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WHY SALES OPERATIONS AND FINANCE ARE MEANT FOR ONE ANOTHER

16/02/2019

By Robert Douglas, European planning director,Adaptive Insights

 

While finance might be at the centre of business planning, sales operations are at the centre of growth. Revenue is the lifeblood of a business—it keeps it alive, growing and moving forwards. However, it is also unpredictable.

 

Top-line growth is vulnerable to external factors over which businesses have no control. Despite hiring sales reps, training them, and passing them quality leads, businesses still run into obstacles. Prospects can walk back on commitments, for instance, or a new competitor or solution could disrupt the marketplace.

 

While a sales operation is a critical engine for the business, it is also a significant risk centre. As such, it is a compelling candidate for active planning—planning that’s collaborative, comprehensive and continuous. Active planning for sales operations delivers the following two benefits; more intelligent revenue planning and lessening the risk of the function as a whole.

 

More intelligent revenue planning means becoming more data driven in the way you handle quota allocation and territory planning. This in turn allows you to incentivise performance, prevent attrition, and achieve intelligent, sustainable growth. Reducing the risk inherent in sales operations comes down to understanding how sales activities impact—or depend on—both the macro finance plan and other operational departments.

 

In either case, sales plans are central to the financial plan. It simply does not make sense to conduct sales operations planning in a system that’s not inherently and directly linked to the financial plan. What’s more, sales and finance models need to speak the same language.

 

Disconnected sales operations planning costs you

When sales operations planning is out of sync with the broader operational goals and activities, the impact on a business can be severe. For obvious reasons, it’s imperative that sales is accountable to the rest of the business. Factors such as booking targets must remain consistent with marketing objectives, head count plans, and expense data.

 

Even small oversights in quota and territory planning can lead to major misses in growth, creating huge knock-on effects for the overall financial plan. It is not just about revenue failing to materialise or immediate cash flow problems – errors can send misinformation, false flags, and unreliable indicators to the rest of the business about performance, customer appetite, market health, and more.

 

Instead, with finance operating as the planning hub for the whole organisation, sales operations planners have a pathway into the other sales plans distributed across the different geographies, in addition to every other functional plan in the organisation.

 

The power of uniting sales and finance

In highly dynamic businesses, isolated planning is not really planning—it has little bearing on what is really going on or what is going to happen. Even in moderately complex organisations, plans usually benefit from coordinated participation from across the business. Integrating sales operations with the rest of the business gives other functional departments a chance to align objectives, synchronise activities, and contribute to resources in ways that maximise positive outcomes. And, importantly, the cost of acting in isolation is not just a suboptimal result—it is a potential disruption.

 

For example, imagine you’re running sales operations for a Software-as-a-Service (SaaS) provider. The recent loss of a customer means you need to increase your bookings. By running the numbers on a few scenarios in your sandbox planning environment, you can determine how much quota to apportion between different teams and territories. The next step is to settle on a plan, and then make changes in your transaction system. But what does that do to other areas of the business? Who else does it impact? And what can other departments do to help?

 

To snare more bookings, marketing probably needs to generate more leads. A sudden customer influx might mean HR need to bring in more implementation staff. And that hiring cost probably contributes to the lost revenue your business is trying to make up from the key customer it lost. So this inevitably impacts the number of new bookings needed to manage cash flow.

 

Isolated static planning accounts for none of these external dependencies or impacts. The result is either that sales is less likely to deliver on its revised figures—because of the cross-functional assistance they forfeit—or that its success causes disruption or delays elsewhere in the business.

 

These disconnects would go undetected until the company-wide planning event, where some unlucky soul will have to forensically consolidate and reconcile disparate Excel sheets from all over the business.

 

Integrated planning avoids all of these problems. Finance professionals can see the increase in bookings within the sales transaction system. They can pull up those figures against the target for marketing qualified leads this quarter, identify a mismatch, and recalibrate that target accordingly. They can see the implementation bottleneck those bookings will create three months from now, and they can advise HR to hire more technical resources.

 

A future with active planning

By investing in planning technology that the whole business can plug into—whether it is sales, finance, workforce management or operations—every department will be working from a single source. This means plans between different regions, and even different functions, are easy to consolidate, reconcile, and cross-reference with each other. Ultimately, everyone is engaged in more active planning, which results in a comprehensive, interconnected model of the business.

 

With an active planning environment, sales remains a critical engine for the business. Now, however, it’s tightly integrated with finance and other business units—and sales operations becomes much less of a risk centre.

 

 

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Finance Derivative is a global financial and business analysis magazine, published by FM.Publishing. It is a yearly print and online magazine providing broad coverage and analysis of the financial industry, international business and the global economy.

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