Part 6 in the Dynamic Planning Series
Planning is an integral part of enterprise performance management (EPM). Gartner defines EPM as “the process of monitoring performance across the enterprise with the goal of improving business performance.” Dynamic planning then aligns seamlessly into the overall EPM structure of the organization.
EPM is also known as BPM (business), CPM (corporate), and FPM (financial) performance management, but whatever the label, the philosophy is the same.
The recent Aberdeen Group report, “Dynamic Planning: Live in the Moment to Succeed in the Future,” nicely highlights the benefits to organizations that adopt a dynamic planning philosophy. In a world where the rate and magnitude of change continue to increase, there is no reason to expect this acceleration will slow down.
Organizations need to adapt to the reality that planning can no longer be an annual process. The ability to ascertain the status of the organization in real time with real-time data, will separate the winners from the losers, the leaders from the followers, and those that thrive versus those that merely survive.
From the Aberdeen piece: “Successful businesses understand that accuracy in planning is the foundation for smart and confident decisions in support of the business.” Business leaders understand that volatility and poor collaboration are among the top challenges to accurate planning.
Knocking down barriers
Interestingly, as stated in an earlier piece in this series, Aberdeen highlighted that delays in making critical decisions could be related to the disconnect between a company’s enterprise resource planning (ERP) software from its planning and analytics applications. It leads to an inability to make decisions based on real-time data, buttressing the idea of “one unique financial system”—having your ERP and dynamic planning software on one platform.
Aberdeen finds that leaders are 24% more likely to utilize dynamic planning than followers and 61% of leaders are more likely to utilize EPM tools. Further, combining these tools with an ERP helps to create an integrated single source of the truth for decision-makers to leverage when creating plans and strategy.
Again, the benefits to knocking down the barriers between your ERP and your planning tool can significantly improve the speed at which the organization is able to execute decisions.
The Aberdeen piece goes on to note that 85% of organizations that embrace dynamic planning are more likely to possess tools to facilitate planning, budgeting, and forecasting. Of even greater note, 46% of dynamic planners are more likely to have predictive analytics. All of this points to the likelihood of more accurate forecasts to inform decisions and improve confidence.
The importance of data quality cannot be overstated. Dynamic planners are twice as likely to have a central repository of performance data and five times as likely to ensure that the data is updated in real time. The only way to be able to make real-time decisions is if the data is available in real time.
The benefits of dynamic planning and its positive impact on EPM are hard to miss as we look at the future of technology in the business world. Dynamic planners are 3.7 times more likely to have the ability to perform “what-if” scenario analysis.
Thinking holistically about collaboration
It’s an important component in the success of the organization’s EPM, and in its ability to truly embrace integrated thinking. It is this holistic approach that allows the organizations to cut across technology silos as well as departmental silos to reinforce the concept of team, both vertically and horizontally across the entire organization.
All of this flows nicely into the three C’s of success formula: capacity, capability, and collaboration. By leveraging technology, organizations are able to build capacity. By bringing in the talent to utilize these new tools, they build the capability. And by having the capacity and capability, finance professionals are able to collaborate with their business partners, to assist them in running their businesses and departments more efficiently and effectively.
At the end of the day, the purpose of dynamic planning, EPM, predictive analytics, and other tools is to help the company make smarter decisions faster in this fast-moving and unpredictable world.
To learn more about dynamic planning, read the whitepaper here.
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