Business planning process existed from the day business was done. But the process, like any other process got better as the years/decades passed by, and off course directly linked were the technologies that supported these processes got better too. Sometimes availability of technologies has transformed the way we do business, plan for future…..welcome the new era of Enterprise Business Planning…
Evolution of Planning technologies:
Over the last few decades, Planning processes have changed around the technologies available to the business. Till the end of 1970s, planning was done mostly manually and therefore it was more in the heads of owners/managers of the business, or it was documented using a typewriter. So there was no way of doing any kind of detailed planning at that time.
In the 80s, with the advent of spreadsheets, lot of management practitioners preached the new process of annual budgets. This was in line with the reporting of annual financial numbers and building multiyear financial projections. The spreadsheet technologies got better and more usable, but still it took a while (several months) to create comprehensive budgets, which was of no use other than for the satisfaction of few souls who had that specific responsibility, and lay in the corporate department shelves.
In the 90s, with ERP coming up in a big way and availability of data in plenty, and due to increased compliance needs, the accounting and reporting become more frequent – quarterly, and therefore naturally the planning process also got more frequent – quarterly. But again this still did not solve the real need of planning, to facilitate the managers to track their performance and take decisions effectively. The plans were created as a mere time trend, the approach was to take last period actuals and increment it by x%age.
So as we entered the 2000s, it became clear that to derive success from planning process, it was essential to allow the business users, to build complex models, that allows planning to be done across multiple dimensions of the business. This could not be solved through transaction based systems alone. The advent of multi dimensional OLAP technologies that was primarily for reporting and analysis, was extended to cover planning processes. So it was perceived that in order to have a successful planning, it was very important to have technologies that can provide both the modeling capabilities that can be done by the business users as well as access to data. Now even at this point, the planning process and technologies did not give the necessary results as desired. Why? The technologies were not scalable to meet complex needs of the dynamic business, it needed significant IT support and intervention which was not acceptable for business who wanted to manage the planning process on their own. So essentially the business continued to do their own siloed planning with spreadsheets and would use the planning solutions more for consolidations of plans.
Welcome new era of Enterprise Business Planning
In the current decade, we are seeing a new era of Enterprise Business Planning that would allow handling use cases and possibilities that was not imaginable, mainly due to the arrival of a combination of in-memory enabled planning technologies that can really handle bigdata coupled with compelling user interface rendered not only in the laptop but also ipad or other mobile devices to allow wider adoption – employees out in the field (e.g. Sales person updating forecasts, buyers negotiating deals ) to decision makers sitting in the board room making instant decisions.
Better Planning and dynamic forecasting with big data
The below chart explains really the process of leveraging big data. So making meaningful insights and taking action (decisions) out of the data is key. I would like to really extend the scope of the term “action” to “adjusted plans” in the context of planning
Mckinsey came out with a great paper on big data and here is chart that I have picked from that which is very relevant how this can be transformational in the context of planning.
Key learning from above :
- Need an integrated enterprise business planning approach to leverage the power of big data.
- Test different scenarios to choose and make the best decision. Scenario planning is possible with varied data
- Predictive analysis can result in powerful trends and bring useful insights, and can result in amazing plans
- Information business models can be a reality, really the breakthrough initiatives that would result in more relevant business plans
- Enable dynamic forecasting to support event (external/internal) based plans that is required any time/any where
So as you see, big data indeed can be a compelling value to drive outstanding enterprise business plans. So of the possibilities cannot be achieved by a single technology solution, but a combination of technology solutions.
SAP just launched in financials 2012 BPC on HANA , which can be new era of planning technologies to realize the real benefits of big data and extend usage of big data to planning, budgeting and forecasting, taking it to beyond finance, and allow for a enterprise wide business planning.
I would like you to look at couple of excellent blogs around BPC on HANA
- What is BPC on HANA ? by Jens Koerner
- Real business benefits and use cases that can be attempted towards “Enterprise Business Planning” using BPC on HANA by John Appleby
Mobility to take it to next level and wider adoption
While we saw the power of big data, wide adoption and participation of organization wide employees into the planning process would result in really make it relevant and allow real time adjustments to plan, and also there is important need to have top management/board the necessary information to make those important decisions. You would agree that the sales force (>50% of most of companies employees) getting involved in this quick planning process, can drive significant value, with ability to meet the changing demands with supply.
Mobile technologies enable this wider adoption to broader users – from top management, to people in the field to be part of the dynamic planning process. SAP’s mobility first strategy is embedded into this by enabling the EPM /Planning solutions on ipad and other mobile devices. Sizzling user interfaces are key to have wider adoption and participation. As highlighted by John his blog, getting the real time planning to the Board for making decisions, another important technology enabler would be to enable on mobile.
So to summarize, the new era of Enterprise Business Planning has arrived, marking a new evolution in planning technologies, powered by
- In-memory enabled planning (with BPC on HANA)
Looking for your comments on this new era of planning technologies…