By Ian Preston, Vice President of Sales for UK and Ireland, Adaptive Insights

Perhaps the most famous quote about planning is Benjamin Franklin’s – ‘by failing to prepare, you are preparing to fail’. In business, everyone is acutely aware of the importance of a comprehensive plan. However, as Robert Burn’s wrote – ‘the best laid schemes o’ Mice an’ Men gang aft agley,’ and today businesses need to learn that a static plan is not enough, no matter how comprehensive it is. Plans need to adapt to changing circumstances, and businesses need to adopt technology which allows them to do this.

The spreadsheet was once the pinnacle of financial planning technology. It gave organisations the ability to condense their numbers into a document, which could be updated and changed along with their finances.However, technology has moved on, and today, with all the financial planning software available,traditional spreadsheets aren’t enough for organisations to effectively plan and forecast in an ever-changing environment.Yet, surprisingly, research from the Chartered Institute of Management Consultants (CIMA) has shown that 50 percent of UK organisations still rely entirely on spreadsheets for forecasting and budgeting.

For those that are not using spreadsheets, ERP systems offer an alternative but, while they have more functionality, they are equally as time consuming due to their complexity. Again, they are more suited to the past – left over from a time when they were the only alternative for companies who wanted a more comprehensive financial planning system.

According to the CIMA research, organisations have noticed the failures of their financial planning systems. Nearly half of the respondents (49 percent) said they were dissatisfied with the speed and inaccuracy of current budgeting and forecasting, and 40 percent find it either ‘very difficult’ or ‘not easy at all’ to drill down into data.

These statistics show that UK organisations are being put at serious risk by their outdated legacy planning tools. If companies cannot plan and forecast quickly and accurately, they cannot hope to cope with the inevitable external factors which could make or break a business. If the recession has shown us anything, it is that companies need to be able to readjust to unforeseen changes in the financial environment in order to survive. Equally, as the economy improves, companies need to be able to evaluate different business scenarios and identify the opportunities available. Currently this is simply impossible for companies using legacy systems, where data is too dense and analytics tools too complex to offer meaningful insights.

To improve on this situation, organisations need to have more effective planning, rather than more time spent on planning, a distinction which many miss. Currently, 46 percent of companies are spending three to five days formulating reports, despite it taking only a matter of hours with available cloud-based business analytics solutions. By adopting an automated planning and reporting process, organisations can save their FP&A managers time spent inputting data, which they could use for analysis. It is extremely important that organisations allow their finance departments this change to step up and play a larger role in business operations, as their data could give the company the competitive edge it needs.

Financeprofessionals need the right tools to understand what the data means for the business. For example, what-if scenarios, which model the impact of changing external factors on businesses and extrapolate the consequences in terms of personnel, costs and bottom line profits, should be a staple of any organisation’s financial department. Such tools would allow companies to assess and prepare for a variety of circumstances – forexample new legislation – and therefore prevent changing factors knocking their business off course.

It is extremely important that businesses’ forecasts and predictions reflect accurate numbers. Many companies – particularly those using spreadsheets – sufferfrom poor version control, as many people are working off different numbers with no coherence. Cloud based planning solutions can solve this issue, as it creates a single line document, providing a consolidated view of numbers and therefore showing one version of the truth. With this accurate data in one place, many arms of the business can access it in order to plan for the future.

The question is whether companies will realise their need for more effective financial planning tools. At the moment, we are in the midst of a perfect storm as, despite the high levels of dissatisfaction, only 2 percent of the UK organisations surveyed had adopted a fully automated planning process, showing a clear disconnect between business pain-points and solution adoption.However, it seems that businesses are waking up to their planning predicament, as 81 percent said that they did have an appetite for adopting a cloud based alternative.

In the near future we’re likely to see businesses shake off their outdated legacy systems and begin to develop far more accurate and comprehensive planning abilities. This transition will separate those in control of their budget from those that aren’t; potentially creating competitive advantage and deciding market leaders.