In my previous blog I discussed the four critical components needed to develop effective business forecasting and planning. When it comes to these components, and how effectively organisations are using these, I have seen three consistent scenarios within organisations, namely:
1. The Ivory Tower
This is where there’s a lot of modelling and a highly responsive finance team that can quickly create forecasts and perform analysis. There’s some rationale there, but the emphasis is on speed and efficiency rather than effectiveness. Participation is low, with few business units being involved in the process. It’s essentially an ivory tower because it’s all done in isolation from other parts of the business. As such, plans and forecasts do not give proper consideration to the true circumstances of the organisation.
In an ivory tower scenario, senior management lacks confidence in the forecasts and plans, a situation that’s often compounded by the limitations of the technology being used. Commonly there’s an over-reliance on spreadsheets, with the shortcoming being that there is a lack of rationale for the approach being undertaken and an inability to incorporate data from ERP and other business management systems. While many organisations would like to move away from an ivory tower approach, it’s the constraints of their technology that’s holding them back.
2. The Bolted Horse
In a bolted horse scenario participation is high and a sound rationale for the desired approach has been established. However it all falls down due to the limitations of the organisation’s technology. For such a business an over-reliance on spreadsheets makes the whole process way too slow. Planning and forecasting exercises typically takes several months, so there is poor efficiency, low effectiveness and, as such, a high degree of risk.
3. The Illusion
The illusion is an awkward situation for any organisation because in this scenario the confidence of key stakeholders, the speed of response and the degree of participation are all high, however the rationale is weak. No business modelling has been done, so there is no solid basis on which planning and forecasting can produce reliable results. Typically the process is carried out from a financial perspective only, it’s all quite detached from the wider business. In this scenario risk levels are also high.
Where is your organisation placed?
I suggest that it can be quite useful to consider where your organisation is placed right now in terms of speed, basis, participation and confidence. By identifying where you are you can begin to make solid plans for improvement.
In doing so, it would be instructive to consider the role that technology can play in achieving improvements. With the right business management systems in place, you can accelerate planning and reporting (speed), provide useful analyses and decision support for key stakeholders (confidence), create meaningful business models that draw on a range of valuable sources (basis) and offer self-service analysis and reporting to key personnel (participation).
When you are freed from the constraints of weak and outdated technology, your ability to meet the future head‑on will be greatly enhanced. Are you prepared for the possibilities the future might have in store for you?
In the meantime, why not download our matrix and see where your organisation sits. Don’t want to be in an ivory tower, riding a bolted horse or in an illusion? Contact Professional Advantage to improve your forecasting and planning.
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