Planning software: How they are used and what benefits they provide

Corporate planning and forecasting are now more essential than ever to cope with increasing dynamics. Well-founded decisions based on current forecasts and data analytics, the efficient evaluation of possible future developments in scenarios and simulations as well as the automation of processes and the relief of planners are becoming massively more important. 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 currently being pursued. In order to remain capable of making good decisions quickly, organizations must update their plans and forecasts frequently and integrate tightly. Software in use and usage scenarios Successful corporate performance management (CPM) requires comprehensive planning, forecasting, analytics and business intelligence (BI) functionality. In particular, the integration of CPM (above all planning, but also increasingly financial consolidation) and CPM with analytics (reporting, dashboarding, and analysis) is becoming a decisive competitive factor for sound decision-making. The integration of corporate planning and its integration with analytics (IP&A) in common platforms is essential to optimally support modern and integrated corporate management. This fact is reflected in the use of planning products for tasks besides planning. Besides planning, Figure 1 shows that ad hoc query and reporting (79 percent) and standard/enterprise reporting (76 percent) are the main BI and analytics requirements companies look for in their planning, budgeting and forecasting products today. Moreover, basic data analysis (60 percent) and dashboards/scorecards (49 percent) are also frequent use cases. In particular, dashboards/scorecards and advanced analysis are emerging as requirements for the future. As our “visual” age of charts, emoticons and infographics continues to permeate everyday activities, and insights from millions of records get condensed into a single icon, dashboards – as opposed to traditional reports – are certain to continue moving up this chart. Figure 1: Do you use or plan to use your product for the following tasks? (n=925) 65 percent of respondents use or plan to use their planning product to perform advanced analysis at some point in the future. Established forecasting techniques provide companies with possibilities to automate forecasting processes and shorten or automate at least some parts of their planning processes, especially for forecasting activities and predictive planning. Experience from BARC consulting projects shows also that financial consolidation is becoming a requirement for an increasing number of companies (24 percent of respondents plan to use their planning product for financial consolidation in the future). Particularly the planning of an organization’s financial results (e.g., balance sheet, income statement, cash flow) may also require a consolidation of the financial plans of individual companies and subgroups if regarded at group level. For this reason, functionality for financial consolidation is often required in financial planning and is in increasing demand. To examine correlations between what the most successful companies do differently to less successful ones, we classify companies as ‘leaders’ and ‘laggards’. Leaders comprise the top 10 percent (approx.) of companies based on their achievement of business benefits, while the lowest 10 percent (approx.) are classed as laggards. In many companies, especially laggards, Microsoft Excel is still the tool of choice to support planning processes (see Figure 2). Specialized planning products are used by 79 percent of companies. Nevertheless, 76 percent also still use Excel separately (or in combination with other tools) for planning. Other non-specialized software products follow some way behind. Figure 2: Which software tools does your company use for planning and budgeting? (n=1,156) Refining the answers in Figure 2 to show the main software tool used for planning reveals that 58 percent use specialized planning software to support their planning processes (see Figure 3). These companies have recognized the added value specialized software can provide with functionality to efficiently support and improve planning processes. Many of them provide comprehensive functionality for creating random planning models on different aggregation levels (strategic as well as operational planning) for an integrated enterprise planning approach (including financial planning). However, 23 percent still use Excel spreadsheets with no underlying database or specific planning functionality as their principal planning product. This is devastating in today’s age of increasing dynamics and need for data-centric management decisions. As we will see in the following chapters, problems, dissatisfaction and a low level of achievement of business benefits are among the inevitable consequences of using Excel as a planning product. Figure 3: Which software tools does your company use most frequently for planning and budgeting? (n=1,156) A comparison of leaders and laggards in Figure 4 reveals that 70 percent of leaders use specialized planning software for planning, budgeting and forecasting, whereas 29 percent of laggards standardize on Excel. Just 57 percent of laggards use specialized software as their main planning product. Something we often discover in BARC’s consulting projects is that a company’s choice of software for planning often reflects its level of appreciation of the value of planning. While planning is an essential element of corporate management to align operational business with strategic corporate objectives for many leaders, it is often regarded as a chore that has to be done at least once a year in laggard companies. Markets and competition today are highly dynamic and complex, and the future is characterized by uncertainty. Not least due to the worldwide COVID-19 pandemic, the dynamics of markets and competition have increased rapidly and many companies are struggling to keep pace. Satisfying customer needs and securing solvency in volatile markets both require quick decisions and decisive action. Many companies seem to have recognized that increasing dynamics demand adjustments to corporate management – as well as planning and forecasting – to meet growing requirements. A dynamic environment requires flexible decision support and short-term updates of targets and forecasts. In order to meet these challenges, corporate planning and forecasting need to be carried out efficiently, in shorter cycles and must be updated quickly for well-founded decision-making. This cannot be achieved without sound software support. Particularly laggard companies seem to have recognized this fact, which is why the proportion of laggard companies still using Excel for planning has decreased by 11 percent compared to last year. In our experience, the permanent transparency of the business, capabilities for short-term forecasting and the consideration of all available data are strong requirements of digitalization, which are not achievable with spreadsheet-based planning. It will be interesting to see whether the trend of moving away from Excel continues in the coming years. Figure 4: Which software tools does your company use most frequently for planning and budgeting? Leaders vs. laggards (n=192) Business benefits from planning products There are many reasons why organizations adopt planning, BI and analytics products, and many ways these solutions are put to work. All projects, however, have common goals: to increase understanding of the forces shaping markets and businesses, and to be able to act on that understanding in a beneficial way. Ultimately, the hope is to be able to outsmart and out-deliver competitors, while proactively addressing customer needs. In general, all planning, BI and analytics products are used to achieve benefits in various areas and to make better decisions based on data. Business Benefits is possibly the most important KPI in the whole Planning Survey, focusing on the bottom-line benefits of planning, BI and analytics projects. Planning, BI and analytics that does not deliver business benefits is superfluous. Unlike core transaction systems, planning, BI and analytics projects are optional, not mandatory, so they must pay their way in terms of delivering business benefits. The following business benefits were evaluated by survey participants: Better quality of planning results Improved employee satisfaction Improved integration of different sub-budgets Improved integration of planning with reporting/analysis Improved integration of strategic and operational planning Increased competitive advantage Increased planning frequency Increased transparency of planning More precise/detailed planning Reduced costs Reduced planning complexity Reduced resource requirements for planning Saved headcount Figure 5: To what level have you achieved the following benefits with your product? (n=922) Figure 5 demonstrates that ‘better quality of planning results’, ‘increased transparency of planning’, ‘more precise/detailed planning’, ‘improved integration of planning with reporting/analysis’ and ‘improved integration of different sub-budgets’ are the benefits companies achieve most frequently through the use of their planning products. All specialized planning products analyzed in our survey are based on integrated data storage for actuals and plan data (‘single point of truth’). Moreover, comprehensive functionality for centralized top-down and decentralized bottom-up planning approaches at different aggregation levels (strategic as well as operational planning) is available as standard to support individual planning processes. Integrated functionality for reporting, analyses and dashboarding typically rounds off the range of functions found in specialized planning software. In contrast to the main benefits, ‘saved headcount’, ‘reduced costs’ and ‘reduced resource requirements for planning’ are seen as relatively minor benefits for planners, which is understandable. Even with the best software, the task of planning requires a lot of effort for any company and the tools used can only support them in the process, not entirely automate it. However, planning tools save a lot of time compared to other approaches, and the hours previously invested in manual efforts can be used for more value-adding activities. From BARC’s point of view, companies can certainly earn a competitive advantage with planning products by gaining deeper insights into their data and being more agile, enabling them to react to current and future developments in their businesses. In the future, it will be interesting to see how current trends such as artificial intelligence …

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