Trying to make sense of this glut of complex data is the least of their problems, though – what about all of the painful processes that lead up to that point?
Processes like data acquisition, validation, number crunching and reporting can cause major headaches during the planning process and create a significant drain on valuable resources.
Managing these different processes can be even more challenging when you consider the multiple data sources and countless structural and numerical changes that occur during the planning lifecycle.
For modern firms looking to gain a competitive edge in the market, this can be a serious problem. This high level of complexity not only increases process risk, but also makes it very difficult to track manual changes and compare and merge different versions of the same plan.
However, there is a silver lining to all this: strengthening these processes will not only reduce the risk and inconsistencies caused by an over-reliance on spreadsheets, but will also promote better communication across the businesses, as plans can be automatically merged.
But how should organisations begin? First, they’ll need to completely re-think how they are analysing, managing and presenting their financial data. By moving away from time-consuming, error-prone spreadsheets and embracing sophisticated data analytics instead, smart businesses will be able to cut costs, increase efficiency and gain access to the best business insight possible.
Trying to manage massive volumes of data – across multiple diverse systems – is never a good idea, and that is especially true when it comes to financial planning. Organisations need to free themselves from this modern day spaghetti junction by bringing their various data sets together in a logical and integrated way. With this approach, a robust financial plan can often be computed within a single process.
Look at an area like income and expense planning, for example. If firms are willing to ditch the spreadsheets and take a single view of this data instead, they will be free to focus their resources on high-level strategic analysis, rather than forming a plan that is based on outdated and inaccurate data.
This more integrated approach to data management will also allow firms to identify any bottlenecks within the business much more quickly and – more importantly – address them to improve productivity.
Having a clear understanding of key performance indicators (KPIs) is an important part of financial planning – but many systems oversimplify these metrics. So what happens? The flexibility of an organisation’s data – and its ability to provide meaningful insight that can be used for planning – is dramatically reduced.
In order to get the most out of KPIs, organisations need to choose a system that can analyse many different kinds of data, with a variety of attributes, collected from a number of diverse systems. This is how to get the greatest value out of KPIs.
With this approach, not only can organisations analyse their current performance more effectively, but historical trends can also be picked out very easily. This powerful combination will help to ensure that future projections are much more accurate.
Putting data to work
Having the ability to obtain business insight through data analysis is all fine and good – but what then? Applying this insight to day-to-day business processes is fundamental to the success of an organisation’s financial planning – but they need to know where to start.
First, the speed with which different parts of a financial plan can be created and analysed is vital, as businesses obviously need to have this information to hand before they can act on it.
However, businesses also need to be flexible in terms of how they interrogate their data – and how they apply the insights they’ve gained – in order to derive the greatest value from it.
But that’s only half the story. By escaping the shackles of the spreadsheet and taking a more strategic approach to financial planning, businesses will finally be able to apply some critical thought to what all these numbers actually mean.
Organisations that adopt this approach to their planning process will therefore be on the road towards cutting costs and increasing efficiency – and gaining a better view of their business as a whole.
Robert Gothan, CEO and founder, Accountagility