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WHAT SETS THE BEST-IN-CLASS APART?5 BEST PRACTICES IN PLANNING AND FORECASTING
 

WHAT SETS THE BEST-IN-CLASS APART? 5 BEST PRACTICES IN PLANNING AND FORECASTING

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    WHAT SETS THE BEST-IN-CLASS APART?5 BEST PRACTICES IN PLANNING AND FORECASTING WHAT SETS THE BEST-IN-CLASS APART? 5 BEST PRACTICES IN PLANNING AND FORECASTING Presentation Transcript

    • WHAT SETS THE BEST-IN-CLASS APART?5 BEST PRACTICES IN PLANNINGAND FORECASTING
    • Aberdeen’s Research o Aberdeen PACE ModelMethodology  Pressures  Actions  Capabilities Financial Planning, Budgeting, and Forecasting  Enablers Will the Economy Emerge? Will You? o Strategies and Tactics Planning, budgeting and forecasting lay the KPIs – Usage and Specifics foundation for any effective business plan, but economic uncertainty can make it difficult to set clear goals and objectives. During volatile economic times, this is more o critical than ever for success and survival. Follow-up Surveys Are you able to adapt financial plans and budgets as conditions change? Are your finances accurate? o Each respondent who answers the survey will receive a complimentary full copy of the report containing this studys results (a $399 value). Individual responses will be kept strictly confidential and data will only be used in aggregate. interviews 2
    • Top Pressures Year over Year Market volatility creates the need to 47% 39% dynamically account for change (agility) 37% Need to better align Planning / 41% Budgeting with corporate goals 29% 34% 2010 Corporate mandates for cost control 32% 2009 34% 2008 Current / past accuracy of the budget 22% 25%negatively impacts corporate performance 42% Current processes are too long & 21% 24% resource intensive 34% 0% 10% 20% 30% 40% 50% Percentage of Respondents 3
    • Best-in-Class Criteria Definition of Mean Class Performance Maturity Class Best-in-Class:  102% overall budget accuracy* Top 20%  99% forecast accuracy of aggregate  20% improvement in profitability year over year performance scorers  66% “always” finalize budget prior to the next fiscal year Industry Average:  92% overall budget accuracy* Middle 50%  89% forecast accuracy of aggregate  6% improvement in profitability year over year performance scorers  37% “always” finalize budget prior to the next fiscal year Laggard:  66% overall budget accuracy* Bottom 30%  73% forecast accuracy of aggregate  8% decline in profitability year over year performance scorers  27% “always” finalize budget prior to the next fiscal year*Ratio of actual to budget 4
    • How Do Companies Approach Financial Budgeting? Best-in-Class Industry Average Laggard 80% 71% Percent of Respondents n=171 70% 60% 50% 50% 44% 40% 30% 26% 22% 20% 14% 10% 0% Strategy drives budget Budget drives strategy For top performing companies, strategy drives budget 5
    • Strategic Actions of Best-in-Class – Planning for the Year 2010 2009 Develop a formal planning / budgeting / 47% forecasting workflow process 40% Automate the process flows associated 41% with the budget process 20% Involve more decision-makers in the 38% planning / budgeting / forecasting process 40% 19% Improve data quality 52% Develop a consolidated view of the process 19% and the results, to be available on demand 28% 0% 10% 20% 30% 40% 50% 60% Percentage of Respondents 6
    • Re-forecast Frequency Current Frequency Desired Frequency 45% 40% 40% Percentage of Respondents, n = 171 35% 32% 30% 25% 26% 21% 20% 18% 17% 15% 13% 10% 9% 5% 5% 4% 2% 1% 1% 1% 2% 0% 0% Never On Daily Weekly Monthly Quarterly Semi- Annually Demand Annually 7
    • What Budgeting Methodology are Companies Using? Best-in-Class Industry Average Laggard Percentage of Respondents, n = 171 75% 59%63% 50% 38% 28% 22% 20%22% 25% 14% 13% 6% 7% 8% 0% Budgets prepared Zero-based Performance Based Driver-based based on historical budgeting (start Budgeting (PBB) budgets (for data (Previous with a clean slate / (Result oriented example: net new Year’s Actuals) no historical data) planning and customers drives budgeting) customer service budget) Laggard companies are predominantly focused on historical data only 8
    • Enhanced Collaboration in Financial Planning,Budgeting, and Forecasting ProcessPercentage of Respondents, n = 171 Best-in-Class Industry Average Laggard 75% 50% 48% 50% 39% 34% 35% 22% 25% 25% 14% 18% 0% Bottom-up Top-Down Combination Top-down, Bottom-up Leading companies use a combination of top-down and bottom-up approach 9
    • Dynamic Planning Capabilities Best-in-Class Industry Average Laggard Percentage of Respondents, n = 171 80% 66% 59% 61% 60% 52% 38% 40% 40% 32% 27% 20% 20% 0% Ability to reforecast Ability to perform Ability to incorporate as market conditions “what if” scenarios business drivers into change and change analysis the on-going forecasting process 10
    • Ability to Conduct “What if” Scenario Analysiswith Forecasting / Re-forecasting… 100% Yes , but selectively because it’s entirely manual Yes, some portion of the 75% process is automated 30% Yes , it’s automated 50% 41% 33% 45% 25% 22% 20% 9% 14% 0% Best-in-Class Industry Average LaggardMore Best-in-Class companies have fully automated or semi-automated “what if” scenario analysis capability with forecasts / re-forecasts 11
    • Visibility Leads to Alignment of Goals Best-In-Class Industry Average Laggard Percent of Respondents n=171 80% 68% 58% 60% 45% 45% 38% 40% 30% 33% 22% 20% 14% 0% Ability to integrate and Able to drill down to Able to perform multi- align sales forecasts with successive levels of detail dimensional reporting with overall business revenue from summaries roll-ups and cost forecasts 12
    • Specialty Applications - Technologies Supporting theProcess Financial reporting and consolidation 71% (standalone) application 48% 26% Planning / budgeting / forecasting 45% (standalone) application 43% 15%Financial reporting and consolidation features 37% 38% of an ERP or other financial application 27% Corporate / Enterprise Performance 32% 26% Management application 12% Best-in-Class 27% Industry Average Budgeting and forecasting features of an 28% Laggard ERP or other financial application 14% 0% 20% 40% 60% 80% Percentage of Respondents, n = 171 13