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Real-time Financial Planning 

by John Appleby

Problem:

Today's organizations are mired with the myth that planning is a process that needs to happen on a periodic basis. For example if you are a publicly list company,  it may be necessary to create a financial plan for the year which is reported as a forecast to shareholders and the wider market. This is normally updated to the market on a quarterly process - allowing companies to push for sales at quarter end and report earnings.


For example in Professional Services organization the financial plan which typically set at the beginning of the year and - sometimes - updated during the year. In addition to this they have sales forecasts which are based on a weighted sales pipeline and  a resource forecast based on sold work and nearly-sold work including holidays. In addition they have actuals of sales, revenue and resource usage and absence. The resource managers want to be able to ask questions like: if we sell these key projects, what will the impact on revenue and recruitment be? What are the areas for which I don't have a mid-term pipeline to fill current expected resource demand? Where are the areas of resource in which I have least availability?


In this situation both the revenue and risk profile changes very quickly and changes in demand or supply or even events such as volcano erupting require a decision to be made immediately. And what's more legislative demands in certain industries can mean that risk exposure may have to be reported much more quickly. It is likely that the global banks, for example, will need to show risk exposure in real-time and this may have a knock-on effect up their supply chain, as they look to understand risky suppliers.

 

For example in High Tech Holger Faber who is Solution Lead from SAP Global IT explains, “A planning application may not sound like a typical big-data solution. But sales forecasts and other plans can often involve hundreds of thousands of records – especially when a company is dealing with snapshot versions, matrix planning, and reference data. Also, planning requires stable and reliable performance; you need to know that it will be completed in time for corporate and regulatory reporting. Speed, stability, and reliability are areas in which SAP HANA excels. "


Solution:

SAP BusinessObjects Planning and Consolidation (BPC) allows organisations to plan scenarios like financial planning and to consolidate group accounts.  And when BPC will run on the SAP HANA platform the performance improvements mean that organizations can reasonably expect planning to be able to happen in real-time. This isn't relevant to all planning scenarios because some are intended to be periodic, but many planning cycles are born out the need to push planning scenarios down through a business. And each time this happens, friction is introduced into the process. With BPC on HANA, plans can be immediately disaggregated - dramatically reducing planning process friction.

 


Benefits:

Organizations can expect to be able to report on plan versions vs actuals in realtime - meaning that for the above resourcing example - even with thousands of employees, line item detail about absence and sales pipelines - can be reported in realtime. So when we win a deal, place a resource, or whatever else - the current position can be reported immediately.


Resources:

 

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