It’s one of those “virtuous circles” that we all hope for in business but only occasionally achieve. Better forecasting leads to stronger collaboration between finance and business. And, stronger collaboration leads to better financial and business forecasts.
A recent report from the Financial Executives Research Foundation (FERF) talked about the many ways that business planning and forecasting can drive competitive advantage. Collaboration—across business and finance, departments and geographies—was a key benefit of better forecasting.
Better forecasting enables people on the operational side of the business to compete more effectively.1 Operational people, in turn, can share information that improves the accuracy and timeliness of financial forecasts. The report said, “effective collaboration starts with understanding the information business units are using to monitor and improve performance, and to make sure the information and reports being produced reflect actual needs.”
More collaboration doesn’t have to mean more meetings
What are the mechanics of collaboration? It’s helpful, of course, for people to talk with one another directly. But, few businesses suffer from a shortage of meetings. Collaboration is more effective when it is integral to how work actually gets done. In the case of planning and forecasting, collaboration for target setting and progress measurement leads to better buy-in. In turn, that leads to more realistic plans and forecasts.
Capabilities that drive collaboration for better forecasting
Let’s look at the capabilities that facilitate collaboration and involve more people in the planning and forecasting process.
The more people involved, the better the chance that plans and forecasts will reflect the realities of the business. Consider a system that is capable of engaging hundreds of managers and staff from different departments and regions and countries. It has the potential to bring the most current, most relevant information from the front lines of the business into the process.
Streamlined workflow and approval
The solution should make it possible for participants to enter information easily and for reviewers to monitor workflow status quickly. For example, color-coded “traffic light” icons could identify plans that are not started, in progress, or ready for review. Reviewers should be able to send email to groups based on hierarchy or workflow status. In addition, they should be able to request modifications if necessary.
Bridging the terminology gap between business and finance
Users should be able to enter data that is relevant to their functional areas in terminology that they understand and use every day, instead of unfamiliar financial terms. A user in operations might enter the number of units sold or quantities of supplies purchased. The solution could then use predefined formulas to translate that information into financial data such as gross revenue or cost.
While spreadsheets have their limitations as a planning tool, they’re still very popular and familiar to most business users. Therefore, a wider range of line-of-business managers and others are more likely to adopt a solution that offers the option of a spreadsheet-like interface.
Version control and audit trail
In an ongoing process that involves dozens or hundreds of people, it’s essential to know when changes are made, and to be able to track who made the change and for what reason. A built-in audit trail provides that record and helps satisfy compliance requirements that might apply to the process.
Role-based security ensures that users see only those portions of the plan or forecast that they need to see. Administrators can set viewing options for business units, workgroups or individuals. In addition, it’s possible to tailor detailed instructions for each user type. As a result, communication of relevant information and expectations is constant.
It’s all for the better
So, these are just some of the key solution capabilities that can facilitate better collaboration in planning and forecasting. Perhaps the most important takeaway here is that the easier it is to use the solution, the more readily people will adopt it. And, that means your organization will reap the benefits of better forecasting and planning.
Want learn more about the value of collaboration in the context of advanced analytics? Read “Forecasting as a Competitive Advantage: Optimizing Business Planning With Advanced Analytics.”
And to learn about a planning solution that makes forecasting and collaboration easier and more efficient, download the IBM Planning Analytics data sheet.
1 David Pelland, Thomas Thompson, “Forecasting as a Competitive Advantage: Optimizing Business Planning With Advanced Analytics,” Financial Executives Research Foundation (FERF), July 2017