Business Intelligence Network - The Vision for BI and Beyond

Enterprise Planning Helps Companies Prepare for the Future

Published: October 11, 2005

Leveraging best practices for enterprise planning is important for today’s companies.

Throughout history, companies have searched for integrated application solutions to better run and analyze their work. Although a centralized location for data was highly desired, proactively slicing and dicing centralized data presented challenges to many users. Many people were duplicating efforts by creating the reports that already were produced by the software, as well as creating custom reports. These applications, however, failed to deliver much value beyond the few approved canned reports.  

Companies inability to effectively plan and budget is largely responsible for this failure. When companies plan, the process is oftentimes lengthy and centralized. Even worse, these efforts are usually monopolized by a management that is out of touch with the rest of the company. Such management generally fails to address key areas. One example of this is the needs of the field. Frequently, spreadsheets become the de facto platform for planning and offer little enterprise-wide collaborative input and commitment. This process can take between two to eight months with no reassessment of the plan. Today, enterprise planning applications frequently assist companies with planning, budgeting and forecasting.

Enterprise planning is a methodology (supported by a system) that helps organizations create strategic plans. This system allows organizations to break activities into initiatives, which can create ways to help companies with planning, monitoring and meeting annual goals. Planning is defined as “the act of formulating a program for a definite course of action.” Thus, a planning system is an integrated application that enables companies to effectively implement their strategic and tactical plans. It also helps groups of people agree upon strategies and objectives. Planning provides a basic process and easily allows any group to track their collective efforts. By doing this, organizations can successfully implement their plans.

Today, companies seek to leverage best practices. These practices have been developed after years of implementation experiences and increased exposure to project management. Below is a list of best practices to consider when planning:

Broad Participation
The planning process must expand and receive input from throughout the organization. This helps align employees with the company’s goals and strategies. While the participants may not be planning experts, they should be the closest to the daily operations of the company. By incorporating them into the planning process, the company can obtain their approval.

Driver-Based Modeling
A driver is a simple measure or input for the business plan. Drivers become predictors when they are designed and calculated according to the correct rules. Driver-based modeling allows for quick and easy conversion into financial numbers, which enables global hypothetical scenarios and the ability to see effects throughout the organization.   

Rolling Forecasts
Even the best plans cannot account for random events that impact the bottom line or delivery date. For instance, the recent hurricanes in the Gulf of Mexico may have harmfully impacted partners, vendors, employees and consultants in that area. Clearly, vigilantly monitoring the latest drivers into revised forecasts is critical for improving performance measurement.

Expansive View
It is important to understand and continually question how a project will add to the ROI and improve overall enterprise corporate health. Moreover, one must keep the future in mind. Although planning with historical data is generally easy, not everything works this way. Enterprise planning brings to the forefront plans that are continuously reviewed and revised.  

Execution Focus
Another essential aspect is for businesses to examine their value propositions from a compartmentalized view to process review. They must widen the scope for revenue generating activities (i.e. production, demand generation) while simultaneously reducing cost incurring activities.

Planning is the key action for closing the gap between strategy and action. By spending less time on budgeting and planning processes, your enterprise will have more time for in-depth analysis and maximization of operational effectiveness. Implementing a planning system using proven, best practice techniques delivers measurable improvements. This leads to faster and more continuous planning cycles as well. Ultimately, this allows organizations to adapt to their ever changing environment with greater speed and flexibility.