Driver Based Planning

FP&A: the Evolution of Driver-Based Planning

By Larysa Melnychuk and  Hans Gobin 

Driver-based planning (DBP) is an essential part of the financial planning and analysis (FP&A) armoury, enabling organisations – ranging from the smallest non-profit to a multinational – to become quicker, more dynamic and agile in their planning and in responding to internal and external changes in the business environment.
DBP was the focus on the London FP&A Board of senior practitioners’ most recent meeting, sponsored by Michael Page and Metapraxis, which was held on the eve of the landmark UK referendum on its continued membership of the European Union (EU). Given that the result early on June 24 confounded many expectations, the benefits of DBP may have been evident to many companies forced to reassess both their short-term and longer-term business plans.

This article outlines the main conclusions and recommendations on DBP that were generated by the London FP&A Board.

Three Stages of Rolling Forecast Maturity

By Larysa Melnychuk, Managing Director at FP&A Trends group

Rolling Forecasts  are an essential tool for financial planning and analysis (FP&A), with a potential to radically transform corporates’ traditional budgeting process.
The London FP&A Board of senior practitioners’ most recent meeting focused on why Rolling Forecasts  are ideal for financial planning and analysis (FP&A) professionals. It also discussed best practice and the ‘Three Stages of Rolling Forecast Maturity’ model, summarised in this article.

The latest meeting was again jointly sponsored by Metapraxis, the consultancy, analytics for financial professionals and software provider and Michael Page, the global specialist recruitment firm.

Dynamic FP&A: How to Design Data Driven Planning Architecture

by Michael Coveney, author of "Budgeting, Planning, and Forecasting in Uncertain Times"

Data driven planning  is fast becoming an essential requirement for organisations operating in today’s volatile, global business environment.  It requires organisations to rethink the way it manages its business processes, the way strategy is implemented and monitors, and it needs a modern architecture that transforms planning into a continuous data driven process.

Relying on outdated management processes makes no sense and will cause organisations to fail in their quest.  Similarly, inflexible, silo-based planning systems will slow down organisational decision-making and prevent organisations from reacting to critical external events.

It’s time to change.  To let go of ineffective management practices and to embrace common sense, supported by architectures designed for today’s business environment.
 

Data Driven Planning: The 7 Key FP&A Models

by Michael Coveney, co-author of "Budgeting, Planning, and Forecasting in Uncertain Times"

In this article, I want to make the case for data driven planning to describe the 7 key FP&A models that every organisation needs to plan, resource and monitor business performance.

From a planning and review perspective, there are 7 key things that management needs to know about its business processes, each of which can be assessed in a range of analytical models:

  • How efficient and effective are the organisation’s business processes? (Operational Activity Model)
  • What trends are ‘hidden’ in the detail? (Detailed History Model)
  • What long-range targets should be set given where the market is heading? (Target Setting Model)
  • Where is the organisation heading if it continues with its current business model? (Detailed Forecast Model)
  • What could be done differently to better meet long-range targets and how much would it cost? (Strategy Improvement Model)
  • What choices/risks do management face and what would be the impact on corporate goals? (Scenario / Optimization Model)
  • How much funding is required to implement the plan and where will it come from? (Cash / Funding Model)

The models that answer each of these questions have different content, structures and are used by different people at different times.  However none can be omitted or ignored, and all need to operate as a single, data-driven management system.

Different Planning Methods for FP&A

by Michael Coveney, co-author of "Budgeting, Planning, and Forecasting in Uncertain Times"

 

Planning involves many kinds of methods that help managers make decisions. It goes without saying that any planning system must be able to handle both financial and KPI information, it must be able to model the different business structures (products, departments, customer groupings) and possess good reporting and charting capabilities. It should also be able to report data from both a financial viewpoint as well as a strategy view through dashboards and strategy maps, as well as be multi-user that allows secure access to people with different roles.

We will look at the different methods an organization can use to set direction. 

 

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