Businesses devote considerable time and resources to strategic planning, but that’s no guarantee of successful execution. As recent Gartner research revealed, 83% of business strategies are at risk due to faulty assumptions people make during the planning process about critical factors like opportunities, obstacles and capabilities.
The same study found that 67% of core functions aren’t aligned with the business unit and corporate strategies, which creates a disconnect between business plans and the people who execute them. Disconnects like that are magnified when the business needs to respond quickly to challenges, such as the fallout from the pandemic, inflation or the war in Ukraine.
These crises have exposed a gap between companies that use integrated planning tools and those that rely on spreadsheets. When a crisis hits, shareholders, boards and senior management have questions about the impact. Finance teams that use spreadsheets have to pull data together, so they aren’t able to provide quick answers. Teams that use integrated planning software can. That’s why more teams are adopting integrated planning tools.
Creating a Single Source of Truth
One major benefit of using an integrated planning tool is that it pulls financial and operational data onto a single platform, which helps with planning and reporting. So, if you’re the new CFO at a company that receives funding from a private equity firm, you’d submit monthly reports about what’s going on in the business from both the financial and operational perspectives. To do your job efficiently, you’d need an integrated system and a single source of truth.
Arguably, your most important priority as a new CFO is establishing a single source of truth and creating a master data file. Otherwise, you’ll spend too much time arguing about numbers. Is this value 10 or 12? You need to know the correct answer if decisions will be based on that value. A single source of truth accelerates decision making and reduces the risk of error.
In addition to pulling operational and financial data together to present monthly reports, you’ll also need that information to manage the business and execute on goals. A single source of truth standardizes the methodology used to calculate data, so you eliminate scenarios where people use different calculation methods and introduce inconsistencies.
Providing Personalized Self-Service Reports
Another advantage of an integrated planning platform is that you have the ability to share information and reports with the management team more easily. You can also layer on technologies like Tableau and other tools so managers can pull information as they need it, instead of creating a monthly report that tries to anticipate everyone’s questions.
It’s a pull vs. push reporting approach. With an integrated planning platform, you can create clickable dashboards as opposed to monthly reports. Managers can go into the platform at any time and click a report that tells them what’s happening in the business, including what the current projections are, which trends are present, etc. Managers can see what’s important to them.
Self-service pull reporting may not sound like a huge leap forward over traditional push reporting, but it is a significant value driver. The people who look to finance for answers no longer have to ask someone on the finance team to generate a report; they can see for themselves what’s happening and make decisions accordingly. That’s to everyone’s advantage.
Living and Breathing Your Strategic Goals
As the Gartner report notes, faulty assumptions are one hazard to reaching strategic goals; lack of focus is another. Many businesses set a five-year strategy and then dust it off yearly to see where they are in relation to the goals. But if they are truly your strategic objectives, shouldn’t you be living and breathing them every day? With an integrated planning approach, you can.
With integrated planning software, you can build reports that are aligned with your strategic goals. Unlike a spreadsheet, an integrated planning tool can be set up to answer questions related to your strategic goals and provide financial and operational data that aligns key performance indicators with the objectives.
This gives you the ability to see where you are at any time. You can align yearly budgets to the strategic objectives and ensure your goals are reflected in forecasts and decision making, focusing on the key value drivers to make sure you reach your objectives. In this way, an integrated planning approach allows you to maintain focus on strategic goals.
Transforming Spreadsheet Jockeys into Business Partners
Another high-potential benefit of adopting an integrated planning approach is that it can convert the financial planning and analysis (FP&A) team into true business partners who can drive transformative change and success across the business. The integrated access to financial and operational data creates transformational power.
As partners, the FP&A team’s job is to help the rest of the business succeed. With a truly integrated planning tool, the FP&A team can focus on that mission instead of preparing data. Without an integrated planning approach, FP&A teams tend to function as spreadsheet jockeys, spending all their time making sure numbers are balanced and reconciled and complete.
Freed from those mundane tasks by an integrated planning platform, FP&A teams can become the business partners the company needs to move forward, collaborating with colleagues on the operational side to drive toward strategic goals. It’s great for FP&A team morale and productivity, and the operational partners benefit immeasurably.
Increasing Confidence — in Finance and Everywhere Else
The truth is that we’ll probably never get away from spreadsheets entirely, and that’s okay; they can fill in gaps where needed. But when companies use an integrated planning platform to manage 80% to 90% of the data, it accelerates decision making, increases productivity and allows the company to react more nimbly to crises.
An integrated planning approach also supports calculated risk-taking that can pay large dividends. By improving forecast accuracy, an integrated planning platform increases confidence. If you know you can trust your cash flow projections, you’ll have the confidence to free up some cash for M&A activity, a move into a new territory or a product launch.
Not only will highly accurate cash flow forecasts increase confidence so you can redeploy working capital, it also increases the bank’s confidence in your company when you seek loans. You can get more capital at lower covenants if your reporting is reliable, and it builds shareholder confidence too. In short, you can operate more aggressively.
Most companies rely on spreadsheets for business planning, even some of the most technologically advanced companies. But the past few years underscored the limitations of spreadsheets as a planning tool, so finance leaders are taking a fresh look at their tech stacks. An integrated planning approach should be a priority since it accelerates decision making and increases agility, enabling better, faster and smarter operations.
Matthew Bagley is CFO at Unit4.