Nicky Tozer, VP of EMEA, Oracle NetSuite
Most businesses are focused on ambitious targets. Whether that is looking to provide the latest in seamless customer service to growth and expansion of profits, revenue and/or scale. With this ambition comes a drive to have a broad strategic vision to ensure the business is reaching these targets. However, while the big picture is key to developing a roadmap for the business, it can be easy to get caught up in the excitement and forget that the ‘basics’, such as budgeting and planning, are key to stabilising growth and change.
Many companies undertake budgeting at the beginning of the year, in a “new year, new start” approach, as if the turn of the calendar year is a magical time to reassess plans and budgets. However, what many businesses forget is how complex planning and budgeting can be, which is why, without regular review, many budgets or plans fail. After all, if managing a business is a year-round endeavour, surely managing the budget should be too? Instead, to optimise the probability of success, businesses should continuously be in a budgeting and planning mode, allowing for agility, the opportunity to adapt, and a focus on the task at hand.
Get planning and budgeting right, and there are some serious rewards. The most effective organisations continually integrate financial and operational data, embed analytics into every process, and use advanced analytical techniques to predict future trends. And these organisations outranked their peers by 70 percent on measures of profit and revenue, according to recent Ventana Research. A careful grip on planning and budgeting can provide a dynamic business approach, where challenges and issues can be spotted ahead of time before they become major potholes on the road to success.
Another key aspect of any planning process is that it focuses a company on the right opportunities and helps identify and avoid any barriers to reaching those objectives. Without planning, businesses risk being swept up in the wrong opportunities, and this lack of focus can have a significant impact. Running a business is like any big project: when the business is not focussed on the task at hand, distractions can send it down the wrong path. Steve Jobs once said: “People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying ‘no’ to 1,000 things.”
Planning is therefore a highly-effective tool in getting and staying on the right track, whatever the distractions or other opportunities might be. Essentially, continuous planning helps a business remain agile. For example, if a competitor creates a revolutionary new technology or product that has the potential to transform the market, plans may need to be changed. Having a constant view on plans and budgets means that the business can clearly see where changes can be made, while keeping in line with targets and staying competitive in the industry. This isn’t a distraction, but a necessary form of agility that all good businesses should be ready to execute should they need to.
Yet financial planning, budgeting and forecasting is a very complicated endeavour for any company. Implementing a superior budgeting, planning and forecasting tool with the right type of process can reduce, or even eliminate, uncertainty, and improve efficiency while simultaneously ensuring companies have the right focus and agility. These tools don’t necessarily do the leg work for the planning and budgeting team – though automation is becoming more commonplace, helping to save businesses a fortune in efficiency and productivity gains – but they ensure that the business data and insights are in one easily manageable place that all parties can access with ease.
The right planning, budgeting and forecasting application not only gathers the data, but it makes early forecasting and estimates, performance measurement, and the identification of trends and deviations possible. This ensures companies can be proactive, nimble and quick, able to double down or make strategic changes to key opportunities when warranted. In the current business landscape, where competition is rife and uncertainty is everywhere, agility is integral to business success. So, having the planning and budgeting in place to make this agility possible is key to running a successful business.