Traditional business planning for companies
Typically organizations spend eight to 16 weeks to complete their business plans or set budgets for the next year based on one or more of the following assumptions:
- Forex, interest, GDP, or borrowing rates
- Employment rates and per capita income changes
- Competitive action, market volatility, and technology changes
- In specific cases it could be crude prices or commodity price changes
Once these assumptions are formulated it takes a few weeks to months to complete the business plan for the next year. After internal review these business plans are then presented to the board and/or senior management team for approval.
Snapshot: Travel and expenses (T&E) planning
Let us review this process by taking a simple and easy to understand example of travel and expenses planning:
- T & E drivers formulated at the corporate level as indicated in below screenshot
- Every department or cost center will submit its plan (wish list) for approval
Let’s look at an example of how a corp and admin department, using various drivers, plans its domestic and international trips, client dinners, etc. to arrive at Final T & E spend of $697,320
This plan is presented to the management team for approval. After its review and analysis,management decides to perform a cut on T & E by a certain percentage. Therefore, the original plan of $697,320 needs to be reduced to $500,000.
Revising the business plan
Traditionally with these revised guidelines, the department owner would manually revisit its trips and client dinners, and manipulate those in a way to arrive at the T & E spend approved by the ,management team. This process often becomes the bottleneck to perform the real-time changes to the plan.
The future of business planning is here
What if we had capability to do following:
- Review the approved T & E budget and automatically perform updates to all the lines which roll up to T & E
- Automatically update the various trips (domestic and international)
- Automatically update the planned client dinners
- Perform all of the above, keeping the T & E budget intact as per the management approval, in real time, and allowing management to evaluate the business impact of their decisions to classify the good spend vs. nice to have
Real-time business planning is possible with Anaplan
Let us now look at how the above could be achieved using today’s in-memory, cloud-based solution powered by Anaplan.
Based on the revisions, Anaplan has automatically calculated the number of domestic and international trips, and client dinners along with all the lines that roll up to T & E, allowing the management team to easily evaluate the impact of their decisions.
Let me know your thoughts on the above business simulation process (Forward/Backward computations) in real time by leaving a comment below. For more information, contact us or request a demo to learn more about such capabilities using today’s modern cloud-based platform powered by Anaplan.
