Budget & Forecast
Fast-changing business conditions call for agile planning, budgeting and forecasting. Aberdeen researched why best-in-class companies are better at forecasting, collaborating, reducing budget cycle times and analyzing and reporting on planning, budgeting and forecast data.
Economic uncertainty makes it difficult to set clear goals and objectives and sustain a financial plan which supports them. Organizations must become more agile with their planning, budgeting and forecasting capabilities -- now more critical than ever for success and survival during volatile economic times. The more dynamic forecast becomes a much more critical component.
Aberdeen identified what makes best-in-class companies better:
Economic uncertainty makes it difficult to set clear goals and objectives and sustain a financial plan which supports them. Organizations must become more agile with their planning, budgeting and forecasting capabilities -- now more critical than ever for success and survival during volatile economic times. The more dynamic forecast becomes a much more critical component.
Aberdeen identified what makes best-in-class companies better:
- The top-most Best-in-Class process capability is the ability to re-forecast the business as conditions change. Best-in-Class companies are 36% more likely to have developed this capability, either through internal process improvements, technology, or both. In addition to re-forecast capability, Best-in-Class companies are also more apt to incorporate business drivers into their ongoing forecasting process.
- The planning, budgeting and forecasting process cannot be successful if it is conducted in a vacuum or without the proper level of collaboration from internal stakeholders. Best-in-Class companies are more likely to prioritize collaboration from all three directions during the planning and budgeting process: top-down, bottom-up and a combined top-down-bottom-up approach. Best-in-Class companies are more likely to allow a combined approach and therefore are also more likely to incorporate a formal collaboration capability whether the budgets and related documents are being reviewed from the top-down or from the bottom-up.
- The cycle time from initial draft to final approved budget and forecast is important. By eliminating manual steps and automating the data gathering process itself, results are significantly enhanced. This also creates the opportunity to involve more decision-makers from various areas of the business, whether defined by job role or level within the organization. Highly advanced organizations will also automate the triggers that alert planning, budgeting and forecasting stakeholders to changes and process exceptions that need to be addressed.
- Another technological edge among Best-in-Class companies involves the ability to perform in-depth analysis and reporting on planning, budgeting and forecast data. The granularity of the analysis and reporting directly impacts the depth of understanding of the data and the quality of planning and budgeting decisions that result. Multi-dimensional reporting, with the ability to perform roll-ups (at any level), helps organizations view performance from many perspectives and permutations, and instantly roll up the new perspective in order to see a consolidated result. Once roll-ups and summaries are delivered, Best-in-Class companies are more likely to be able to drill down to successively detailed and granular levels of the data. This allows for enhanced analysis and rapid understanding of the effects of decisions made at the summary level on individual departments or line items within a budget or forecast. This is critical to the ability to improve cycle times and accuracy while quickly responding to changing conditions and understanding how changes affect the lowest levels of the organization.
- Best-in-Class companies are less likely to use spreadsheets in almost every aspect of planning, budgeting and forecasting than their Industry Average. They are far less likely to export data into manually shared spreadsheets at the initiation of a planning/budgeting/forecasting project, and are also less likely to use spreadsheets as the input mechanism for the first and possibly subsequent iterations of the overall process.
- Finally, Best-in-Class companies are achieving far greater performance when it comes to providing access and visibility to process stakeholders. Best-in-Class companies have improved visibility (and therefore participation) by more than three times the rate of Laggard companies, and 50% greater than Industry Average companies.
