Yet historically, many organizations have built up their plans along functional silos – simply because that is the way that people are usually organized: according to their skill set, such as sales, accounting, engineering, marketing, and so on.
But business processes do not respect functional boundaries. Take, for example, the “quote-to-cash” cycle. It embraces inventory management, the sales department, logistics, and finance functions. The true costs of sourcing a product, delivering it to a customer, and getting paid are driven by the process – not by functions. This means that plans in one area need to be consistent with plans in another if resources are to be allocated efficiently, and setting a performance objective in one place does not have unforeseen consequences in another.
The trouble is that when organizations plan in functional silos, it creates differences and distrust, which ultimately erode stakeholder buy-in and confidence in the integrity of the plans and results.
The obvious question is: How can organizations establish an approach that more effectively connects people to the process and to each other?
Crucially, modern collaborative enterprise planning recognizes the pivotal importance of interrelationships between different business functions. It uses collaborative technologies such as workflow and social tools to help encourage dialogue between all functional areas involved in the setting of an enterprise-wide plan.
Social tools that allow collaboration-in-the moment are gaining ground. Chat functionality, combined with screen sharing and “presence checking” (which shows whether a colleague is available or not), allows colleagues to reach within and beyond their part of the process to engage with other personnel involved, to share and resolve issues in real time. The advantage of such capabilities is that compared to email, telephone calls, and walking the corridors, budget participants never have to leave their planning application to engage. And in many systems, the chat forms a permanent record and audit trail of what was agreed upon.
But collaborative enterprise planning on its own is not sufficient to drive agile decision-making. FSN’s research reveals that even though 70% of planning, budgeting, and forecasting processes are respected, inclusive, and strategically aligned, only 40% are insightful – that is, revealing unexpected insights and pathways to better performance.
For this, organizations need more advanced analytical tools, data visualization, charting, and increasingly, and emerging technologies such as machine learning and artificial intelligence. The latter is already making an impact in terms of the speed with which the results and insights can be generated. FSN finds that around 14% of organizations with more than 10,000 employees are already deploying AI and machine learning in their forecasting process.
Smart CFOs know that collaborative enterprise planning promotes agility and smarter decision-making by explicitly making the link between operational business drivers and business performance. Synchronizing financial and operational plans using the latest data for forecasts sales, marketing, financial, and supply chain planning improves confidence in revenue forecasts and closes the gap between planned outcomes and operational reality.
But crucially, keeping all functions on the same page – by collaborating – helps ensure that decision-making is strategically aligned, that forecasts are made with greater accuracy, and that organizations can drive superior returns by responding faster to market changes.
This article originally appeared in FSN and is republished by permission.