In the Proformative webinar “Innovative Budgeting and Planning” Sarah Bergseth, Barry Broadus, and Carr Phillips talk about the need for businesses to be agile, flexible, and decisive when it comes to budget and financial planning. Sarah Bergseth is the Solution Implementation Partner at NTT Data Inc. Barry Broadus is the CFO at Alion Science and Technology, which serves as a case study for SAP. Carr Phillips is the Industry Marketing Senior Director at SAP. The event was sponsored by SAP.
The Planning and Consolidation Framework
To begin, Carr Phillips provided an overview of the planning and consolidation framework. Many companies already use these steps, but going over them helps ensure that everyone is on the same page. The steps are communication, collection, analysis, and reporting.
The first step in the process is communication. Communication is necessary in order to provide everyone with targets, timelines, and guidelines that are involved in the process. Generally, this information is communicated from the top down.
The second step in the planning and consolidation framework is collection. In this step, your company creates plans and forecasts according to the established corporate guidelines. Your company may plan any number of things, including forecasts, research and development, capital expenditures, staffing needs, operational expenditures, cash-flow, and taxes.
The third step is the analysis stage. In this sage, your finance team consolidates the data and creates multiple scenarios. For example, you may use reconciliation of your bookkeeping records, management consolidations, and legal or statutory consolidations.
Last but not least, your finance analysists will generate and distribute reports. These may include ad-hoc reports, variance analysis, expense analysis, or formal reporting as required for public companies. How the data is presented depends on who the data is for. Internal reporting may be done in the form of charts and graphs, while external reporting will most likely be in the form of financial reports.
Finance Challenges for Businesses
Many businesses are facing challenges in their finance and accounting department. A lot of companies report that their budget cycles are too long. Consequently, they have difficulties in providing the necessary anticipated resources in time. All in all, businesses have a need to improve their planning accuracy while decreasing the associated costs at the same time.
Companies need to be able to react quickly and use financial analysis to model different scenarios and take action. The problem is that many companies use different tools to do their planning and their reporting, which makes it difficult to access the data when it’s needed.
Another challenge that business face is that they tend to collect data in a variety of applications. This makes it difficult to pull all of the information into one source for analysis purposes.
Takeaway for Your Budgeting and Planning Needs
First of all, it’s important to realize that your company has unique needs and requirements. For example, a service firm is very different from an asset-intensive industry in the way they organize their information and operate their business. Therefore, both companies need industry-specific solutions.
Most companies want to use industry-standard dimensions and key performance indicators (KPIs). They also need sample business rules and logic, sample allocations, dynamic reports and input forms that are relevant to their industry.
Second, it’s important for your organization to partner with someone who understands your unique challenges and is willing to support you in the way it serves your company best. Your company should take time to select the right partner to help you with your planning and consolidation goals. Last but not least, it’s important to evaluate your partner with a long-term view in mind.
Budgeting and Planning Framework for Different Industries
When companies use the planning and consolidation framework, there will always be differences in how the information is used. For example, a service business may need to break down the plan by project, service line, or service location.
Basically, companies need to be able to plan and budget for the future, but not just on an enterprise level. Project managers needs to be able to plan projects, resource managers need to ensure that you have enough staff on hand to fulfill your projects, and sales consultants need the right information to get the project started on the right terms.
At the end of the webinar, Barry Broadus detailed the implementation process of BPC for his company, Alion Science and Technology Corporation. BPC is SAP BusinessObjects Planning and Consolidation tool that caters to all types of planning, budgeting, and forecasting.
Alion went from a manual planning and budgeting process to a highly automated, integrated, and dynamic solution. Implementation only took 3 months, with SAP providing the technical assistance to configure the company’s BPC servers.
Alion’s also used the SAP’s BPC application for forecasting. Previously, the company was relying on spreadsheets to fill this role. It only took about 6 weeks to implement the forecasting application.