The Business Value of Predictive Planning – Episode 2: Scenario Planning
Predictive planning can help accelerating and automating the forecasting activities.
This is relevant for lower-touch forecasting activities, performed on a recurring basis.
Planners may need deeper interaction with certain areas of their forecasted scope.
They form hypotheses about the future, possible evolution of their business.
This activity is known as scenario planning (or scenario management).
The latest FP&A Trends report shared some key findings on scenario planning:
- Running scenarios is a long and challenging process for 55% of the respondents.
- 26% of respondents are unable to run scenarios.
- Most organizations using AI and ML run scenarios in less than one week.
Planners can leverage predictive planning as part of their scenario planning activities. They can generate predictive forecast scenarios, based on their hypotheses on the future.
Let me take an example here.
When forecasting future energy expenses, planners must consider energy price evolution. The energy price evolution depends on the evolving geopolitical situation. Forecasting energy expenses means creating different scenarios on energy price evolution.
This is another part of the dialogue I was alluding to in the first episode.
Planners input their hypothesis and scenarios as data. This data becomes inputs to the predictive models. Predictive models can deliver a range of forecasts, from the best case to the worst case. Planners can further optimize and finalize their forecasts.
This is an optimal combination between human expertise and forecasting technology.
- Predictive Planning What-If Simulation in SAP Analytics Cloud
- Carbon Emission Forecasting: How SAP Analytics Cloud Can Help
Scenario planning powered by predictive planning is a unique approach for forecasting. This is very relevant in an uncertain and rapidly changing business environment.
This concludes these blog series. You can learn more on forecasting acceleration and automation in the first episode.
I will be eager to read your comments and thoughts on these blogs. Thank you for reading these! I hope SAP Analytics Cloud predictive planning can deliver value to your organization. Please do not hesitate to contact me if you need more information.