Budgeting & planning at the right speed

Why is reducing your lead time so important?

As described earlier in the series, organizations often find that collecting plan data is time-consuming. This leaves professionals with no time to do meaningful analysis. Also, this often makes the budget data obsolete before the process is complete. This is obviously a waste of your time and effort, but fortunately it can be done differently.

By greatly reducing your lead time, you can be more responsive to adjust your organization. Think about being able to respond to rapidly changing market conditions in a timely manner, analysis time and broader use of the numbers.

How do you do that?

At the clients where we have already reduced this lead time, we see that the gain is mainly in making your manual data set smaller. The budgeting and planning process will always be a process in which input from the financials remains mandatory; sometimes by top-down target setting from the directors, other times by processing input from the business. What you do have influence over as an organization is the amount of manual data you request. By using smart techniques such as allocate, spread or advanced linked data models, you can get from a small set of data points and drivers to the same level of detail as manual input, but with considerably less work.

Allocate

If you want to be able to quickly allocate certain costs of your headquarters, CCH Tagetik has an excellent allocation engine. This not only allows you to allocate across different keys, but also to create stepped allocations. So with this you can quickly create a detailed first set of data based on a single data point and multiple drivers. From there you can start working further. By properly maintaining your model and continuing to sharpen the business logics in your organization, you can quickly create a well-founded setup of your budget data with this.

Spreading

Then, once you've moved on and know where you want to end up by the end of the year, it's important to plot the course of your performance over time. In fact, a common analysis of finance is to plot actuals against periodic budget data. Differences in this between finance and the business often create conversations where real value is created. Therefore, to get to this point, it is also important that your budget data reflect reality. For this, there is a technique called spreading. This technique automatically calculates a distribution of entered figures across the axes of your worksheet. In practice, we see this used most often for periodic distribution of year-end forecasts. Distributions across other dimensions are, of course, also conceivable here. The beauty of a smart implementation of CCH Tagetik is that you can not only spread the spreading functionality linearly or via a simple pattern, but you can also have the software look at patterns from previous years. That way, for more stable items in, say, your P&L, you arrive at an accurate forecast fairly quickly.

Advanced Data Modeling

Often drivers can be traced from financial data, but much more often non-financial data underlie them. It is therefore good to capture these drivers in a customized data model within CCH Tagetik. Think of predictions from other branches of your organization such as sales funnels, but also external data around demographics or market developments. This data is often for sale, so then all that remains for your process is integration. The technique you can best apply for this within CCH Tagetik is the Analytical Information Hub. This technique today quite easily allows such developments to be stored and further used in your planning process.

Use your edge

Once all the building blocks are in place, starting the calculations is all that remains. Let that tool do all the simple work for you. From there, it's up to the financial to add value. Through insight and strategy, you help your organization move forward.