by individual business units. For years, we’ve demonstrated throughout primary research that (except for companies with 100 or few employees) the use of desktop spreadsheets as the primary planning tool is counterproductive. The tools for improving planning are available and affordable for all companies. The first step in finding the best way out of this recession is replacing desktop spreadsheets in your planning process with a dedicated planning application.

Mark also blogs at VentanaResearch.com/blog.

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>Planning and Budgeting – European Study

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Planning and budgeting are indispensable but also time-consuming. Although companies need to be very flexible in today’s dynamic business world, rigid planning and budgeting processes often inhibit flexibility. The BARC – Business Application Research Center conducted a study on how European companies approach planning and budgeting. The study looks at the planning methods, planning periods, forecast cycles, changes in the planning process, regulatory requirements and planning and budgeting software solutions that companies use. Main findings of BARC study:  Excel is the most commonly used planning tool (82 percent of the companies use Excel for planning purposes). Companies, however, rarely use just a pure Excel-based solution or a specialized planning tool. Most rely on a combination of several different solutions. Companies need an average of 42 work days to conduct planning on each single organizational level (i.e. operative, corporate and / or group). This median rate increases to 55 days in corporations with subsidiaries and drops to a mere 25 days for single companies. This shows that planning and budgeting involve a tremendous amount of time and effort. Companies that use a specialized, central planning tool spend less time on planning (25 percent less than with Excel-based systems) and have higher satisfaction levels. The average number of planning tools used per company is around three. Companies who use four or more planning tools need twice as long per organizational level (60-day average) than companies that use one or two planning tools (30-day average). Despite the increasing requirements on corporate governance, process documentation and risk assessment still play a relatively small role for companies during the planning process. 75 percent of the companies use mixed planning, a combination of a top-down and bottom-up approach. 44 percent of the companies follow “beyond budgeting” principles – mostly, however, in combination with traditional planning methods. Most companies base their planning on historical trends and rolling forecasts – mostly focusing on cash flow planning. Few companies plan more than five years in advance.  – one to two years (67 percent),  – three to five years in advance (52 percent). Planning processes are highly dynamic.  77 percent of the companies modify their plans at least once a year and 36 percent do so every six months. 66 percent of the companies make forecasts every one to three months. Data collecting, processing and analysis comprises a third of the overall planning effort. Full Article   Planning_and_Budgeting_in_European_Companies_final.pdf O2ibm

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>Planning and Budgeting – European Study

>

Planning and budgeting are indispensable but also time-consuming. Although companies need to be very flexible in today’s dynamic business world, rigid planning and budgeting processes often inhibit flexibility. The BARC – Business Application Research Center conducted a study on how European companies approach planning and budgeting. The study looks at the planning methods, planning periods, forecast cycles, changes in the planning process, regulatory requirements and planning and budgeting software solutions that companies use. Main findings of BARC study:  Excel is the most commonly used planning tool (82 percent of the companies use Excel for planning purposes). Companies, however, rarely use just a pure Excel-based solution or a specialized planning tool. Most rely on a combination of several different solutions. Companies need an average of 42 work days to conduct planning on each single organizational level (i.e. operative, corporate and / or group). This median rate increases to 55 days in corporations with subsidiaries and drops to a mere 25 days for single companies. This shows that planning and budgeting involve a tremendous amount of time and effort. Companies that use a specialized, central planning tool spend less time on planning (25 percent less than with Excel-based systems) and have higher satisfaction levels. The average number of planning tools used per company is around three. Companies who use four or more planning tools need twice as long per organizational level (60-day average) than companies that use one or two planning tools (30-day average). Despite the increasing requirements on corporate governance, process documentation and risk assessment still play a relatively small role for companies during the planning process. 75 percent of the companies use mixed planning, a combination of a top-down and bottom-up approach. 44 percent of the companies follow “beyond budgeting” principles – mostly, however, in combination with traditional planning methods. Most companies base their planning on historical trends and rolling forecasts – mostly focusing on cash flow planning. Few companies plan more than five years in advance.  – one to two years (67 percent),  – three to five years in advance (52 percent). Planning processes are highly dynamic.  77 percent of the companies modify their plans at least once a year and 36 percent do so every six months. 66 percent of the companies make forecasts every one to three months. Data collecting, processing and analysis comprises a third of the overall planning effort. Full Article   Planning_and_Budgeting_in_European_Companies_final.pdf O2ibm

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>Planning and Budgeting – European Study

>

Planning and budgeting are indispensable but also time-consuming. Although companies need to be very flexible in today’s dynamic business world, rigid planning and budgeting processes often inhibit flexibility. The BARC – Business Application Research Center conducted a study on how European companies approach planning and budgeting. The study looks at the planning methods, planning periods, forecast cycles, changes in the planning process, regulatory requirements and planning and budgeting software solutions that companies use. Main findings of BARC study:  Excel is the most commonly used planning tool (82 percent of the companies use Excel for planning purposes). Companies, however, rarely use just a pure Excel-based solution or a specialized planning tool. Most rely on a combination of several different solutions. Companies need an average of 42 work days to conduct planning on each single organizational level (i.e. operative, corporate and / or group). This median rate increases to 55 days in corporations with subsidiaries and drops to a mere 25 days for single companies. This shows that planning and budgeting involve a tremendous amount of time and effort. Companies that use a specialized, central planning tool spend less time on planning (25 percent less than with Excel-based systems) and have higher satisfaction levels. The average number of planning tools used per company is around three. Companies who use four or more planning tools need twice as long per organizational level (60-day average) than companies that use one or two planning tools (30-day average). Despite the increasing requirements on corporate governance, process documentation and risk assessment still play a relatively small role for companies during the planning process. 75 percent of the companies use mixed planning, a combination of a top-down and bottom-up approach. 44 percent of the companies follow “beyond budgeting” principles – mostly, however, in combination with traditional planning methods. Most companies base their planning on historical trends and rolling forecasts – mostly focusing on cash flow planning. Few companies plan more than five years in advance.  – one to two years (67 percent),  – three to five years in advance (52 percent). Planning processes are highly dynamic.  77 percent of the companies modify their plans at least once a year and 36 percent do so every six months. 66 percent of the companies make forecasts every one to three months. Data collecting, processing and analysis comprises a third of the overall planning effort. Full Article   Planning_and_Budgeting_in_European_Companies_final.pdf O2ibm

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>Planning and Budgeting – European Study

>

Planning and budgeting are indispensable but also time-consuming. Although companies need to be very flexible in today’s dynamic business world, rigid planning and budgeting processes often inhibit flexibility. The BARC – Business Application Research Center conducted a study on how European companies approach planning and budgeting. The study looks at the planning methods, planning periods, forecast cycles, changes in the planning process, regulatory requirements and planning and budgeting software solutions that companies use. Main findings of BARC study:  Excel is the most commonly used planning tool (82 percent of the companies use Excel for planning purposes). Companies, however, rarely use just a pure Excel-based solution or a specialized planning tool. Most rely on a combination of several different solutions. Companies need an average of 42 work days to conduct planning on each single organizational level (i.e. operative, corporate and / or group). This median rate increases to 55 days in corporations with subsidiaries and drops to a mere 25 days for single companies. This shows that planning and budgeting involve a tremendous amount of time and effort. Companies that use a specialized, central planning tool spend less time on planning (25 percent less than with Excel-based systems) and have higher satisfaction levels. The average number of planning tools used per company is around three. Companies who use four or more planning tools need twice as long per organizational level (60-day average) than companies that use one or two planning tools (30-day average). Despite the increasing requirements on corporate governance, process documentation and risk assessment still play a relatively small role for companies during the planning process. 75 percent of the companies use mixed planning, a combination of a top-down and bottom-up approach. 44 percent of the companies follow “beyond budgeting” principles – mostly, however, in combination with traditional planning methods. Most companies base their planning on historical trends and rolling forecasts – mostly focusing on cash flow planning. Few companies plan more than five years in advance.  – one to two years (67 percent),  – three to five years in advance (52 percent). Planning processes are highly dynamic.  77 percent of the companies modify their plans at least once a year and 36 percent do so every six months. 66 percent of the companies make forecasts every one to three months. Data collecting, processing and analysis comprises a third of the overall planning effort. Full Article   Planning_and_Budgeting_in_European_Companies_final.pdf O2ibm

Visit this Open Forum

ACTIONABLE INSIGHTS >>> KNOWLEDGE YOU CAN TRUST >>> ENJOY IT!