INTRODUCTION TO BUDGETING AND FORECASTING

BUDGETING AND FORECASTING

Budgeting and financial forecasting are tools that organizations use to build up an
arrangement of where the board needs to take the organization and whether it's
going the correct way. Although financial forecasting and budgeting are
frequently used together, there are particular contrasts between the two.

BUDGETING

Budgeting evaluates the desire for incomes that a business needs to accomplish
for a future period, though financial forecasting estimates the quantity of incomes
and expenditure that will be accomplished. As such, budgeting spreads out the
arrangement for where the executives needs to take the organization, though
financial forecasting indicates whether the organization's going the correct way.

A financial plan is a framework of desires for what an organization needs to

accomplish for a specific period, normally one year. A portion of the instances of
budgeting include:

Expected incomes and expenses for the year

Expected cash flows

Expected debt reduction

A financial plan is analysed with actual outcomes to compute the differences

between the two.

Financial Budgeting speaks for an organization's budgetary position, cash flows

and goals & objectives. An organization's budget is typically rethought
occasionally, more often than not once per monetary year, contingent upon how
the executives needs to refresh the data. Budgeting makes a gauge to compares
actual outcomes to decide how the outcomes differ from the expectations.
 Most budget plans are calculated for the situation of whole year, however that is
not a rigid standard. For a few organizations, the board should be adaptable and
enable the budget to be balanced during the time as business conditions change.

FORECASTING

Financial forecasting estimates an organization's future money related results by

analyzing recorded information and future prospects. Financial Forecasting permits
Management people to envision results dependent on past monetary information and
future prospects. Financial Forecasting features include:

Companies utilize financial forecasting to decide how they ought to apportion

their financial plans for a future period. Dissimilar to budgeting, financial forecasting
does not examine the change between financial forecast and real outcomes, point required
to be noted is that analyzing is an subjective matter of decision.

Financial forecasting figures are consistently refreshed, maybe month to month or

quarterly, when there's an adjustment in tasks, stock, and marketable strategy.

Forecasts can be both short-term and long-term. For instance, an organization

may have quarterly estimates for income.

A management group can utilize financial forecasting and make quick move
dependent on the forecasted information.

Forecasts can enable administration to make changes in accordance with

manufacturing and stock decisions. Likewise, a long term forecast may enable an
organization's administration to build up its corporate strategy.
TAKEAWAYS

A budget is an outline of where management wants to take the company. A

financial forecast is a report showing whether the company is getting to its budget
or not, and where the company is heading.

Budgeting can sometimes contain goals that may not be attainable due to
changing market conditions. If a company uses budgeting to make decisions, the
budget should be flexible and updated more frequently than one fiscal year, so
that there's some relationship to the prevailing market.

A budget and financial forecast should work in tandem with each other. For
example, the forecasts both in the short-term and long-term could be used to help
create and update the budget and making various versions to achieve.
BRIEF ON IBM

International Business Machines Corporation (IBM) is an American multinational

information technology company headquartered in Armonk, New York, with
operations in over 170 countries. The company began in 1911 as the Computing-
Tabulating-Recording Company (CTR) and was renamed "International Business
Machines" in 1924.

IBM produces and sells computer hardware, middleware and software, and
provides hosting and consulting services in areas ranging from mainframe
computers to nanotechnology. IBM is also a major research organization, holding
the record for most U.S. patents generated by a business (as of 2019) for 26
consecutive years.[5] Inventions by IBM include the automated teller machine
(ATM), the floppy disk, the hard disk drive, the magnetic stripe card, the
relational database, the SQL programming language, the UPC barcode, and
dynamic random-access memory (DRAM). The IBM mainframe, exemplified by
the System/360, was the dominant computing platform during the 1960s and
1970s.

IBM has continually shifted business operations by focusing on higher-value,

more profitable markets. This includes spinning off printer manufacturer Lexmark
in 1991 and the sale of personal computer (ThinkPad/ThinkCentre) and x86-based
server businesses to Lenovo (in 2005 and 2014, respectively), and acquiring
companies such as PwC Consulting (2002), SPSS (2009), The Weather Company
(2016), and Red Hat (2018). Also in 2014, IBM announced that it would go
"fabless", continuing to design semiconductors, but offloading manufacturing to
GlobalFoundries.

Nicknamed Big Blue, IBM is one of 30 companies included in the Dow Jones
Industrial Average and one of the world's largest employers, with (as of 2017)
over 380,000 employees. Known as "IBMers", IBM employees have been
awarded five Nobel Prizes, six Turing Awards, ten National Medals of
Technology (USA) and five National Medals of Science (USA).
INTRODUCTION: WHY ANALYTIC TOOLS?

What's distinctive now that requires CFOs and fund groups — just as business experts in
jobs as various as sales, operations, and HR—to redesign their analytical capabilities?
Indeed, even with an economy encountering stable development, low expansion, and low
unemployment, various powers are upsetting the business scene. What's more, individual
businesses are confronting a bunch of difficulties:
Market instability
Continuing cost pressure
Changing rules and regulations
Structural multifaceted nature inside an organisation, exacerbated by an absence
of common processes crosswise over lines of business
A growing oragisation role for finance, bringing new obligations and duties
Presumably, existing conditions is evolving. "Digital Transformation" is eradicating
obstructions to entry. Businesses are uniting, mechanical advances are putting up new
items for sale to the public quicker, and new deals channels are adjusting client
purchasing behaviors. Supply change vulnerability, a lack of talented specialists, and
quickly changing client inclinations are additionally wellsprings of concern.
In the present constantly associated business condition, you should be prepared to settle
on increasingly exact business choices and make a move on them immediately. There's
positively a lot of information accessible, yet how would you do best mining of
knowledge from monstrous data warehouse?
THE CHANGING ROLE OF THE FINANCE FUNCTION

As the business condition changes, the job of finance is evolving as well. It's moving
from an accentuation on conventional stewardship capacities — closure of the books and
giving an account of past records — to a progressively strategic role. It's ending up
increasingly forward-looking, concentrating on guidance, risk analysing and assessing
open doors for development.
To lay the preparation for this new job, finance associations are hoping to digitize their
procedures to drive down expenses and to drive more prominent speed, nimbleness, and
foreknowledge to enable their organizations to remain competitive. They have to draw
further bits of knowledge from all information sources, both inside and outside, organized
and unorganized.
New innovation, for example, advanced and predictive analytics, and cognitive
computing can build the productivity of customary finance works and lessen the measure
of manual action required, with the goal that finance experts can invest more resources in
value added evaluation and concentrate on corporate strategies.
Note that finance additionally has an imperative job in sharing the advantages of
analytics with different zones of the business. Surely, at most organizations, "finance is
obviously the function in-charge of driving analytics into unique parts of an organisation,
for example, as sales and marketing, operations, and customer service."
CFOs perceive the significance of grasping new innovations:
89% of finance experts have a dream for utilizing computerized advances to
rehash the finance functions.
CEOs states that finance is one of the best five investment regions for cognitive
computing.
72% of review respondents said that finance should "considerably increment in its
utilization of data analytics to assist in decision making".
Be that as it may, regardless of this close agreement on the estimation of new
advancements, numerous CFOs recognize considerable holes between the significance of
different capabilities and the effectiveness of their organisations in utilizing those
abilities.
For instance:
75% of CFOs overviewed said that driving coordination of data over the firm is
crucial. However just 47% trusted they were powerful at it.
Only 14% of CFOs report that their finance functions are digitally "upgraded,"
with frameworks empowering data-driven determinations.
How might you set up your association for flighty, troublesome economic patterns and
give the analytic devices that present business condition requests? How might you
increment effectiveness and steer business execution all the more adequately? Further are
four issues that are holding back many finance organizations and possible solutions.
WHAT’S HOLDING YOU BACK? COMMON OBSTACLES AND
HOW TO OVERCOME THEM.

PROBLEM.1.
YOU RELY TOO MUCH ON SPREADSHEETS.
Spreadsheets are a prominent tool with finance and business experts. Yet, in spite of the
fact that they're valuable for short scale analysis, they have significant deficiencies with
regards to vast scale planning, budgeting and forecasting and controlling extensive
informational indexes.
Version control is one noteworthy test. While coordinated effort is fundamental to great
planning, messaging spreadsheets forward and backward nearly ensures that blunders
will be presented. Truly, 88% of spreadsheets have been found to contain some sort of
blunder, prompting problematic plans and clashing versions of the truth. Many
administration gatherings have invested more energy discussing whose numbers are right
than choosing what strategy is ideal.
Manual work can include hours or even days of extra work, prompting superfluously long
planning cycles. Truth be told, many finance and operation groups spend as much as 60–
70 percent of their time on information gathering and approval rather than on esteem
added analysis to assist business.
RECOMMENDATIONS.1.
• Computerize routine procedures so as to limit blunders and enhance the
timeliness and reliable quality of plans, budgets and forecast.
• Use computerization and implicit work processes to empower better coordinated
effort crosswise over divisions and geologies in real time.
• Adopt a total arranging and analytics arrangement fit for giving a solitary variant
of truth.
• Reduce the time spent on information gathering and approval, and commit more
opportunity to value-added analysis.
PROBLEM.2.
YOU LACK ADEQUATE INSIGHT INTO WHAT’S DRIVING YOUR
BUSINESS.
"Many finance experts get themselves data rich and information poor, with
significant data living in disparate systems. “Sound familiar? It most likely does,
regardless of whether you're in finance, operations, or practically any territory of
the business. At the point when business drivers aren't demonstrated reliably over
the organization, the outcome is an inability to gain strong insights into business
drivers and the crucial associations among operational and financial information.
Siloed planning processes, portrayed by an absence of coordinated effort and set
up work processes, can prompt detach among financial and operational plans.
There's a failure to penetrate down to decide the main drivers of issues or to
comprehend the full story behind the information.
RECOMMENDATIONS:
 Coordinate arranging crosswise over business functions to indicate how
changes swell through the firm, for example how sales influences manufacturing,
manufacturing influences headcount, headcount influences HR spending plans,
and so on.
 Incorporate multi-dimensional evaluation of financial and operational
information to reveal bits of knowledge into the drivers of revenue, profit, and
cash flow.
 Include non-financial information in your Financial Planning and analysis
procedure to recognize the basic business and operational factors behind the
numbers on the financial statement.
PROBLEM 3
YOUR FORECASTS ARE BASED MORE ON “GUT INSTINCT” THAN ON
CONCRETE DATA.
Experience and "gut nature" will dependably have a place in basic determination
process. However, when stakes are high, you need that hard-won nature and
experience to be educated by however much solid information as could be
 expected. Similarly as "fortune favors the prepared mind" in science, favorable
luck in business supports the very much educated leader.
Today, numerous chiefs depend excessively upon detached spreadsheets,
straightforward extrapolation forecasting techniques and general guidelines. The
basic leadership process experiences an absence of combination with present day
business intelligence (BI) and predictive analytics tools. Forecast accuracy
endures, and with it, the capacity to foresee market patterns and make a move
with certainty and confidence.

RECOMMENDATIONS:
Incorporate predictive demand planning specifically into the Budgeting and
Forecasting procedure to enhance figure precision.
Adopt BI and predictive analytical instruments that utilize pro statistical
displaying and prescient calculations dependent on expansive, recorded datasets to make
progressively solid figures.
Use multidimensional "imagine a scenario where" situation demonstrating to test
assumptions, comprehend underlying drivers and look at alternative blueprints.

PROBLEM 4
YOU CAN'T REACT QUICKLY ENOUGH TO RAPIDLY CHANGING
BUSINESS CONDITIONS.
Numerous associations still depend on a yearly budgeting procedure, despite the
fact that examination and experience have demonstrated that this practice
outlasted its convenience long prior.
Yearly spending plans are full of governmental issues and endeavors to "game the
system." Modifications aren't speedy or simple, so your planning framework
regularly can't stay aware of changing economic situations and moving client
request. Absence of real-time insight into execution measurements prompts
reactive rather than proactive decision making.
RECOMMENDATIONS:
Institute consistent planning and rolling forecasts so you can adjust promptly to
market trends and react properly before your rival.
Introduce agile planning techniques that empower associations to explore, flop
quick, and build up a culture of advancement.
Build dynamic, real time figures that are sufficiently adaptable to be altered
rapidly as business needs change.
Connect operational strategies with financial techniques so you can designate
resources successfully in light of aggressive dangers and market opportunities.

WHY IBM’S ANALYTICAL TOOLS

How might you put these suggestion without hesitation? With IBM Planning Analytics.
Deployable on cloud or on premises, IBM Planning Analytics reclassifies what your firm
can achieve. It robotizes manual procedures for planning, budgeting and forecasting, and
detailing. However it goes past simply enhancing procedure proficiency by giving the
speed, spryness and foreknowledge you truly need to contend — and succeed — in the
present where there's always showing signs of changing business condition.

IBM Planning Analytics causes you streamline your way to deal with business
determination in leadership. It can enable you to answer addresses, for example, "How
might I meet my income targets and develop piece of the overall industry while keeping
costs in line?" "What are my key business drivers, and how are they associated with one
another?" "What monetary effect will this choice make?" IBM Planning Analytics gives a
coordinated perspective of execution so you can make progressively precise figures,
recognize potential execution holes before they happen, and settle on resource assignment
choices rapidly and cleverly. Utilizing multidimensional modeling and situation
evaluation, you can bore down into your information to inspect the gradually expanding
influences of elective game-plans and understand how your decision will ultimately
impact the bottom line.
IBM Planning Analytics offers all zones of your business — finance, operations, HR,
sales, marketing, supply chain, and more-- the capacity to take care of issues today and
react to aggressive weights with dexterity tomorrow.
PLANNING, BUDGETING AND FORECASTING: SOFTWARE
SELECTION GUIDE

OVERVIEW

The venture planning process—planning, budgeting and forecasting and revealing—

introduces an impressive test to most organizations, irrespective of size or industry.
Corporate Planning is a critical segment of monetary administration that contributes
enormously to an organization's general achievement or disappointment, particularly in
these unsure economic occasions. Notwithstanding its significance, planning is frequently
observed as burdensome and tedious. However ground breaking associations consider
intending to be putting forth tremendous chances.

Driving organizations address planning impediments and enhance processes. They

exploit new advances and utilize planning and forecasting best practices. They are
immediately remunerated with increasingly exact plans, all the more convenient re-
forecasts and progressively powerful decision making. Generally, these instruments and
practices spare time, lessen blunders, advance venture wide coordinated effort and foster
a disciplined financial management that conveys genuine upper hand regularly often
accompanied by a leading or stable market position

In particular, such organizations can:

• Consistently convey all the more timely, dependable and adaptable plans.

• Strengthen the connection among operational and financial plans.

• Improve correspondence and cooperation among managers.

• Enhance vital Decision making, empowering managers to all the more rapidly
distinguish, break down and forecast the effect of changes as they happen.

The objective of this guide is to enable firm in enhanced planning, budgeting and
forecasting. This guide plots a deliberate way to deal with programming assessment and
choice that adjusts best practices and driving edge innovation with planning exercises in
an organization. These will assist to audit their planning procedure, distinguish
difficulties, characterize partner prerequisites and match developing criteria with
programming highlights and features.

BUSINESS PROBLEMS

Planning Challenges: Process Problems

Corporate leaders ordinarily voice comparable worries about planning, budgeting and
forecasting.

Processes are repetitive and tedious.

Data honesty is faulty.

The clarification of differences is troublesome.

Existing tools are inflexible and don't bolster a dynamic domain.

For supervisors outside of Finance, planning can seem to comprise minimal in excess of a
periodic invasion of their time with insignificant advantage. Supervisors can feel
assaulted by requests for data and enhanced projections, while as yet being relied upon to
convey results.

Yet, these burdens are minor when compared with the missed opportunities that can
result from resolute and lacking planning and forecasting, especially in the midst of
monetary downturn. A very much associated, dynamic planning and forecasting
"nervous" system ought to be lined up with operations and bolster high support all
through an association. This empowers the executives to participate in forceful,
innovative action, to create keen emergency courses of action, and to fundamentally
enhance resource reallocation to meet changing business conditions.

Origins of planning challenges

Within the most recent decade or something like that, organizations have dedicated
significant resources to implementing enterprise resource planning (ERP) systems.
However most planning is still performed utilizing spreadsheets, electronic mail and
innumerable staff hours—an economical methodology in programming terms, yet
exorbitant over the long haul since spreadsheets are not intended to adequately bolster
planning and forecasting processes. Inhibitors are various:

 Business rules (equations) are blended with data and inclined to

defilement.
 Files must be swapped every now and again among users, yet cross
organization groups can't cooperate effectively.
 Presenting or analysing information from alternate points of view is
troublesome.
 Data collection is confounded and tedious.
 The business structure is not represented well, if at all.
 Complex counts, multidimensional reporting and examination are
unthinkable.

BUSINESS DRIVERS

Supporting best practices

It is vital that planning software supports accepted best practices in order to enhance
timeliness, information reliability and participation by key people throughout the
organization. A best-practice approach requires that planners include several key
strategies and tactics.

Align strategic and operating plans

Within the "great financial management levels with brilliant business management"
culture, the progressing arrangement of strategic and operating plans is indispensable.
Because of their duty to connect with division administrators in the planning procedure,
finance experts should unmistakably convey corporate strategic plans to the individuals
who maintain the business every day. 70% of finance administrators envision serving in
the job of the performance management head in their organization, as indicated by a CFO
Research Services Report, "Overseeing Performance Amid Complexity," arranged in a
joint effort with IBM Cognos, 2008.
Finance can assist in translating Strategic objectives into monetary targets and—in-turn-
into explicit departmental plans and related income and cost drivers, for example,
headcount and equipment. By making translation of strategic objectives into operational
plans, and by following and measuring execution against plan, driving organizations are
better ready to meet or surpass destinations.

Start at the top—and at the bottom

A critical component in effective planning budgeting and forecasting is the capacity to

adjust top-down financial targets to bottom-up plans. A few organizations set up best top-
down targets and afterward turn the yearly budgeting procedure over to Finance
alongside an order to meet those numbers. Some organizations require definite bottom-up
planning, and after that plug the total organization numbers in at the best so the
arrangement meets key targets. Neither of these methodologies mirrors a guarantee to
planning perfection.

Rather, driving organizations give starting direction from senior management's best top-
down viewpoint on strategic objectives, goals and desires. At that point, division
supervisors construct an plan from the bottom-up, demonstrating how they expect to meet
built up objectives. This procedure requires visit cycles for the top-down and bottom-up
ways to meet and accommodate.

The outcome is a plan that is upheld by:

• Department administrators since they made it and will be compensated for meeting it.

• Senior administration in light of the fact that operational objectives are lined up with
strategic objectives.

• Finance since they increased the value to a productive, collaborative effort, rather than
demanding participation in a mere exercise.
Model business drivers

A first-rate budget and forecast depends on a model with equations that are attached to
fundamental business drivers. Essentially bringing in and manipulating past actuals does
not reflect underlying operational causes and financial impacts in a business. Building
driver-based models into plans ensures appropriate consistency crosswise over functions
and promotes planning coordination among functions. For instance, by understanding the
patterns and profitability identified with specific household products that take off the
shelves during a recession, a retailer can decide advertising, stock and sales costs to
optimize benefits. Finance can furnish the operations administrators with a helpful model
that incorporates data about past actuals and current labor, inventory and promotions as
well as formulas driven by assumptions.

Backing from Finance does not abuse the best practice that requires department managers
to be responsible for creating their own plans. Rather, it spares them time by giving a
strong, authentic pattern—a beginning stage that contains essential data about their areas
of expertise's relationships to different functions. Administrators would then be able to
adjust this baseline to mirror the most recent business conditions. This methodology
likewise guarantees coordinated effort crosswise over functions.

Drive collaboration between functions

Not exclusively should strategic and operating plans be adjusted, however designs
between functional areas ought to be coordinated. Best practices incorporate direct
contribution by line-of-business administrators alongside a collaborative approach to
planning and forecasting.

Notwithstanding understanding strategic objectives, division administrators should

likewise realize what different functions are planning. For instance, in an organization
that is arranging another product rollout, production department to increase
manufacturing, promotion team requires to build marketing plans and sales needs to
include new headcount. But, the marketing plan ought to likewise incorporate training
programs coordinated to help new sales representatives to increase efficiency. The
facilities department needs to get ready for new headcount, equipment, product storage
and so on. Such collaborative planning can be practiced through an iterative procedure
that lets managers forecast and share alternative scenarios, which are essential given
today’s economic uncertainties. Finance likewise assumes the key job in encouraging the
coordination of plans over the organization, which guarantees that operational strategies
are lined up with finance all through the organization.

Adapt to changing economic conditions

Businesses today are seeking ways to manage risk, cut costs, improve their profits and
drive cash flow. These major transformations force adjustments to plans, metrics and
resource allocation—and require a heavy dose of dynamic re-forecasting with a focus on
business drivers rather than budgets.

Frequent re-forecasting. In this challenging global economic environment with multiple

market pressures, forecasting may be needed monthly or even bi-weekly. Continuous
reforecasting helps managers answer critical questions such as, “What did we expect?”
“How are we doing against our plan?” and, even more importantly, “How should we
adapt our plans going forward?” If revenue forecast signals are below targets, a
manufacturer may need to recalibrate resource or capital expenses. With a model-based
approach to forecasting, marketing and sales managers can rapidly run multiple what-if
scenarios to recalibrate unit-volume numbers, which in turn are evaluated by operations
based on production and inventory plans. Updates to plans feed directly to Finance,
which then turns the order projections into revenue—all in a matter of hours or days
versus weeks or months.

Rolling forecasts. A company that runs rolling forecasts is always looking forward to the
immediate or near-term future. For such companies, business does not end on December
31st and restart on January 1st. The forecast timeframe should extend out two to eight
quarters, depending on business volatility. Additionally, the forecast should reflect the
input of all business units, not just Finance. “The process goal is coordination of the
different parts of the organization using the latest available estimates of what may likely
occur,” according to Steve Player, program director for Beyond Budgeting Round Table
of North America. “Action plans to correct negative trends or to exploit positive
developments can be included with discussion of their likelihood of success. These plans
can be made dynamic based on the movement of leading indicators.”

Planning should be an ongoing process with frequent opportunities for managers to view
the company’s latest internal and external performance data. Managers should be able to
alter plans based on new information coming from various sources, including leading
market indicators (such as customer inquiries, sales pipeline information and market
data); other managers; monthly actuals; and top-down target revisions. Finance should be
able to quickly consolidate plan data from all areas of the company and disseminate new
information immediately. This process will facilitate more informed decision-making in
such areas as pricing, product family, channel mix, capital allocations and organizational
changes.

Manage content that is actionable

A focus on actionable content in planning frees managers from unnecessary detail,

enabling them to produce better plans. While supporting detail can provide audit trail and
insight into managers’ thinking, more detail does not necessarily make a better plan.
Managing material content requires attention to whatever information has real and
significant impact on expenses, revenues, capital or cash flow. Content management
helps a company:

• Avoid false precision. A complex model might not have any more precision than a
simpler model. More detail and intricate calculations can lure managers into the trap of
thinking their plan is more accurate.

• Monitor volatile—not stable—accounts. Efforts are best spent on fluid expenses such as
headcount and compensation.

• Aggregate accounts. The forecast does not need to reflect the same level of detail as that
in the general ledger. Even if the general ledger has 15 different travel accounts,
managers can often plan using one account.

Timeliness and reliability

Many companies have an inefficient and inflexible planning process at the center of
which is the annual budget. Time-consuming distribution and consolidation processes
practically guarantee that plan data is out-of-date and irrelevant before it is even
published—and plans based on stale data and assumptions are of no value. World-class
organizations shorten their planning cycles by implementing the best practices described
here. They also use technology to successfully manage budget consolidation and
aggregations on demand. Technology is particularly effective for improving timeliness
and reliability in the area of plan consolidations. Plan consolidation on demand
eliminates eliminates the necessity to process results manually and enables a smoother,
more consistent, more accurate planning process. Variance reports delivered within two-
to-four days after the period close allow managers to immediately evaluate their
performance against plan and effectively adjust their businesses.

At an operational level, this type of planning is also less costly and produces more
accurate results than the processes followed by most companies today. At a strategic
level, timely and reliable financial plans provide more credible guidance to stakeholders
and enable faster, better-informed business decisions.

Best-practices templates

The use of pre-built, best-practice templates or planning models can help organizations
reduce implementation risk and accelerate time to business value. Best-practice templates
such as expense management, resource planning, and capital planning and integrated
financial reporting are available from software vendors for a wide range of functional
areas and industries. With best-practice templates, companies can establish dynamic
connections that keep strategic objectives, operational plans, people and initiatives in
sync as business conditions change. Executives can quickly see the impact of changes in
operational plans on corporate financials. Functional- and business-unit managers can
quickly adjust resource allocations to support corporate objectives. And corporate
guidelines and policies are more consistently communicated and applied throughout the
business.

THE SOLUTION
Technology supports best practices

Leading companies have recognized that spreadsheet-based planning impedes

implementation of planning and forecasting best practices. They have moved to a
purpose-built application with lean infrastructure requirements, which enables them to
accurately plan and re-plan quickly, using the same or fewer resources. Streamlining the
planning process demands technological tools capable of supporting a faster, more
flexible and adaptive approach to planning. By using an on-demand, dedicated planning,
budgeting and forecasting application that is delivered over the Web, organizations can
readily implement best practices.

Leading companies formulate top-level requirements for evaluating and selecting world-
class planning, budgeting and forecasting software. Solutions must be:

 Integrated. Strategic, operational and financial planning reside in one system.

Managers do not need to maintain “shadow” planning systems.
 Collaborative. Web-based, distributed planning enables participation anytime,
anywhere. The ability to use a secure Web connection allows everyone to access
plan information wherever there is Internet connectivity.
 Adaptive. Simplified version control and the ability to frequently re-forecast give
companies the ability to respond to business changes with “what if” scenarios as
often as necessary.
 Timely. Information is always current because departmental users contribute
directly to a central planning database. Consolidations and rollups are done
automatically, so deadlines are more easily met.
 Efficient. Finance managers and department managers spend less time managing
data and more time managing the business.
 Relevant. Customized views for managers increase adoption and ownership.
Formula capabilities enable modeling of all relevant business drivers.
 Accurate. Plans contain fewer errors because broken links, stale data, improper
rollups and missing components are eliminated.
 Led by Finance. Because the finance office is responsible for planning process
development, deployment, reporting and analysis, finance professionals have the
 best understanding of what is required in terms of software flexibility and ease-of-
use, both in modeling and day-to-day activities.

The evaluation of a vendor’s product features and support is a complex task. It requires
evaluation of software functionality, its value to the planning process and its ability to
support planning best practices. There are also intangible factors such as vendor support,
user community connections and commitment to customer success once the sale is
complete.

The key is not just evaluating product features, but also how features are implemented
and by whom. It is important to test a planning solution that will be used by a large
number of stakeholders and will play a critical role in organizational performance.

Therefore it is highly recommended that a workshop approach be used to evaluate not

only solution features, but also the way a plan is constructed, distributed and reported on.
A business process should be defined (such as capital, headcount or expense) as context
for the evaluation of product features and intangible factors such as ease of development,
roles, references and customer support.
CONCLUSION

IBM Analytics helps quickly analyze data from multiple sources so you can enhance
customer loyalty, reduce financial risks, and increase operational efficiencies.
Through customized IT financing solutions, IBM helps acquire and deploy the
advanced analytics technologies need to create transformational change. Better
proactive analysis. More predictable financing. With one financing resource to
address all needs – including software, hardware, services for short term projects, and
transformational initiatives such as cloud-based solutions. – IBM helps

 Accelerate time,
 Consolidate financing of all technologies and services,
 Gain financial flexibility to quickly adopt the latest technologies.

The successful implementation of a planning solution requires an intersection of

technology, business process and best practices. This selection guide outlines key
principles to help align a company’s business process and technology requirements
during the process of selecting planning, budgeting and forecasting software. By
matching a company’s planning process to best practices, facilitated by proper
implementation of a planning solution, an organization can significantly improve its
financial and operational performance. This guide helps companies as they begin the
journey of evaluating and selecting appropriate software for their planning, budgeting and
forecasting needs.