Post on 15-Jul-2015
© 2010 Alight Planning Slide 1
Application Requirements for Rolling Forecasts
By Alight Planning
Ben Lamorte, VP Business DevelopmentRand Heer, CEO
Presented at ASMI ConferenceSan Diego, CA
April, 2010
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2-Hour Video Workshop on Rolling Forecast Requirements Highlights of 4-Hour Conference Workshop
http://www.alightplanning.com/Workshop/Requirements-for-Rolling-Forecasts/Video.html
Books and Websites Managing with Rolling Forecasts
www.johnstretch.com/book/rollingForecast.html
Future Ready www.futurereadybook.com
Visit Our Website www.AlightPlanning.com
ASMI Private Demo Tuesday – Demo Room Reserved To Sign Up, Contact Ben Lamorte
Resources for Rolling Forecasts
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Ben Lamorte Business Activities
Vice President, Business Development, Alight Planning Principal, Decision Consulting (Adobe, Kaiser) Manager, Business Development, planetrx.com Consultant, APM/CSC Healthcare
Today’s Speaker
Publications Author of 2 technical research papers, American Mathematics Society Co-author of planning white papers
Education BS Math & Mechanical Engineering, University of California, Davis MS degree Stanford University, Management Science and Engineering
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Requirements for Rolling Forecasts
Today’s 45-Minute Agenda 30k Foot:
Why Rolling Forecasts? Budgeting Vs Rolling Forecasts
5k Foot View: Summarize Checklist #1: Scenario Analysis Special Case Study: Rand Heer on Budgeting & Forecasting at Clorox
Not doing the 100-Foot View Today: In-Depth Analysis of Application Requirements for Rolling Forecasts Requirement #1: Scenario Analysis Requirement #2: Driver-Based Modeling Requirement #3: Integrated Actuals
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At what point do you expect your annual budget targets to become obsolete?
SOURCE: Business Finance Magazine
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SOURCE: APQC / BBRT Research
How Much of Planning Adds Value?
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Budgeting Rolling ForecastsTimingFrequency Once a year Often—event drivenCycle time Months/weeks Days/hours/near real timeTime horizon Fiscal year Rolling; beyond “The Wall”______________________________________________________________________________________________________________________
ProcessIteration cycles One version at a time Multiple scenarios at one timeParticipants Many—all managers Fewer—finance; key managersCollaboration Submission/approval Near real time as possibleDeliverables Reports in binders Decisions; action__________________________________________________________________________________________________________________________________
DataType Financial Financial & operationalInputs Many direct inputs Fewer direct; driver-basedMeasurement Variances Relative change; trendsLevel of detail Precision driven Relevant; what’s material
Budgeting Vs Rolling Forecasts
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1. Robust Scenario Analysis You can’t predict the future, especially in today’s economy But you can construct scenarios that let see alternate futures You can evaluate best courses of action under different conditions
2. Driver Based Modeling Reduce direct input data volumes Increase ‘modeled elements’—operational/driver based planning
3. Integrating Actuals “Rolling over” actuals in plan files—apples to apples Using actuals to understand trends—focus on rates Using actuals as an activity driver/source for plan data
3 Key Requirements for Rolling Forecasts
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Scenarios In Spreadsheets Separate workbooks is the principal mechanism A nightmare for maintenance & comparisons
Scenarios In Budgeting Applications Manage to budget versions– aka “version control” Process control: who changed that number? what’s approved? Compare versions at the product/cost center/account level
Scenarios In Planning Applications Reporting functionality Maintenance issues Performance [meeting the “need for speed”]
Requirement #1: Robust Scenario Analysis
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Versions Are For Budgeting Create and approve one version at a time Version control: who changed that number? what’s approved? Once a new version is approved, prior versions are discarded
Budget Version A Budget Version B Budget Final
Scenarios Are Different from Versions
X X
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Forecasts = Scenarios (lots of them!)1. Assessing risk—BE/Hi/Low ranges 2. Evaluating alternative strategies/programs3. Managing uncertainty— external events
Actionable knowledge/decisionsGo/no go decisions on programsReallocate resourcesChange underlying processesManage timing
What You Can Do with Scenarios
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“Be Prepared”
“Develop Situational Awareness”
The Goal: Be Prepared
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What are the three scenarios that your company needs to be analyzing now as part of your planning process?
What are the three most important decisions your company will be making over the next 12 months?
Questions about Scenarios
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Reporting functionality checklist: Compare any two scenarios side by side with variances Compare any two scenarios with variances at all levels of detail Line up scenarios side by side at all levels of detail
Examples
Scenario Analysis: Reporting
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Maintenance issues Cumbersome maintenance results in errors Time consuming maintenance kills the use of scenarios
Maintenance checklist Create a new scenario by copying any existing scenario Make value changes across scenarios in one operation Make structure changes across scenarios in one operation
Examples
Scenario Analysis: Maintenance
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Communicating the model in real time
The new “collaboration”
The Excel PowerPoint Cycle
The Need for Real Time
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The “need for speed” Everything refreshes in near real time The planning tool is the presentation tool The planning tool enables collaboration on-the-fly
Performance checklist Change values of a scenario with ripple through in real time Change dimension filters with ripple through in real time Toggle between scenarios in seconds Update scenarios for structure changes in seconds or minutes
Scenario Analysis: Performance
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Scenario Analysis Checklist Scenarios have comparative reporting:
Compare any two scenarios side by side with variances Compare any two scenarios with variances at all levels of detail Line up scenarios side by side at all levels of detail
Scenarios are easy to create and maintain: Create a new scenario by copying any existing scenario Make value changes across scenarios in one operation Make structure changes across scenarios in one operation
Application meet “need for speed” for scenario analysis: Change values of a scenario with ripple through in real time Change dimension filters with ripple through in real time Toggle between scenarios in seconds Update scenarios for structure changes in seconds or minutes
Complete Checklist: Scenarios
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Rand Heer Business Activities
CEO, Alight Planning (Planning software) Co-Founder, Aspirity (Microsoft BI consulting) Founder, FP&A Train (Essbase training) Founder, Pillar Corporation (Enterprise budgeting) CFO/Finance Director for 2 public companies
Today’s Special Speaker
Publications Coauthor: “Business Intelligence: Making Better Decisions Faster” Author of 10 white papers on planning/reporting topics
Education MBA degree Harvard Business School