How Will You Plan for the NEW Normal?
Much has been written about how organisations should approach financial planning, budgeting and forecasting (Planning) during the Covid-19 pandemic. The major focus of this has been around how the pandemic has caused an overnight decline in many markets and how to deal with this. I agree this is vitally importance if organisations are to survive such a cataclysmic event.
But, with the UK coming out of lockdown and the incredible vaccine programme steaming ahead, organisations must now urgently turn to how they can address, and take advantage of, the coming upturn opportunities. This will NOT be going back to pre-pandemic norms, it will require a different approach and mindset for the new normal.
The time to do this now:
The Guardian, 13 April 2021
The Times, 12 April 2021
An interesting Oracle blog talks about Scenario planning: Pivoting from pandemic to proactive which is in essence what I am discussing here, but what does Finance need to put in place to enable this to happen? Here are the 4 essentials Brovanture and our clients’ finance departments are focused on in our efforts to be ‘Rebound Ready’.
Once, a controversial subject for many organisations, since the pandemic, it has become ‘the new normal’. Forbes covered this subject in How Remote Working Is Reshaping A Future New World of Work way back in May 2020. How we plan, budget and forecast needs to be cognisant of this change. Meetings on Zoom, communications via email, text messages and much more… No longer can you walk up to a colleague’s desk and ask a question or catch them when making a coffee in the staff break area. Whatever software applications we use for Planning, at a minimum they will need to be accessed from anywhere and at any time easily and efficiently with appropriate security. The best finance organisations will have Planning software solutions that positively support this way of working.
Multiple Scenario Planning
There is no one correct plan. There are lots of possibilities which need to be simulated and reviewed to determine the one most probable to deliver the required outcome. This not a one-time exercise it is something that has to be done regularly, often triggered by events rather than on a fixed frequency. Jennifer Toomey discusses this in her blog Want effective scenario planning? Here’s what it takes. Jennifer makes the case for techniques like goal seeking and Monte Carlo simulation along with insightful reporting and analysis if organisations are going to effectively develop the financial plans they will need for the new normal.
If the pandemic has done nothing else, it has shown us just how quickly everything we take for granted can change. If organisations are to cope, then they need to become much more agile in the way they plan and change the plans they have. This has repercussions for the tools they use and how they use them. Emailing Planning spreadsheets around, especially to remote workers, is not going to deliver the agility needed. Planning tools need to have embedded process definitions, communications, alerts and controls so that the lag between each step is minimised and everyone is clear as to what they have to do, and when, to achieve the desired outcome. This is ‘stable’ agility as defined in The keys to organizational agility published by McKinsey and Company. They also discuss ‘dynamic’ agility which is the ability to change how things are done in response to change. The Planning software solution used will need to be able to address this as well, for truly agile financial planning, budgeting and forecasting.
In the past, organisations have restricted the involvement of the workforce in financial planning often due to technology, cost and/or time limitations. There is a danger this could become even more widespread with remote working. In his paper Social Knowledge Management David Seacombe makes the case for becoming a ‘social business’ to get the best value from your people. This requires the free flow of knowledge across the business so that it can be shared with peers and lead to the best solutions and decisions possible. This applies to Planning and specifically to the software that is used. Does it enable and promote communication and sharing across a wide number of staff who have valuable input if they are involved in the process? We know that very often the best information comes from those closest to the customer, supplier and/or market. There is a bonus here, in addition to better knowledge, getting more people involved means more commitment to achieving the desired outcome!
As you start to think about 2021 H2 Planning we hope these ideas will help. With modern Cloud based planning, budgeting and forecasting software solutions, we know from experience, you can have something working very quickly that would address the four points above.
We wish you good Planning and good fortune for 2021 and beyond.