Collaborative Enterprise Planning: Bringing FP&A Into The 21st Century

Michael Coveney

Part 1 in the 10-part “Collaborative Enterprise Planning” series

Planning and budgeting solutions were among the first end-user computer applications for business. Initially, they were single-user applications that were nothing more than adding machines. But as computing progressed along with the development of Internet-based apps, they became multiuser tools that can be accessed anywhere, on any device, and at a fraction of the cost of those original solutions.

But the strange thing is that many organizations still adopt the same practices enforced by the original planning software that are anything but collaborative. These processes were established in the 1920s when the business world and the state of communication were far different from what it is today.

For most, planning typically starts with a simple supposition about the future that is far removed from the complexity of the real world. Parts of this plan are then communicated by corporate as targets for divisions that are asked to submit their numbers and how they intend to reach them. The medium is usually a simple, standardized template. The numbers are consolidated to reveal income is too low while costs are too high. Corporate then asks users to resubmit their numbers, only to produce the same result. Finally, corporate sets a “top-down” budget, giving departments an excuse to miss the plan.

While this approach may involve interaction, it’s not collaboration.

Is your planning process collaborative?

For financial planning & analysis (FP&A) purposes, collaboration is a two-way process by which senior managers give direction and operational managers provide feedback, often based on past experiences and current forecasts. Working together, both senior and operational managers become a team, developing and monitoring realistic plans to achieve the organization’s long-term objectives.

All these interactions are treated as a single continuous operation that covers the management processes of strategic planning where long-term goals and objectives are set, followed by:

  • Operational planning, where strategy is converted into activities and projects to be implemented
  • Budgeting, where resources are allocated to the operational plans
  • Forecasting, where actual results are predicted
  • Management reporting and analysis, where plans are monitored and adjustments are made

The trouble is that most management processes are supported by separate, discrete applications that simply don’t support collaboration. Collaboration involves numeric and textual data organized into views of the business, along with background information that provides context. That information is brought to the attention of various recipients through tailored reports and dashboards, either in response to a query or as a software-detected exception. Collaboration tools direct the relevant parties to deliver the feedback required, informing them when it is needed and what actions are requested.

It’s something that needs to happen on a continuous basis and not just because of a date on the calendar. Today’s business environment changes too fast to assume that these processes can be left as annual or even quarterly exercises. With the right solutions and the right processes, there is no reason why this can’t take place as the organization evolves toward becoming an intelligent enterprise for finance.

Anything less is not collaborative.

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Michael Coveney

About Michael Coveney

Michael Coveney spent more than 40 years in the software analytic business with a focus on transforming the planning, budgeting, forecasting, and reporting processes. He has considerable experience in the design and implementation of business analytic systems with major organizations throughout the world. He is a gifted conference speaker and author. His latest book "Budgeting, Forecasting and Planning In Uncertain Times" is published by J Wiley. His articles have also appeared on www.fpa-trends.com, encouraging innovation in FP&A departments.