Top-down & Bottom-up Planning

Despite its importance, planning processes within companies are often a source of dissatisfaction for the people involved. In this blog we explain how ‘Top-down & Bottom-up Planning’ can improve processes within your company and help keep your employees happy.

Corporate planning is important.  It determines how company objectives will be met, how resources will be allocated, and how work processes will be defined and organised. In an ideal world, effective corporate planning also provides a mechanism for a company to avoid recurring problems and overcome everyday challenges.

Ironically, corporate planning in the real world is often a source of staff dissatisfaction. Some of the most common complaints are set out below:

  • the process is too time-consuming
  • the quality of the outcomes is too low
  • the process consumes too many resources
  • the company cannot see the wood for the trees
  • the process is too heavily driven by the finance department
  • there are not enough people responsible for planning outside the finance department
  • the subplans are not integrated coherently into the overall company plan

The Challenge

Corporate planning is becoming increasingly difficult as the complexity of the business world grows. Companies today must solve a multitude of planning problems simultaneously. What is needed is a planning process that unites scheduling, content and resources, and also integrates the detailed subplans into a company’s overall plan.

Neither top-down nor bottom-up planning meet these demands on their own. Both methods have their advantages, but quickly turn out to have limits. So, how can companies benefit from the advantages of each planning method without striking their limitations too quickly?

The solution: Combining Top-down & Bottom-up Planning

The answer is clear.  Companies must approach planning from both the top down and the bottom up. Here is a simplified explanation of this approach:

Management defines the overarching objectives and framework conditions without going into too much detail. (This is the top-down aspect of the method.) The employees at each successive level of the company then formulate intermediate objectives and operational subplans that are integrated into the overall company plan. (This is the bottom-up aspect.) The combination of the two methods ensures that the operational measures align with the overall strategic objectives and that the process is oriented towards practical actions and feasible outcomes.

Top-down & Bottom-up Planning enables companies to achieve their objectives efficiently and in a targeted manner while involving all relevant departments in the process. As a result, the quality of the planning output is significantly improved and the planning process is viewed as more satisfactory within the company.

Maximising Efficiency

Companies must not lose sight of the amount of time and effort required to coordinate the various planning levels. It is vital to use a suitable planning solution with predefined best-practice processes. Pre-built applications enable companies to take a standardised and structured approach to prioritizing and applying KPIs and integrating subplans into the overall plan. This ensures that the planning process is faster across all business units and that Top-down & Bottom-up Planning is implemented with maximum efficiency.

Are you interested in Top-down and Bottom-up Planning using a single application? CLICK HERE.

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