unlocking the value in your planning process

Unlocking the Value in your

Planning Process

Scott Wallace

Senior Director, Transformation

11/1/2018 © 2018 eCapital Advisors, LLC.

Rolling

Forecasts History

1

Value

2 3

Discussion

© 2018 eCapital Advisors, LLC. 2

Introduction


•38

•4

•10

Planning, Budgeting &

Forecasting



And…

everyone was looking

for the answer

11/1/2018

Evolution of Planning, Budgeting and Forecasting


✓ Beyond Budgeting✓ Activity Based

Budgeting

✓ Zero Based

Budgeting

✓ Traditional

Budgeting

✓ Limited

Forecasting✓ Quarterly

Forecasting

✓ Driver Based

Forecasting

✓ Rolling Forecasts

2000 +199019801970

Innovation in Finance


67%85%

Innovation in Planning


EMERGING

• No formal

planning

process

• No planning

tools

• Inadequate

communication

DEVELOPING

• Inconsistent

process

• Basic tools

(excel)

• Inadequate

communication

DEFINED

• More

standardized

processes

• Reliance on

ERP for

planning

• Limited

Analytics

ADVANCED

• Enterprise-

wide planning

processes

• Use of cloud

enable

planning tool

• Using

Advanced

planning

processes like

Rolling

Forecasts

LEADING

• Strategy

integrated with

planning

• Real time

forecasting

• Advanced

analytics in

place and used

to manage

performance

Where does your company fall?

Unlocking Value


Business Value

© 2018 eCapital Advisors, LLC. 1011/1/2018

Business Value informal term that

includes all forms of value that determine the health and well-being of the firm in

the long run

Unlocking the Value in Planning - Focus

Value Creation: strategies for creating

value

Value Management: support performance

management and analysis

Value Stewardship: enforce fiscal

discipline and control


Unlock the Value in Planning


Value Creation Value Management Value Stewardship

Innovation and Investment Analysis/Performance Management Control and EfficiencyK

ey A

ctiv

itie

s

Strategy Execution

Capital Investments

Analytical Modeling

Workforce Planning

Target Setting

Review and Approval

Key E

nab

lers

Project Management Driver Based Mgmt Process Improvement

Strategic planning

Investment planning

Project prioritization

Rolling forecasts

Driver-based models

Zero based budgets

Formal planning processes

Project portfolio mgmt.

Capital spending Process

Driving Value with Rolling

Forecasts


The 12-Month Budgeting Cycle


Too Historically

Focused

• Annual budgets have a very short shelf life and are overly focused on

the past.

• Rolling forecasts focus on creating a realistic view of the future,

allowing leadership to quickly react to changing environments.

Treated as an

Isolated Event

• Traditional budget processes consume significant leadership

headspace in the 3rd quarter, but are rarely evaluated more than once

per year.

• Rolling forecasts can be refreshed weekly, monthly or quarterly,

allowing managers to learn from their forecast record, and to refine

forecasting techniques and assumptions.

Provides Limited

Visibility

Issues with a Typical Twelve-Month Planning CycleJack Welch, former

CEO of General

Electric, has called

the annual

budgeting process

the “bane of

corporate America”

• Annual budgets create an artificial barrier at year-end, and there is

little insight gained beyond the current year.

• Rolling forecasts continually provide an updated assessment of

progress towards medium term goals that drive value.

Rolling Forecasts Enable…

• Frequent updates of the forecast based on changing conditions

• Higher level of confidence in the predicted result

• Corrective actions to be taken to alter the predicted outcomes


Forecasting revenue in any market climate today is at best difficult. But properly trained FP&A people are doing less static forecasting and more rolling forecasting. It’s the difference between reactive finance and proactive finance

Brian Kalish

Principal and Founder, Kalish Consulting

11/1/2018

Rolling Forecast: Benefits

• Increase in speed, efficiency and accuracy through the use of drivers

• Significantly decreased manual effort

• Shortened response time to analyze impact of changing market conditions

Speed and Efficiency

• Quarterly forecast using highly correlated drivers improves projection accuracy

• Ability to do “what-if ” analysis and scenario planning by changing drivers

• Control and consistency of all drivers and assumptions

Forecast Quality

• Rolling forecasts eliminate the need for a stand alone budget process

• Reduced duplication in processes and underlying planning and reporting activities

Integration and Standardization

• Improved empowerment due to use of operational drivers that operators understand and control

• Increased job satisfaction through the acquisition of new skills

• Significantly reduce overtime associated with current budgeting processes

Empowered and Satisfied Employees


Rolling Forecast: Critical Success Factors

Development of accurate forecasts must be a priority - changing methodologies will not change

attitudes

There must be a clear distinction between targets and forecasts

The forecasting process will need to be streamlined due to the increasing number of times it will

be refreshed per year

Forecasts should be evaluated for accuracy to help inform, improve and build the trust in the

forecast


Discussion & Questions?


Thank you!

ecapitaladvisors.com


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