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A Game of Plans – Bring on the Finance Dragons

By Pras Chatterjee, Senior Director of Enterprise Performance Management at SAP

As many of us get caught up this summer in the intrigue and suspense created by the characters and story lines of Game of Thrones there are parallels that can be drawn on how annual budgets, forecasts, and plans are also full of intrigue, anticipation, and unexpected findings and results. Just as in Westeros, where different houses strive to control the continent, financial planning at the enterprise level often comes with an interesting story line. While it may not reach the level of deception and intrigue seen on HBO Sunday nights, but there is a lot to be analyzed.

The days of creating an annual plan and then reviewing that plan 12 months later are over. The rate and magnitude of change today continues to increase, and the premium on being able to make better, faster, smarter decisions continues to rise. Similar to the power shifts on Game of Thrones(GoT), there may be major upheavals in your industry, in the economy, or in technology over the course of a year. If you haven’t thought about making adjustments to the changes in your world in real time, you’re at risk of missing major opportunities or warning signs.

Bending the knee to finance

Leading the dynamic planning charge is primarily the responsibility of the financial planning and analysis team, which reports in to the CFO. Their job is to manage everyone through the plans, collect the information at hand, and provide analysis powerful enough to set the direction of the company.However, this process is often disrupted, as most enterprises face departments, geographies, business units, and other groups that are disjointed and operate in silos. What’s key is that finance owns the plan. But as we know, a kingdom is only as strong as those who follow and “bend the knee” to finance.

One challenge enterprises face is integrating their financial plans. Integrated financial planning entails bringing together all elements of the organization as relevant contributors and stakeholders in the plan. Too often, departments work in silos: the marketing team has their budgets and tracks their possible spend; IT tracks equipment purchases and perhaps associated depreciation; sales and operations go through typical S&OP challenges. The office of the CFO needs to bring all these silos of data into one version of the plan that everyone can adhere to and see the big picture.

Even when departments are integrated and working as one, perhaps an even bigger challenge is market volatility. A recent study that looks at challenges faced during the planning, budgeting and forecasting process reveals that today’s changing business world (similar to the changing fates of our favorite GoT characters) was ranked as the number one challenge by a wide margin. Many organizations find that by the time they come up with a plan they are happy with, the plan is no longer feasible due to events that occurred while that plan was being composed. Lucky for the finance kingdom, there are technologies that executives can arm themselves with to help overcome these challenges.

Finance can stand tall – with credibility

To initially address these problems, dynamic planning gives the CFO the tools to bring credibility to the finance organization. The goal of dynamic planning is not just about minimizing the downside; it is also about maximizing the upside. It is difficult, if not impossible, to forecast, predict, or plan for unforeseen opportunities. By breaking your planning process into smaller consumable pieces, you’re better able to seize upon opportunities.For example, instead of estimating what the next 12 months will look like, break your planning process down into four quarters and adjust the plans as each quarter rolls off. Focus on the short-term while actively analyzing the results of your efforts. By monitoring your activities in the short term, you will gain the flexibility to affect change as your surroundings change. The result is greater accuracy, productivity, and profitability.

In addition to building flexibility into their plans, dynamic financial planners utilize advancements in technology – such as Enterprise Performance Management (EPM), Enterprise Resource Planning (ERP), and predictive analytics – to quickly access information and gain a better understanding of the impact of their actions.Through these modern tools, the CFO can stand tall, bringing everyone together by combining all the different budgets and forecasts into a singular set of results. No longer are financial analysts required to sit around and massage data to make it look a certain way. No longer does finance need to send spreadsheets and wait in hopes of correctly populated templates. No longer will finance fear losing credibility through presentations in which the numbers they present differ from some other presentation. No longer will finance report on yesterday’s results and effectively state the obvious.

Today, with the latest in financial technologies powered by dynamic planning, finance can rise and help drive the enterprise to forward. It’s time for finance to roar like the dragons they can be and make a fiscal difference!