If you are an FP&A professional whose company plans on a calendar basis, memories of burning the midnight oil to complete the annual budget are likely still fresh in your mind.
You may dread planning season, and so does everyone who has to fill in the budget templates. Although annual enterprise planning and budgeting is a company-wide process, it is FP&A that typically owns the bulk of this much-maligned process. So if you don’t want to work the same long hours and experience the same frustration of working with clunky tools, standalone spreadsheets or legacy planning solutions, now is the time to do something about it. Below are 4 good reasons for making this the last year you endure this level of stress:
- Finance needs to improve its own productivity
- Planners need to collaborate more
- Planning goes beyond line item expenses
- Planning and budgeting need to be continuous—especially for FP&A
Like most other lines of business, Finance is under pressure to improve its productivity. Finance must balance the need between driving down costs and freeing up time to become involved in more value-added activities, such as providing decision-making support for those in commercial and operations roles in the organization. This is not going to happen without moving to a more modern planning tool that allows you to easily integrate large volumes of data from disparate systems, as well as quickly manipulate data to keep in step with constantly changing organizational structures and business priorities—all while rapidly consolidating it across different dimensions.
One of the reasons why budgets tend to go through so many iterations is because spreadsheets and legacy systems do not facilitate collaboration. This leaves planners working in silos, resulting in misaligned departmental plans and consolidated, bottom-up plans that rarely match top-down expectations the first time around. The only way to break this pointless cycle is to deploy a planning platform that allows business functions to share information across departments and hierarchies so plans and assumptions can change in real time.
Many of the problems endemic in the annual budgeting process are due to operational planning and financial budgeting being disconnected. In such situations, sales and operations planning is typically done by modeling in a different tool and outputs, such as line item expenses, are simply copied and pasted into a budget template in another system altogether. Despite all the effort invested in the annual budgeting process, budgets will always become out of step with what is actually happening in the business as long as this disconnect persists—and doing a reforecast will be nearly as onerous as doing the annual budget.
There is increasing recognition that adopting a driver-based methodology overcomes this disconnect and turns planning, budgeting, and reforecasting into rapid, light-touch processes. This allows enterprises to keep in step with changes going on around them and to reforecast more frequently so they have better visibility into their future financial performance. Adopting such a driver-based approach also relieves potentially hundreds of planners from building and maintaining the spreadsheets used for departmental planning—giving you immediate access to the type of data that is essential for the FP&A team’s future as a partner to the business.