Similar to any journey, the path to financial and operational excellence can often include steep twists and sharp turns. For FP&A teams, this includes navigation through fluctuating customer demands and mounting market volatility. Successful navigation also means that today’s FP&A teams have to anticipate performance gaps and drill down into root causes, collaborate strategically with the business, and execute timely and reliable planning, analysis, and reporting.
One business strategy that can help FP&A teams achieve this is the adoption of an enterprise performance management (EPM) approach. As Anaplan sees it, EPM encompasses both integrated business planning and the larger connected planning enterprise model. It incorporates past, present, and future business elements and drivers for a more holistic method of financial planning.
Along these lines, allow me to introduce you an equation: OC = FE. For each operation cause (OC) there is a corresponding and measurable financial effect (FE). Cause and effect is a universal law; how does your finance and operations platform account for this fundamental principle?
Recently, Tony Levy, Global Head of Finance at Anaplan, hosted an informative webinar featuring guest speaker Paul Hamerman, Vice President and Principal Analyst at Forrester Research, that dived deep into some of the common financial planning hurdles that face teams today and how EPM can help resolve them, as well as five distinct signs of a successful EPM approach.
The common hurdles tackled by implementing an EPM strategy
Organizations have long acknowledged a need for a more adaptive financial planning process. A recent Harvard Business Review survey revealed that 75 percent of organizations need to plan more frequently, and 85 percent responded that they need to plan faster. Yet, of those survey participants, just 5 percent believe their organization is effective at ongoing course corrections.
So, what gives—what is holding finance back?
According to Tony, finance teams still continue to hold on to outdated batch-oriented business processes and legacy tools, which weren’t designed to manage business performance in the face of increasing volatility, uncertainty, and risk.
While spreadsheets are a suitable productivity tool, they simply don’t have the capabilities of enterprise applications, and most notably lack data management, workflow management, and multi-dimensional modeling analysis capabilities. Paul expanded on this even further by calling out some of the specific pain points that an EPM approach can help resolve for an organization, which include:
- Lack of planning accuracy and outcome predictability. Plans are often not agile enough to adapt to changing business conditions. With better analytics insights and modeling techniques provided through technology, organizations can drive more valuable performance outcomes.
- Stale business information. Batch interfaces and a lengthy close-the-books process can result in delayed reporting and analysis. With EPM technology, real-time information is integrated into planning for up-to-date, faster, and reliable business insights.
- Intermittent collaboration. With email and spreadsheets, collaboration can feel like a challenge for developing plans and forecasts. With accessible technology and appropriate workflows, stakeholders are connected with not only one another, but the intel they need to achieve short- and long-term business objectives.
- Lack of strategic focus. With more traditional tools, organizations could fall short on achieving long-term strategic goals. This is because planning and performance measures customarily focused on controlling costs—rather than aligning with strategic growth imperatives.
- Lack of insight into revenue and operations. Numerical reports and presentations can provide murky insight into trends and performance indicators, in addition to difficulty in correlating financial, sales, and operational results. EPM technology eliminates this kind of data density by providing transparent business insights.
5 signs of successful enterprise performance management
Technological advancements in multi-dimensional databases, web-based visualization, and cloud technology have become top of mind for today’s finance leaders. However, how do you know if your organization is leveraging these features effectively? Here are five distinct signs, as highlighted by Paul, that reflect organizations have implemented a successful enterprise performance management approach:
- It’s integrated. Do all areas of the business execute against plans? There is a wide variety of use cases across the enterprise, with opportunities to connect workforce planning, sales compensation, marketing campaigns, project planning, IT costs, and more. This is also an exclusive benefit of adopting a true connected planning platform.
- It’s continuous. Are your financial plans static or living and breathing things that can be refreshed with real-time information? With technology moving to the cloud, we now have better data integration tools. What was historically executed as a batch process is now becoming continuous. This is encouraging organizations to move away from annual budgets to highly iterative processes.
- It’s collaborative. Is real-time information shared across the enterprise? Access to shared technology and data can help eliminate spreadsheet errors and inefficiencies. Moving collaboration within a planning platform also allows users to refine their assumptions and act on outcomes more quickly.
- It’s predictive. Is your team still doing all of the hard work? Traditionally, people performed all of the work manually. However, today, planning and forecasting processes are enhanced with real-time insights and predictive analytics. Progressive technology can do more of the work with its predictive algorithms and simulations—giving teams more time back in the day to focus on value-added work.
- It’s strategic. Can executive stakeholders focus on growth opportunities? For many organizations, there is extreme pressure to deliver results that may be at direct odds with what is needed to improve the customer experience. With EPM and connected planning technology, bottom-up initiatives connect with top-down strategies to ensure business alignment.
The journey to financial transformation can be both exciting and scary—and it often requires organizations to reimagine how they’ve traditionally approached financial planning. By successfully implementing the principles of EPM and adopting modern technology, organizations can begin expanding into connected planning for more refined plans and informed decisions, and driving more effective planning processes across the entire enterprise.
For the full scoop on how advancements in technology is paving the way for EPM, tune into the full on-demand webinar. In search of a quick read? Here are five client testimonials on how Anaplan’s connected planning platform transformed their businesses.
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