Financial Consolidation with Anaplan: Modeling flexibility and calculation speed drive forecasting and simulation
Financial consolidation is often perceived as backward looking. One of its main goals is to deliver financial statements, which in essence provide a representation of the past. There are many forward-looking activities also requiring consolidation, including:
- Plan, budget and forecast consolidation
- Impact of FX evolutions on consolidated results
- M&A simulations
This is a limited list of course, but it demonstrates the point that consolidation is not just about looking in the rearview mirror. Future, forward-looking numbers are often of the highest interest to a company’s management team, which means they need to be delivered fast and accurately.
Here are some of the key requirements for a consolidation tool to be great at forecasting and simulations:
- Integration with planning system
- Actuals are usually downloaded from your GL or ERP, so you don’t need to bother about actually building these numbers. You just get them. When it comes to consolidating a plan, or a forecast, you first need a true planning and modeling system to generate the right data. Most consolidation tools today do not have this capability or lack the flexibility to be really effective at planning. This means another specialized tool has to be used and connected—increasing the overall total cost of ownership (TCO) and resulting in a disconnected process.
- Agile modeling
- What if a new company is acquired? A new management structure is set up? Flexibility in the management of dimensions is a must-have, as well as the ability to secure dimension members so that visibility is limited to the right collaborators.
- You certainly don’t want to wait to get your results. Planning is an iterative process, so calculation speed is even more critical than for actuals.
How is Anaplan different… and why does it matter?
Key to our platform is the in-memory database: our patented Hyperblock™ technology. It’s a blazing fast, in-memory modeling and calculation engine that was purpose-built to manage and blend transactional data and highly multi-dimensional models. We then gave it a spreadsheet-like interface so that the business users themselves can build and maintain their own models and run immediate calculations and what-ifs.
Hyperblock combines flexibility with speed so that any dimension can be changed in real-time (provided you’ve the right to do so, of course). This means that adding a new company to perform a simulation can be done directly from the entry screen. No need to go to some back office admin screen. This also applies to all other dimensions, such as product or customers, with easy rearranging of a dimension when and if needed.
In addition, all model or data changes can be roll backed, so if you’re not happy with your simulation, you can revert your changes and easily get back to the previous state.
Hyperblock is also the secret sauce behind Anaplan’s speed. Only items that are impacted by a change are recalculated. So instead of re-calculating millions of values, only a few of them are actually changed. This makes a huge difference in terms of performance.
Modeling flexibility and calculation speed are Anaplan’s biggest advantages, and fully deliver on the simulation requirements we’ve discussed. With Anaplan, you can build a truly integrated solution, starting from operational plans, then deriving financial plans from them, and getting a consolidated view of your forecast at lighting speed.
For more on how Anaplan’s Financial Consolidation application radically simplifies and accelerates the overall consolidation experience, be sure to read my previous posts in this series: