When it comes to planning your future, the biggest mistake you can make is to think small, to limit your vision. Thinking small means thinking tactically rather than strategically, which is risky. Tactical thinking tends to restrict your focus to simple historical financial reporting, static budgeting, and limited collaboration in planning and analysis, which typically limits your ability to create a planning environment that allows you to identify opportunities as they arise. You risk planning for the future by looking backward. You constrain potential.
It happens more often than you think, though I understand why.
When you are looking to transform how you manage your business, it is natural to focus on your most immediate points of pain. You want to relieve pain in one or more areas of your business, and you need a solution capable of doing that.
Certainly, those immediate needs must be met. But by focusing on immediate pain points, you risk overlooking broader transformations that could have a far greater—and far more strategic—impact on your business.
We have seen this happen hundreds of times. A common scenario is one where a finance or operations executive wants to build a model for managing expenses. Building that model consumes the lion’s share of the executive’s attention and energy because it is not a trivial project. Improving expense management—using historical data, department-level detail, driver-based account planning, and analytics to visualize metrics like cost per employee and spend by region—can lead to significant boosts in the operating profit margin of a business. So getting it right is essential.
But that expense model should be a starting point, not a destination. Too often executives fail to step back to take a big picture, strategic view of the planning, reporting, and analysis process. Stepping back with a strategic view can help you see that you can do much more to take advantage of opportunities as they arise, to foster collaborative decision making among the entire management team, to focus decisions on fact-based financial and operational metrics and KPIs, to iterate on plans as your organization or market changes, and to integrate data from around the organization beyond your GL or ERP system into a single, actionable view of the organization’s performance.
Not just an implementation, but a journey
Taking a broader view is recognizing that planning itself has become a strategic advantage for businesses. In fact, time and again, the experience of our customers shows that organizations can transform the way they manage their business. But it takes looking beyond that initial project—seeing what planning and analysis means to the organization as a whole—and laying out a way forward that helps you optimize outcomes companywide.
Some might call this way forward a roadmap. We call it a journey—the Adaptive Insights Journey. The Adaptive Insights Journey is designed to help customers and prospects understand the depth and breadth of planning and analysis in a more strategic light and help them to achieve a true active planning environment.
Working with thousands of organizations helped us to formulate a planning and analysis framework that can be used by virtually any organization. We believe every planning journey consists of five core components:
- Process: The starting point for any journey is to identify the planning, reporting, and analysis processes you intend to implement within your organization. This goes beyond simple budgeting and financial reporting. Strategic leaders are incorporating processes like periodic forecasting, scenario analysis, operational reporting, board reporting, and long-range planning into their planning journey.
- People: We believe that in business, everybody plans. So it is important that you account for every person participating in the processes you have identified. This includes people internal to the organization as well as those outside of it, such as board members, investors, or regulators. This also includes identifying the ways in which each of these people participate in the process, such as directly contributing planning data or simply consuming reports and analysis.
- Model: The model component represents the analytical core of your processes, specifically identifying the forward-looking models and backward-looking analytics that are required to support the business outcomes you hope to achieve with the processes identified above. This often starts with the core expense, workforce, and revenue planning required to create an income statement. Models then typically evolve to include more operational drivers and KPIs, and expand to include cash flow and balance sheets details.
- Data: You will need to identify the source systems and data required to provide historical/transactional data that will support the models and analytics driving your processes. Not surprisingly, organizations generally start by integrating their ERP system with their planning environment, but strategic thinkers move on to CRM data, human capital management (HCM) data, and other operational data.
- Time: Finally, any plan that you create needs a timeline to provide some structure and measurement of progress. In the journey, we like to structure timelines as phases to be accomplished in broad buckets of future quarters —think of them as goals more than schedules. This helps avoid the kind of aimlessness that threatens adoption and erodes ROI. (Realize, though, that your journey is never really done, because your business will evolve as will the nature of business planning itself. And the best planning platforms will make that evolution easy.)
The right framework gives you room to think big
Without a long-term plan for planning, reporting and analysis, too many organizations stop short of a collaborative, comprehensive, and continuous planning process and risk overlooking major aspects of these critical elements. We developed our journey framework specifically to help organizations identify, evaluate, and plan their own organization-wide business planning journey.
To share this framework, we created a website that allows anyone to create an Adaptive Insights Journey Plan that helps transformation owners explore all the elements that make for a successful, fruitful journey. They can then use the Journey Plan to communicate to executives and stakeholders where they are, what’s next, benefits to be achieved, and roles and responsibilities associated with the journey.
Hundreds of our customers have developed their own Journey Plan and are continuing their business planning transformation to make planning and analysis a strategic asset. As you consider your own planning and analysis activities, ask yourself this question: Are you thinking tactically or strategically?