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Planning software trends: What users really care about

The Planning Survey 21 The Results document: Chapter 4
Used and upcoming planning software trends The most important trending topics in terms of planned adoption in the future (see Figure 1) are: ‘predictive planning’ (55 percent, down 1 percent compared to last year) ‘integration of strategic and operational plans’ (41 percent, up 7 percent) ‘simulation and analysis of scenarios’ (40 percent, up 1 percent) Other topics such as ‘integration of planning with analytics’ (38 percent) and ‘value driver-based planning’ (38 percent, up 4 percent) trail some way behind. ‘Use of planning product in the cloud’ has the joint second lowest ‘planned’ rate of all the trending topics listed (25 percent). In 2019, only 23 percent said they were already using a cloud-based planning product. That figure has jumped to 38 percent in 2021. In contrast, the number of respondents claiming that a cloud-based planning product is ‘not required’ for their companies is fairly stable: in 2020, 38 percent of respondents said that cloud-based planning software was not required, which is nearly identical to the 37 percent in 2021. It will be interesting to see how this develops in the future and whether companies increasingly recognize the benefits of cloud-based planning for their companies. The results of The Planning Survey confirm what BARC has also discovered in other surveys: cloud-based planning and BI is a bigger trend in the eyes of software vendors than users. There is very little interest in migrating existing on-premises planning implementations to the cloud. Cloud-based planning is particularly attractive to companies when addressing new requirements or implementing new planning tools for additional use cases. Figure 1: Which of the following does your company do/use with your product for planning and budgeting? (n=884) Figure 2 visualizes and confirms BARC’s experience in customer projects that planning approaches within companies, as well as the planning market in general, are constantly maturing and many organizations now possess profound expertise in this area. It is no surprise to us that advanced planning topics such as predictive planning and forecasting are generally gaining in importance as many companies strive to reach the next level of planning maturity. Also, software vendors are reacting to trends in the market, providing additional advanced planning functionality to support customers’ needs. An effect of the current pandemic could be the increase in the use of ’self-service planning in business departments‘ this year (up 7 percent). A dynamic environment requires flexible decision support and short-term updates of targets and forecasts. Decision-makers need up-to-date and high-quality information to cope with increasing dynamics. The efficient provision of information as well as a high degree of adaptability to changing conditions and requirements are essential goals that companies are currently pursuing. This is why planning and especially forecasting are gaining in importance for companies and forecasts are replacing classical budgeting as the central instrument for corporate management. In the last 12-18 months, the frequency of updating forecasts in companies has markedly increased. Many organizations now update their forecasts and projections at least once a month to take account of changing signals from their environment for corporate management. In our opinion, these developments have accelerated the use of self-service planning in business departments. To increase speed, planning and forecasting must take place directly in business departments with minimal IT involvement. Therefore, software tools must be simple and business-user-friendly. Figure 2: Trends in use, 2016-2021, (n=various) Whereas the ‘planned’ rates for many trending topics are stagnating or decreasing over time, Figure 3 shows that interest in the following trends is growing fast: ‘integration of strategic and operational plans’ ‘value driver-based planning’ ‘integration of different sub-budgets / financial planning’ Figure 3: Trends planned, 2016-2021, (n=various) Leaders vs. laggards A comparison between leaders and laggards (see Figure 4) shows that leaders have a strong focus on improving their planning activities and therefore are generally more open to trending topics. In particular, their higher level of planning maturity and more solid grasp of the planning basics puts them in a better position to address advanced planning topics and benefit from the advantages. Some examples of these topics include: Better integration of different sub-budgets with financial results planning, as well as integration of strategic with operational plans, leads to a significantly higher quality of planning results in many cases. In a volatile economic environment, companies have to react to changes quickly. Simulation and the analysis of scenarios (best case/worst case) provide companies with the ability to replace their ‘best guess’ with objective assessment criteria to minimize the risk of making bad decisions. Concentrating on the real drivers of a business with a moderate level of detail couples significance with efficiency. Using a value driver-based planning approach can often lead to a reduction in complexity and a shortening of planning processes. Predictive analytics and prognosis are major trends in the market that also affect planning and forecasting (‘predictive planning’). In particular, the automation of forecasting processes with consolidated estimates using statistical predictions offers the possibility for companies to shorten or automate at least parts of their planning processes. The integration of planning with analytics is essential for predictive planning and forecasting as it brings together the relevant data and functionality. Many companies we speak with say the main problem they face when addressing trends such as these is a lack of expertise. This is especially so in laggard companies where knowledge of the essential planning basics is often lacking, or planning is only established at a very rudimentary level. In these organizations, expertise and experience of how to proceed are the main limiting factors. Figure 4: Which of the following does your company do/use with your product for planning and budgeting? Leaders vs. laggards (n=173) Integrated corporate planning Determined corporate management requires fast and well-founded decisions. Organizations face an increasingly dynamic environment with more frequent and comprehensive forecasts, simulations and analyses. Increasing dynamics and growing time pressure are forcing companies to update their targets and forecasts at ever shorter intervals. Planning, budgeting and forecasting must be adapted to these new requirements. With markets becoming more dynamic and fast-moving, companies expect that the relevance of carefully integrated corporate planning, which provides valuable information and insights to management, will continue to increase. The hope is that excelling in this area will give them a clear competitive advantage. Holistic integration of strategic, tactical and operational plans, but also all sub-plans with each other and with results planning, is the essential foundation for high-quality results in corporate planning. Furthermore, it is the backbone for the use of modern planning approaches. This applies not only to value-driver-based planning but also to the use of statistical methods and machine learning (predictive planning and forecasting). For as many as 90 percent of respondents, it is clear that the integration of strategic, financial and operational planning creates high added value or is even essential for corporate management (see Figure 5). Figure 5: How important is the integration of strategic and operational planning to the management of your company? (n=627) Integration must be carried out conscientiously at all levels to maximize its benefits. Integrated corporate planning quickly provides reliable and relevant information for corporate management only when all the following aspects are addressed simultaneously. But organizations must not underestimate the effort required to thoroughly integrate all sub-plans and to connect planning with analytics and BI. Companies constantly need to question and optimize their planning approaches, tools, structures and processes. Many organizations today have a lot of catching up to do in this area, as the following detailed analyses clearly show. Objectives and assumptions from strategic planning must automatically be incorporated into annual planning (see ‘integration of strategic and operational plans’). This is the only way to ensure that a company’s long-term goals are consistent with its medium and short-term goals. Corporate strategy provides the framework for annual planning and budgeting. It is essential to fully convey the strategic guidelines into the detailed data of annual planning in order to provide orientation and content for tactical and operational management. The Planning Survey results show that planning is performed annually (classic budgeting) in many companies. Designated strategic planning with a medium to long-term planning horizon is not carried out in all organizations. Just one third of the companies surveyed (31 percent) have largely or completely integrated strategic and operational short-term planning (see Figure 6). The majority of organizations (65 percent) currently only have partial integration or are planning to merge strategic and operational planning in the future. In these organizations, planning medium to long-term strategic corporate goals – if this is done at all – is thus isolated from operational, short-term planning. Changes to strategic plans do not directly affect operational plans and have to be merged at great (manual) effort. Figure 6: How far advanced is the integration of your strategic plans (long-term, medium-term) and operational planning (short-term)? (n=625) Companies are forced to make forecasts or predictions at ever shorter intervals in dynamic and volatile environments. This is the only way to ensure that decisions are based on the latest information available. The integration and intertwining of annual corporate planning with forecasts during the year is essential for integrated and transparent management. Predictive planning and forecasting driven by predictive analytics and machine learning is currently gaining rapidly in importance in this context. The technically and economically correct linking of all sub-plans with each other (e.g., sales, production, resources) and with financial results planning (balance sheet, profit and loss statement, cash flow) is at the core of integrated corporate planning (see ‘Integration …

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