Nine steps to improve business planning in a Covid-constant world
Facing the continuous presence of Covid-19 and an ever-changing business environment, organisations are seeking to change the way they undertake strategic planning. Nic Dennis, ANZ Country Manager of BOARD International, shares nine steps how leaders can improve their financial planning in a pandemic-constant world.
Accurate financial planning and analysis is essential for any business – it underpins the business decision making process and supports strategic visions. Unfortunately, the methods traditionally used by businesses are increasingly becoming less effective. These methods struggle to cope with the high number of variables at work in the market, constantly changing conditions, and an inability to clearly see what lies ahead.
To overcome this, businesses must fundamentally change their approach to financial planning and analysis. Rather than leaving it up to the finance department, every part of an organisation must be actively involved in the process.
Key steps to improve financial planning
When you consider organisations that have managed to successfully evolve their financial planning processes and capabilities, it becomes clear there are a series of steps that are followed. The nine key steps include:
1. Start at the top
For long-term, effective planning to be achieved, the direction for change has to come from the top. Senior management needs to be convinced of the benefits that the activity will deliver and communicate these to staff throughout the organisation. Be clear on what can be achieved when effective planning is undertaken and ensure everyone involved understands the difference that their input and efforts will make.
2. Assess your data quality
Planning can only be as accurate as the data used when the process is undertaken. Thoroughly review all data sources and ensure that which is being used is up to date and reflective of current operating conditions and performance.
3. Encourage collaboration
Changing the way financial planning and analysis is undertaken will take time. For this reason, it’s important to stimulate collaboration between everyone involved to ensure progress is maintained. As well as maintaining motivation, this will ensure that any required shifts in direction can be quickly made to keep the change on track.
4. Identify the key drivers
Work with key decision-makers across the business to understand and analyse all key business drivers. It will then be possible to form a strong connection between these and the goals of the organisation. This will also allow a deeper understanding of the financial impact of these drivers.
5. Create a driver-based plan
Once the key drivers are identified, create a firm plan that is based on them. This can be modelled in Excel or other toolsets initially and, once proven, implemented into an integrated planning methodology.
6. Deploy an integrated planning system
To ensure the plan remains on track and can be readily evaluated, adopt an integrated planning platform. This platform will link strategic plans to business and operational planning. Set an objective for these plans to be integrated horizontally, vertically, and cross-organisationally.
7. Automate where possible
A key aim of evolving the approach to financial planning and analysis is to allow an organisation to better respond to changing conditions. To ensure this can happen as quickly as possible, look to automate as many of the manual tasks carried out by the finance team as possible. This will free up the team to focus on more value-adding activities.
8. Undertake scenario planning
The age of uncertain market conditions have highlighted the importance of scenario planning. Move away from a single view of the future found in traditional planning and forecasting methods and use new driver-based models in collaboration with the business and develop multiple views of the future.
9. Focus on decision making
Once the evolution of financial planning and analysis has been completed, turn your attention to the task of decision making. Use the integrated planning system, together with accurate data, to create scenarios and determine the likely impact of a range of different decisions. In this way, better decisions and plans can be made that will have a positive impact on overall operations.
It’s highly likely that this age of uncertainty that exists in the business world will be here for an extended period. By taking steps now to improve the way financial planning is undertaken, organisations will be in a much better position to survive and thrive in the months and years ahead.