“Understand the future that has already happened.” This quote from venerable business consultant Peter Drucker was invoked by Steve Player, North American Program Director for Beyond Budgeting, in one of a series of SAP Game-Changers radiocasts. Three guests visited the program and were asked to offer their thoughts on budgeting and forecasting – and here’s what they had to say.
When it comes to integrated business planning, CFOs might want to decipher and heed Drucker’s advice. According to roundtable experts, it might be C-level executives who are keeping companies behind the eight ball.
Budgeting and forecasting success are dependent upon a comprehensive understanding of the business and a keen ability to predict future trends.
But how do we achieve this? Are disruptive technologies such as enterprise mobility, cloud, and in-memory computing the answer to implementing integrated business planning enterprise-wide?
Jeff Hattendorf, cofounder of IT consultancy firm Macrospect, believes they are. He cautions that strategy and financial planning need to be separate activities. It’s the responsibility of the CIO and CFO to herald the arrival of tools that integrate planning, operations, and finance at an operational level and at a level of detail that line managers can put to good use.
Let Go of the Budget
“In many cases the CFOs tend to be the ones that are holding everybody back,” agrees Player. They become attached to a certain budget and want to quickly close the books, without considering the overall health of the business. But Player says the budget is out of date before it’s even finalized. Placing so much focus on a defunct budget can hinder forecasting and predictive analytics.
Rather than keeping score and getting hung up on meeting a certain number, CFOs should focus on something more strategic and long-term, according to Floyd Conrad, Senior Director of EPM and Finance with the SAP Center of Excellence. He claims it is much easier to create a balanced budget and an actionable strategic plan for a company if you rely on new predictive and in-memory technologies.
Chart a Quest for Vision, Not for Speed
As any executive will tell you, reports don’t become more valuable simply because they run faster. Hattendorf explains that adopting technologies to speed processing should be done within the larger framework of achieving a clearer, more detailed view of business processes.
Player thinks the whole reporting concept should be completely reimagined, since reporting speed dictates how quickly insights are uncovered. The objective should not be finding a quick fix, but preventing problems from occurring in the first place. For example, find out when people need information instead of what kind of information.
For integrated business planning to succeed, CFOs and CIOs need to collaborate more and become early adopters of technology that prepares them for ups and downs in ever-changing markets.
Player is so optimistic, he believes that the notion of integrated planning won’t be a point of discussion in the next five years. It will happen so naturally that no one will consider it newsworthy.
Is that a wager you’d take? Dive deeper into this debate and listen to the whole radiocast.