Our professional services Interim management. Resources Whitepapers. Differences between strategic planning, budgeting, and forecasting. Company About us. Contact us. Three are produced in-house, two are bought in. The path to integrated financial planning is primarily an iterative communication process, which can be radically simplified by a software solution with consistent data.
If figures from production planning can be directly applied to the scenarios from sales planning, then sales targets including production costs are transparent. It is then immediately obvious whether the contribution margins provide the right incentives for sales or not.
Companies that rely on Excel during the planning process typically only manage one iteration — with many remaining discrepancies that should actually be resolved. On the way to integrated financial planning, the top-down approach has the advantage that management has the big picture in mind and the harmonization of the various sub-plans is considered from the outset. This reduces the number of coordinating loops and shortens the process.
The counter-current method compensates for the disadvantage that the management level is less able to assess opportunities and risks within the individual business units than the divisional managers. Ultimately, the stakeholders at the operational level have their say next and can take corrective action. The hope in the bottom-up process is often that conflicts in planning will not arise in the first place, provided the plans come together as a whole. In the bottom-up process, each planner defines the resources he or she needs and the output that can be generated from them.
Depending on the corporate culture and the personality of the planner, this planning tends to be more aggressive or more conservative, having sometimes more, sometimes less of a buffer.
The efficient sequence is therefore: first top-down, then bottom-up. In this way, the bottom-up planner plans with a clear objective, verifies the feasibility of the plan, and provides constructive feedback to management. Buffers are avoided and the buy-in of the planners is still ensured. A software-based planning system must alleviate all the pain points described above.
It must be immediately clear what the adjustments to the plans in one business unit mean for dependent departments and for the overall planning process. This transparency is the factual basis for decisions. Many discussions become instantly superfluous when there is clarity about the effects at the push of a button.
Plus, arguing about remaining issues becomes much more fruitful and constructive if everyone at the table trusts the numbers. Because they can. Controllers know Excel and don't need to rely on anyone else to do it. No IT, no external consulting, nothing. And even if it takes all day to adapt the planning to the demands of management, the 26th tab with dependent cells is built and half the night is spent tracking down that one error in that one particular Excel formula — at the end of the day, the result is there.
Each time a work of art. Each time paid with even darker shaded eye rings. Why do this to yourself voluntarily? Planning tools often create dependency on IT. Every adjustment means a change request where no one can predict when it will make it onto the roadmap.
Or controllers are suddenly dependent on external consultants who build or prepare a solution but are neither cheap nor available for ad hoc changes. No matter how thoughtful and early you get into the planning process: Management will always have change requests — right in the middle of the planning phase.
Only during the planning process itself do individual strands of information crystallize into one picture. Only now can leadership delve into the subject in depth. And that is a good thing.
Only when modelling scenarios and weighing impacts is easy, sensible decisions can be made. No alignment iteration should be dropped just because implementation with the planning tool is too time-consuming. Whoever is responsible for planning must be able to change and adapt the system independently. Controllers must be able to master their planning tool in their sleep. Then change requests are not a horror scenario, not a messed-up weekend, but a simple to-do.
That is why the introduction of a planning tool must include coaching for autonomy as early as the first project phase. After the first implementation step, controllers must be able to operate autonomously with the tool and configure the system according to their own needs — again and again, because requirements will change. Are you looking for the financial planning software that frees your budgeting and forecasting processes from complexity and reliably delivers consistent business figures?
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