For its report called “The Future of Planning, Budgeting and Forecasting,” UK-based analyst FSN surveyed nearly 1,000 senior finance executives from around the world and we’ve been discussing the results of that survey in the Business Analytics blog. This week we’re looking at the topic of continuous planning and rolling forecasts.

Archaic and ineffective

How many companies don’t have an annual budget? Not many. The annual budget has long been the central pillar of the planning, budgeting and forecasting cycle.

As markets, business sectors and organizations move faster and faster, annual budgets can quickly lose their relevance. In its report, FSN, observes that “no sooner has the budget been agreed, than it is no longer relevant because the assumptions on which it is based have changed.” Not to mention the fact that the traditional annual budgeting process is “entirely outdated.” Although annual budgets in one form or another are still common, “many CFOs are all too aware that annual budgets are archaic and ineffective in a competitive market.”

Making the switch to continuous planning for greater accuracy

Those who have made the switch to continuous planning have seen noticeable improvements in their ability to forecast accurately and quickly. The survey found that organizations are almost twice as likely to be able to forecast within 5% of earnings, compared with companies that rely on static forecasts. They are also “one and a half times more likely to be able to reforecast within one week, and are almost four times more likely to be able to respond more quickly to market change.”

In addition, organizations that use continuous planning also tend to follow other planning best practices. FSN reported that “organizations which implement a continuous planning process are almost twice as likely to engage more stakeholders in the process and two times as likely to make more use of nonfinancial data.” And the benefits don’t stop there.

A truly effective continuous planning process

To learn more about why companies are turning to continuous planning, and what companies need to do to implement “a truly effective continuous planning process,” read Chapter 4 of the FSN report, CFOs Who Ignore Continuous Planning May be Putting Their Business at Risk.  Download Chapter 4 now. And if you’re looking for a solution that can help you with continuous planning or rolling forecasting, take a look at IBM Planning Analytics. Learn more here.