Collaborative enterprise planning is the process of connecting and aligning plans from all departments and business units across an organisation. It breaks down silos and brings teams together to collaborate on plans and drive better business outcomes. The case for involving more stakeholders, from across the enterprise couldn’t be stronger. For example, FSN’s research, The Future of Planning, Budgeting and Forecasting 2017, finds that budgets and forecasts created in organisations that involve more stakeholders are 2.5 times more likely to be perceived more positively and are trusted 30% more by budget participants.
Yet, historically, many organisations have built up their plans along functional silos – simply because that is the way that people are usually organised, i.e. according to their skill set, such as sales, accounting, engineering, marketing and so on.
But business processes do not respect functional boundaries. Take for example, the ‘Quote-to-Cash’ cycle. It embraces inventory management, the sales department, logistics and finance functions. The true costs of sourcing a product, delivering it to a customer and getting paid are driven by the process – not by functions. This means that plans in one area need to be consistent with plans in another if resources are to be allocated efficiently and setting a performance objective in one place does not have unforeseen consequences in another.
The trouble is, that when organisations plan in functional silos it creates differences and distrust, which ultimately erode stakeholder buy-in and confidence in the integrity of the plans and results.
So, the obvious question is how can organisations establish an approach that more effectively connects people to the process and to each other?
Plainly, the modern era needs a different approach to enterprise planning, one that supports a more collaborative (cross-functional) approach; that joins up the dots between operational and financial data; that can swiftly on-board diverse data sources; that can recalculate highly granular business models and offer alternative scenarios without missing a heartbeat. Modern systems not only need the ability to leverage common data sources such as ERP systems that provide the real-time actuals from across the organisational hierarchy against which plans can be compared, but also the means to bring in less codified and more unstructured data.
But crucially, modern collaborative enterprise planning recognises the pivotal importance of interrelationships between different business functions and uses collaborative technologies such as workflow and social tools to help encourage dialogue between all functional areas involved in the setting of an enterprise-wide plan.
Social tools that allow collaboration-in-the moment are gaining ground. Chat functionality combined with screen sharing and ‘presence checking’ (which shows whether a colleague is available or not) allows colleagues to reach within and beyond their part of the process to engage with other personnel involved, to share and resolve issues in real-time. The advantage of such capabilities is that compared to email, telephone calls and walking the corridors, budget participants never have to leave their planning application to engage. And in many systems the chat, forms a permanent record and audit trail of what was agreed.
But collaborative enterprise planning on its own is not sufficient to drive agile decision-making. FSN’ research reveals that even though 70% of planning, budgeting and forecasting processes are respected, inclusive and strategically aligned, only 40% are insightful, i.e. reveal unexpected insights and pathways to better performance. For this, organisations need more advanced analytical tools, data visualisation, charting and increasingly newly emerging technologies such as machine learning and artificial intelligence. The latter is already making an impact in terms of the speed with which the results and insights can be generated. FSN finds that around 14% of organisations with more than 10,000 employees are already deploying AI and machine learning in their forecasting process.
Smart CFOs know that collaborative enterprise planning promotes agility and smarter decision-making by explicitly making the link between operational business drivers and business performance. Synchronising financial and operational plans using the latest data for forecasts sales, marketing, financial and supply chain planning, improves confidence in revenue forecasts and closes the gap between planned outcomes and operational reality. But crucially keeping all functions on the same ‘page’ i.e. collaborating, helps to ensure that decision-making is strategically aligned, that forecasts are made with greater accuracy and that organisations can drive superior returns by responding faster to market changes.