Last chance for corporate planning: Part 1

“Corporate budgeting is a joke, and everyone knows it,” the business magazine wrote in 2001. The polarizing article generated an enormous reaction. However, little has changed since then. To this day, planning is perhaps the greatest challenge that companies face. In a two-part blog series, we reveal how companies can make their planning processes more efficient by applying more modern methods.

Part 1 – The Unified Performance Management Approach

While potential solutions for overcoming corporate planning frustrations are the subject of lively debate, there is a general consensus as to the causes of the problem: Planning takes up too much time, ties up too many resources and data quickly becomes obsolete. The consequence: Most companies are not satisfied with their own planning processes. So, it’s high time to brighten the mood in finance departments.

We are dedicating the first part of our blog series to a method that is better able than any other of combining all relevant business segments in a comprehensive planning system: unified performance management, or UPM. This model consists of strategic planning, medium-term planning, budgeting and forecasting. Essentially, UPM is implemented by the following five steps:

  1. Strategic planning: First, a business model is developed in consideration of the corporate strategy. It must comprise the key value drivers discussed in the section above.
  2. Performance measurement: In this step, the relevant key performance indicators (KPIs) are defined to measure how successfully the company is pursuing its objectives. Note: KPIs should be defined which provide the best insight into daily business. Unfortunately, these KPIs are not always the easiest ones to measure. Selecting the wrong KPIs is one of the most common mistakes companies make when it comes to measuring their performance.
  3. Business analytics and modeling: Next, a company uses the data obtained in step 2 in order to analyze its own performance. The aim here is to establish a solid knowledge base so that well-founded decisions can be made later. In the age of big data, many companies have collected a vast amount of different data. This can represent both an opportunity and a risk. Companies that can positively leverage this data volume have a competitive advantage.
  4. Measuring performance: Now for the tricky part… The insight gained into the company’s performance must be integrated into management reports and dashboards to derive an action plan. Performance measurement and analyses are only meaningful if the necessary conclusions are drawn and changes are made.
  5. Corporate culture: The deciding factor for achieving positive results in the implementation of efficient planning processes is the direct involvement of the employees who are immediately impacted by the changes. This is a question of corporate culture. It is the job of management to mend any potential rift between the upper echelon and employees at the front line.

Do you want to know more about Unified Performance Management?

Download our White Paper here:

Unified Performance Management (UPM) as a way to unleash value and drive better outcomes

More resources

Lower your data latency and improve your business decision-making

There’s a term in network technology called ‘latency’ which refers to the delay between the execution of a command and the instruction given by the user. You’ll hear it most often in the world of high-speed training where a slight increase in latency (to the effect of a couple of milliseconds) can have a drastic negative impact on speed and thus performance.

Read this article

How strong FP&A solutions improve data literacy

As most of us realise, there is useful data and not-so-useful data. And merely having it at your disposal doesn’t necessarily mean that you’re able to discern between these two camps. It’s often only in the processing phase where we dig into the data and look for insights that we discover whether the data we’ve collected can actually drive us forward, rather than remaining a red herring.

Read this article

5 common mistakes when building financial models

Critics of financial modelling will always tell you that there are simply too many moving parts and interdependencies within a company to arrive at an accurate prediction of the future. They’ll point to how easy it is to adjust an input assumption and completely change the entire scope of what the model outputs. And to a certain extent – they’re right.

Read this article

Unlocking a new operating model for finance

Much has been written about how changing tides, rapid disruption, and global trends impact the customer-facing side of business today.  You can open any business publication of your choice and hear stories of how technology has completely changed how they think about their offering and their messaging to the market. 

Read this article

The 10 commandments of FP&A

Here at Apliqo, the FP&A process is at the heart of what we do and so in this post, we thought we’d share our 10 commandments for what strong FP&A execution looks like. While somewhat tongue-in-cheek, there’s a lot to be gained from getting these things right. Now, without any further ado, onto the ten commandments.

Read this article
Ten commandments of FP&A