1. Integrated Planning: Linking Up Disparate
Data Streams
Published on October 14, 2016
Nilly Essaides, Director & Practice Lead FP&A, Association for Financial Professionals
This is the second part of a two-part post on integrated planning. Part one focused on how
integrated planning helps companies make smarter decisions. Part two focuses on the
technology implications.
Integrated planning means synching the financial and operational planning processes. It’s a
strategy that merges cross-functional information and allows finance to see and predict the
financial implications of changing business drivers and how financial decisions may impact
operational choices. By looking outside its own four walls, financial planning and analysis
(FP&A) can provide better and data-driven decision support to business leaders and management
to optimize enterprise performance.
Technology is the backbone of integrating two, once-disparate data streams—operational and
financial. That’s something many legacy systems can’t do because they were built to work in
silos. According to Meredith Hobik, product line leader, finance at vendor Anaplan, to be able to
break the old barriers, companies need tools that provide users with a collaborative planning
platform to share the same metadata, hierarchies, versions, and formulas. These tools “can pass
the information between finance, HR, sales and marketing on the same cadence. Integrated
planning means everyone speaks the same language, across finance and the business.”

2. Added Steve Elliott, director at The Hackett Group’s EPM Transformation Practice: “Now
there’s a real opportunity to integrate the S&OP process with the finance process and create a
strong linkage between the budget and the forecast and operational information flows in real
time.”
Ultimately, all financial metrics relate to something that at its core is operational. The simple
premise behind integrated planning is that every line in the P&L or the balance sheet is tied to
real or virtual assets. “Production limits tie into marketing campaigns, which tie into working
capital, which tie into what kinds of financing a company needs. “That’s why it doesn’t make
sense to work in a silo,” said Nari Viswanathan, vice president of product management at River
Logic.
What’s different?
There are several aspects to these new solutions that make them stand apart.
They democratize knowledge. The solution may sit in finance, but it must extend to other
departments so that changes to business drivers are incorporated in real time into the financial
plan and analysis. Ian Charles, CFO of Host Analytics, offers a simple example: “If you ask the
head of sales what’s the impact of a growth of X percent in sales on EPS,” he or she can’t answer
that question using traditional tools. “It’s only when you combine the financial and operational
steams of data that you can ask and answer questions that require more complex calculations.”
It’s very helpful to use tools that provide business partners with the capability to ask and answer
some of their own questions. “It gives them a chance to have a deeper understanding of the
overall business and have a richer conversation with FP&A,” he said.
They can get granular. According to Christian Gheorghe, CEO at Tidemark, while before,
planning was done at the regional or corporate level, to be able to compete at the digital age,
companies need to be able to analyze their business at the transaction level to uncover patterns,
look at business drivers and accumulate per-customer information. “Before they were basically
blind,” he said.
They’re hypothesis based. What distinguishes a system that enables integrated planning from a
traditional financial planning application is that it’s hypothesis-driven. “You start with a
problem,” said Nari Viswanathan, vice president, product management at River Logic. “Then
you then look across the data sets to find the relationship.” Older systems first identify drivers
and then look for what connects them. Once the model is validated, FP&A can enter new data.
Based on this new data, FP&A can test how the model will respond. “The system can deliver
recommendations on what you can do to change the outcomes,” he said.
They’re multidimensional. Even today’s driver-based models are based on simplistic
assumption. They do not connect the relationship between multiple parameters and a number of
combinations, but how a single driver affects a single financial result. “If FP&A is really trying
to predict how the enterprise will perform, it can’t make simplistic assumptions or rely on
averages. It needs to use granular data points all the way down to the cost of raw materials at the
supply-chain level,” Viswanathan said.

3. Taking an integrated approach leads to measurable benefits. Viswanathan has seen companies
realize actual top and bottom line improvements of 1-5 percent in annual revenue. “The
integrated planning tool provides data-driven decision support,” he said. “It means the company
can move away from making decisions based on the loudest voice in the room.”