Alight White Papers

Application Requirements for Rolling Forecasts

Driver-Based Planning for Budgets & Forecasting

Escaping Excell Hell: Budgets & Forecasting

Integrating Actuals into Financial Plans

Planning at the Business Unit Level

APPLICATION REQUIREMENTS FOR ROLLING FORECASTS

With company valuations in the dumpster and credit markets tight, the economic crisis has forced hard looks at revenue sources and spending across the board. The economy aside, old ways of doing business are continuously challenged by competitors with innovative business models enabled by the internet.

These and other socio-economic trends are pressuring finance teams everywhere to make planning systems more immediate and responsive. The old way of thinking — you run a company through the once a year budget process — is on the way out in favor of new concepts and system approaches generally described as "continuous planning". The practical implementation of continuous planning is through rolling forecasts — frequent updates of financial plans that include integrating actuals data and rolling the forecast time period beyond the current fiscal year.

This white paper explores the concepts and practices of rolling forecasts with a focus on defining application requirements for integrating actuals, financial modeling and scenario analysis — the three foundations of a rolling forecast system.

Alight Planning is an integrated planning and analysis software package that supports the requirements for budgeting, forecasting and financial reporting.

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DRIVER-BASED PLANNING FOR BUDGETS & FORECASTING

Line managers and finance staffs are frustrated by the inadequacies of spreadsheet based planning systems for delivering useful budgets and rolling forecasts. A major problem is the disconnect between the operational elements of a business and financial plans. In particular, managers have difficulty forecasting headcount and expenses because spreadsheet templates do not contain models that allow them to relate their spending to marketing forecasts or other operating activities. Finance staff who roll up the numbers from the managers have very little backup for evaluating the reasonableness of submissions or for answering questions from the executive staff.

What's missing is driver-based planning, a best practice methodology where financial plans incorporate assumptions about business activities which are modeled to drive financial data such as revenue projections, headcount, spending and capital requirements. With driver-based planning, managers are empowered to do better budgeting and, in particular, improve the accuracy and decision making usefulness of rolling forecasts.

Alight Planning is a multi-user software package that incorporates architectures, modeling tools and analytics that make driver-based planning accessible to companies that want to improve their budgeting, forecasting and decision making processes.

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ESCAPING EXCEL HELL: BUDGETS & FORECASTING

More than 70% of companies use Excel® as their principal interface for budgets and forecasting. Many of these companies are in "Excel Hell", a continuing state of inefficiency and disruption related to using Excel for collaborative planning. The spreadsheet symptoms of Excel Hell are broken formulas, consolidations that choke, and wrong numbers. The organizational symptoms are inefficiency, frustration and decisions based on bad information.

For the strategic CFO who needs better answers and more analysis, and for the financial planning manager who's pulling too many late-nighters trying to get clean rollups, this white paper explores the root causes of Excel Hell and lays out criteria for solutions. Specific issues explored include: modeling using cell-based formulas; structures needed for activity-based plans, multiple user security and rollups; and the state of analysis, or the lack thereof, because there's not enough time.

Alight Planning, a financial planning and analysis software package, delivers feature sets that address the most serious issues of Excel Hell.

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INTEGRATING ACTUALS INTO FINANCIAL PLANS

Integrating actuals into the planning cycle is usually a zoo. Financial and operating results are spread across multiple databases. Actual results and plan detail are at different levels. Lack of underlying volumes and rates make meaningful causal analysis difficult. You want apples to apples. Too often you get fruit salad.

With today's more intensive focus on driver-based planning and key performance indicators, this timely white paper will help management and FP&A staff think through the issues for better actual versus plan analysis: reporting on actuals and plan line items below natural class accounts; getting a handle on activity driver relationships with units, rates and amounts; capturing volume and rate impacts underlying plan variances; and calculating actual/plan operational metrics for conversion rates. Alight Planning is financial planning and analysis software that lets you build and maintain a solid infrastructure for fully integrating actuals and plan using driver based planning and reporting.

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PLANNING AT THE BUSINESS UNIT LEVEL

BPM (business performance management) systems are gaining traction in Fortune 1000 companies. BPM integrates actuals, plan and business intelligence information from multiple users and data sources, helping C level executives better understand operations and anticipate problems and opportunities.

Such systems, however, do very little for business units at lower levels whose requirements for planning, reporting and analysis are typically at different levels and have modeling requirements that the BPM system cannot accommodate. Planning at the business unit level is most commonly done in Excel with cost center inputs gathered using workbook templates that are difficult to format and consolidate. While business units can't escape from "Excel Hell" using a corporate BPM system, they can streamline planning and analysis processes with Alight Planning, a multi-user software package with built in driverbased planning architectures and automated analytics.

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