Agile finance-led business planning is important to master, in times of change and otherwise. Read on to find out why.
According to the 2020 Vena Industry Benchmark Report, less than half of today's finance teams operate within an agile planning process.
The report--which is based on a survey of 350 business leaders, finance executives and operations professionals around the world--examines how organizations across industries are adapting to today's ever-changing business conditions. When asked if their current business planning processes are agile, only 48% of survey respondents said yes, while the remaining 52% said no.
This is a noteworthy finding, especially at a time when responding quickly to change is a top priority for organizations. Operational shifts, revenue losses and strategy shake-ups have been the norm for most businesses in 2020. In order to ensure your business is well prepared for the future, your finance function needs to be nimble. You need to develop business plans that are resilient, adaptable and reliable so your decision makers can lead with confidence--and doing so with agility has never been more crucial.
But what is agile planning and what does it look like in practice for finance teams? If you're among the 48% who struggle with agile business planning, read on to discover:
- What is agile planning in finance?
- Why is agile planning so important?
- Top 3 elements of an agile finance-led planning process.
What is Agile Planning?
Agile planning is a series of connected processes that allow your finance team to look ahead (or behind) on demand, gather actionable insights from your numbers and shape your business plans with purpose. It involves having the right people, processes and technology in place so you can collaborate with cross-functional stakeholders, analyze data strategically and always uncover the best path forward for your business.
Why is Agile Planning Important?
Agile planning ensures flexibility through every stage of your business planning cycle. Instead of just conforming to a static annual budget, agile planning lets you pivot your plans when needed as priorities and business drivers evolve. In times of change, it allows you to respond proactively to unique scenarios and to update your budget accordingly--rather than just reacting without a clear vision of the consequences.
If your finance function is static, you won't be able to deliver the analysis your stakeholders need in a timely and efficient manner. You'll also run the risk of basing your planning decisions on outdated numbers. That's why agile business planning is so important to master. It puts finance in the driver's seat as you plan for today and tomorrow.
3 Key Elements of Agile Planning in Practice
If you don't think your planning process is agile right now, don't worry. Speeding things up and building a strategic finance function isn't as hard as you think. The improvement journey starts with having the right tools at your disposal, as well as a solid understanding of the following three processes:
1. Automated Data Consolidation
Agile planning is easier if you integrate your source systems and enable on-demand access to all the information you need. By automating data consolidation, you'll be able to build a single source of truth for company-wide data and achieve a holistic view of real-time business performance. It also helps eliminate the manual tasks that are typically associated with business planning--such as copying journal entries from your ERP/GL and pasting them into your planning templates.
2. Frequent Reforecasting, a.k.a Rolling Forecasts
The second key element of agile business planning is updating your forecasts on a monthly, weekly or (in some cases) daily basis. This is less of a burden if you've automated data consolidation, because then you won't have to track down your actuals manually and key numbers into a spreadsheet yourself. Instead, your forecasts will update automatically, giving you a reliable bottom-line outlook whenever you need it most. This is especially helpful when business conditions change and you need to assess the impact on your short and long-term revenue targets. In any case, regular reforecasting ensures your planning decisions are based on the most up-to-date numbers available.
3. Scenario Modeling and Analysis
Much like reforecasting, scenario modeling lets you look ahead with your numbers and make data-driven planning decisions. But instead of relying on current and historical data, scenario analysis gives you the freedom to incorporate potential future outcomes into your business plans, giving you a much clearer picture of what might happen down the road. In the context of agile business planning, scenario modeling is what helps your finance teams remain proactive. By modeling a range of potential business scenarios and analyzing their impact ahead of time, you'll always be one step ahead whenever a unique situation arises.
With the above processes in practice, you'll master the art of agile planning in no time. And as we all continue to navigate this period of unprecedented change, remember: Every organization has a different growth journey ahead of them. Enabling agile finance-led business planning is always the first step on that journey--in times of change and otherwise.
Discover how to get started with agile planning, or talk to a Vena expert 1:1 with no obligation and learn how to plan through change confidently.
Download Vena's 2020 Industry Benchmark Report here.
