In part two of our series of the Four Must-Haves for financial planning, we are putting the spotlight on process improvement. This can be paralyzing for some, but through careful reflection and understanding of your objectives in improving financial planning/forecasting, decisions made early on where to focus can make your process easier.
#2 – Decide up-front where to focus process improvements
Consider asking your team the following set of questions. Are we trying to better align our initiative to the organizations’ strategic goals and themes? Are we shifting funding and resources appropriately to better align to our strategy? Are we supporting business unit and department planning utilizing driver based planning? Are we able to focus attention on the key things that impact revenue or cost outcomes, do we even know what those things are, and can we consider them leading indicators?
You may want to consider making the decision to prioritize variance reporting and analytics. Do you have a solid view of how you are performing against your budget and forecast? Are you able to drill down to determine what the root cause of your variance issues are? It has been our experience that successful companies place great importance on the corporate roll-up of plans and what-if scenarios. It is no easy task, but if done successfully, the ability to roll up multiple departments and create multiple iterations will greatly benefit your organization.
Finally, if you are planning a team session to determine where you should focus your process improvements, consider utilizing the following questions, drafted to consider relevance across business units, geographies, and reporting structures.
- What is the organizational scope of your planning initiative?
- What is the financial scope of planning (P&L, BS, Cash)?
- What key business drivers are in scope (e.g., headcount, materials, projects, capital expenditures)? These drivers should be aligned with business strategy and will become leading indicators to business performance.
- What planning cycles need to be supported (e.g., Budget, Forecast, Strategic planning)? What is the frequency of each of these?
- Who are the key stakeholders? Are they aligned on the vision and objectives of this program? How well do Finance, IT, and business work together?
- What are the data sources for planning and budgeting (usually actual financials and drivers)? How available and accurate is the data?
There you have it, the keys to a successful process improvement initiative. Next, we’ll address technology solutions and how they too can aide your financial planning initiatives.
Other Posts in this series: