No matter how in tune you are with your business and industry, there's no way of knowing what the future will bring. The best thing you can do is prepare for anything and everything, thus allowing you to take immediate and effective action. And that's where scenario planning comes into play.
Scenario planning--also known as scenario modeling and scenario analysis--is a method of financial planning that enables you to prepare for various circumstances, mitigate risk and better position your organization for future financial stability.
Here's an excerpt from a post on our blog that explains how scenario planning works and why it's important:
"Whether you're encountering seismic market shifts, entering a new geographic market or making changes to a line of business (LOB), scenario modeling can help you build agile models that allow you to assess the impact of your business plans on revenue, costs and cash flow."
Now that we have the basics out of the way, let's turn our attention to the five types of scenario planning tools to help you succeed.
1. Scenario Analysis Software
You can't talk about scenario planning tools without a strong focus on scenario analysis software. This is where it all starts, as this type of software is designed specifically for scenario planning--nothing else.
At Vena, our agile scenario modeling software is designed to help your company mitigate risk by staying ahead of change. The decisions you make today will have an impact on your future. And that's why scenario planning is so important. A simple mistake at the present could cost your company time, money and/or personnel down the line.
For example, our instant "what-if" analysis is based on real-time actuals and business drivers. Use scenario modeling software to better understand the impact of changes to revenue, cash flow and employee headcount among other important details--all in one platform.
2. Customer Relationship Management Software (CRM)
A big part of scenario planning is based on your company's current financial circumstances, short and long-term goals and the potential impact of both internal and external factors.
When it comes to effective scenario planning, sales volume data from your CRM can help you answer questions such as:
Customer relationship management software can do more than maintain a database of prospects and customers. It can also be a valuable addition to your scenario planning toolkit when used appropriately.
If you're not sold on your current CRM, there's no shortage of options to consider. Search for one that will integrate with your scenario analysis software and other tools.
There are a variety of ways to use a marketing automation system. If you've yet to consider how it can assist with scenario planning, there's never been a better time to do so.
Regardless of the marketing automation system you choose, it can assist you with many aspects of scenario planning such as:
The way you market your company's products and/or services today probably won't be the same as in the future. Through the use of a marketing automation system, you can effectively plan for various scenarios that could come to light.
4. Human Resource Information System
One year your company's headcount is slowly growing. The next year it takes a massive leap forward. And unfortunately, you may even find that your headcount is declining.
A human resource information system (HRIS) can power important decisions related to hiring and firing practices, benefits, onboarding, training as well as payroll to name a few.
Every department within your company will evolve with time, but none change as often and as much as human resources. There are always employees on the go, training to schedule, benefits to update and interviews to conduct.
Without effective scenario planning--powered by the right software--human resources has a greater potential of falling behind. A problem here can reverberate throughout your entire organization.
5. Recruiting and Retention Software
Recruiting and retention software goes hand in hand with a human resource information system. The primary difference is that this software focuses solely on recruiting new talent and retaining current employees. Not only is this crucial to the current well-being of your company, but it has a giant impact on the future.
For instance, you can bring the best talent in the industry into your company, but if you don't know how to retain your team, it's all for nothing. In fact, a poor employee retention rate will lead to increased onboarding and training costs.
Motivosity is one of the many available software applications for recruiting, retaining and engaging employees. You can use it alongside scenario planning to address questions including:
Plan for Today and Tomorrow
If you have these five types of tools in your scenario planning toolkit, there's no reason to fall behind in this area. You can take full control of scenario planning and analysis, which helps with everything from finances to operations to employee benefits.
With Vena, you're able to work within a native Excel interface that you're already comfortable using. This makes for a more streamlined and stress-free transition into scenario planning. We'll help you better understand how our platform can integrate with your favorite spreadsheet software for your varying scenario planning needs.
As Vice President, FP&A at Vena, Tom Seegmiller is responsible for strategic finance, including business partnering, budgeting and forecasting, with a focus on optimizing enterprise value. Tom is instrumental in the formulation of the financial narrative for the executive leadership team, investors and board members. Tom has always had a focus on driving enhanced business decisions through leveraging financial and operational data. He is an experienced finance executive, having most recently led the finance team at Miovision Technologies. Prior to that, he was in senior FP&A leadership roles at OpenText. Tom enjoys golfing, skiing, exercising and traveling in his spare time, but most importantly, he loves spending time with his wife and daughter.
