Guide to Continuous Planning
What is continuous planning?
Essentially, continuous planning is a dynamic approach involving strategic financial planning across all aspects of a business to drive informed, timely decisions. It utilizes technology to provide real-time information that facilitates rapid planning cycles, allowing finance professionals to become proactive in responding to events. It mostly depends on long-term strategic financial planning and critical management functions, like capital planning, cost accounting, financial reporting, and managerial reporting, in an integrated cyclical flow.
Continuous planning process
Continuous planning enables management teams to continually monitor and assess the impact of budget projections, strategic initiatives, and operations on critical KPI metrics. Also, it allows the organization to concentrate more on scenario forecasting and analysis than collecting data manually. This equips the entire organization with valuable insights that allow them to manage resources better and make informed decisions to drive better business outcomes.
Importance of continuous planning in finance teams
The changing economic landscape and the growing uncertainty, especially during the covid-19 period, have resulted in many businesses struggling to plan accordingly for the future to keep up with the rapidly evolving market trends and disruptions. The current static annual planning also makes finance teams unable to forecast revenue more accurately over the past six months. That means conventional ways of forecasting cannot support today's business needs.
Instead of traditional planning, financial organizations need to adopt a continuous planning model or approach to forecasting more often to achieve flexibility and agility in planning for their finance. Continuous planning enables a finance organization to drive business agility through rapid forecasting based on changing economic and market conditions. It also allows for better scenario-based planning, enabling companies to plan for the future with flexibility by considering how different scenarios could change the course of the business.
By considering the different scenarios a business can face and the range of possible outcomes in the future, finance leaders can better plan for the future and reduce the impacts on expense and revenue. They also can be better positioned to implement new workforce strategies quickly, make data-driven proactive decisions, and mitigate business risks.
Access to accurate data more frequently allows for faster reaction times based on unexpected events that could dramatically impact a company's future. It also enables finance leaders to provide the executive team and stakeholders with the latest data and analysis reports.
Benefits of continuous and strategic planning
So how can you establish continuous planning as the solution for the entire organization during times of uncertainty? Here are some of the benefits of implementing continuous planning in your enterprise:
- It enables your finance team to continually assess your business's financial position relative to operational needs, strategic goals, and available resources.
- Continuous planning helps organizations adapt quickly to changes in business circumstances, allowing them to make adjustments to their strategies and plans whenever necessary.
- It also enables your finance team to improve their budget planning process and cycle, increase transparency, and improve collaboration among various units and departments. This approach accelerates the speed at which finance can execute and close transactions.
- Automates laborious manual planning for finances and processes, enabling more efficient, accurate, and faster access to more detailed business data.
- Enables better financial planning and analysis with faster and more control over actual financial outcomes, fostering a culture of continuous, agile planning and decision-making.
- Provides leaders with deeper, more valuable insights into the performance of your business, helping them develop and improve responses and course-correct with greater confidence and faster.
- Provides structured financial and dynamic planning for your enterprise in a single platform, encouraging a collaborative partnership that boosts overall business performance and establishes finance as a key part of strategic business development.
Overall, continuous planning enables your company to prepare the future of your FP&A, allowing you to use finance as a strategic advantage.
What is a continuous planning example?
The perfect example of continuous planning is the agile software development approach.
Due to the dynamic nature of software development, users and customers' expectations are bound to evolve over time. This is mainly because of change in the environment and the insights of using the product. Since no requirements specification can possibly be made to anticipate the frequent need for change, continuous planning is the only feasible approach.
Akin to the agile software development methodology, agile planning is inherently iterative, thus making it very adaptable to continuous change. The agile way of thinking lets you focus on customer and user needs at various business levels.
Typically, the plan isn't in itself all that important. The real value therein agile planning is the way of thinking it fosters, helping create a plan that helps the business achieve its set goals and objectives while still maintaining customer satisfaction.
For instance, agile software development teams often release new software updates, thus enabling rapid product delivery and value creation. To achieve this, teams work in rather short cycles or iterations. By allowing a feedback loop from partners, suppliers, customers, and other stakeholders, they are able to gather valuable information relating to the issue they're trying to fix.
Once your team decides to follow the agile continuous planning approach, you can guarantee quality at every step. Moreover, you can choose to work in short cycles and deliver your work at any time without unnecessary chaos. Additionally, the faster pace of delivery will go a long way towards giving your product the much-needed competitive edge against the competition.
Continuous planning is more agile, efficient, and thus beneficial to businesses of all sizes. Agile planning allows you to change the scope of your business when necessary, leading to enormous cost savings, increased customer satisfaction, and, more importantly, faster product delivery.
How to use continuous planning process in finance
Like implementing a new process, adopting a continuous planning approach in your business takes time. It also requires a framework, vision, and technology to foster speedier, improved planning and decision-making. To help you get the most out of continuous planning, here are three practical steps your finance team can take to integrate continual planning in finance:
- Evaluate Your Strategic Vision
Strategic vision shouldn't be static. The vision that led to your success in previous years may not be effective in the future. Thus, it's critically important to constantly assess your strategic vision to confirm its relevance and effectiveness by checking if it's still defining your business goals and outlining the right roadmap to help you reach them.
Your continual planning model must be supported by clear and consistent operational and financial data. Error-prone manual systems can lead to issues like inconsistent records and data duplication. And making important business decisions using incorrect or outdated information can risk making the continuous planning process useless.
Centralizing your data offers finance professionals a single source of truth, eliminating the many risks associated with laborious, time-intensive manual processes. It also ensures your team can access the right information and data whenever needed, improving finance efficiency and effectiveness.
- Plan in Real-time
To effectively adopt continuous planning process in your business, you should utilize real-time data. Making important business decisions using outdated data can leave finance leaders unable to respond to immediate changes in business conditions. Employing modern cloud solutions can help provide your business with real-time, accurate data and the advanced analytics tools you need for continuous planning.
This equips your finance team with timely and actionable insight into the performance of your business. It also enables self-service capabilities, allowing business users to evaluate their data and creating more time for your team to focus on financial forecasts instead of managing one-off requests.
- Plan for Different Timeframes
Continuous forecasting helps leaders to better understand the impact a change could have on performance during different timeframes. This allows finance teams to plan ahead by identifying how performance may change in varying scenarios.
Implementing a rolling forecasting and budgeting approach also simplifies a company's ability to make more effective targeted investments since shorter cycle periods are usually more accurate. Empowering your finance team with the required resources more frequently can enable your business to grow and undergo more organic changes. This can benefit your company in diverse ways, including streamlining the hiring process and reducing staffing expenses using real-time insights into your business needs.
Continuous planning is an invaluable tool for finance organizations, especially during uncertain times, to help them deliver more accurate forecasting and planning. Implementing continuous planning in your organization can help you quickly and easily adjust to the ever-changing business conditions by leveraging data and technology across the organization.
Continuous planning also enables your time to make more informed business decisions, increase transparency, and enable greater collaboration between departments in your organization.