The new horizons of forward-looking management

"The only purpose of economic forecasting is to make astrology respectable" joked the famous economist John Kenneth Galbraith. Can the new "agile" business planning approaches lend greater credibility to corporate financial forecasts? What are the challenges of forecast management? How can we improve the efficiency of the budgeting process? What technologies are available to support operational and financial staff?

What are the main difficulties encountered in planning?

Many companies are questioning their budgeting process, which they consider to be time-consuming, costly and of little added value. Forecasts often arrive too late to help steer the business. The CFO is overwhelmed by the demands of reporting and budget monitoring, and is unable to free up sufficient time to fulfil his role as advisor to senior management. The main limitations observed are as follows:

  • The budget process is often disconnected from strategy, with ambiguous objectives based on assumptions that quickly become obsolete, using indicators that are too accounting-based, and poorly articulated with the assessment of economic and individual performance;
  • Even if each department has a detailed understanding of its business, financial forecasts remain isolated in spreadsheets and rarely connected at corporate level. This situation limits the ability to assess the impact of strategic changes on operational departments;
  • All too often, the information contained in different systems is inconsistent. Companies lack the resources to quickly reconcile, consolidate and share results to present a single view of forecasting data.

However, alternative approaches are not widely deployed and are often deemed disappointing: outright abandonment of budgeting, Activity Based Budgeting, Zero-Based Budgeting, external performance benchmarks, etc.

‍

What are the keys to agile forecasting?

There are three main areas for improvement to give the budgeting process real added value:

  • Ensuring that the budget is consistent with strategy implementation
    • By definition, the purpose of a budget is to ensure that a company's resources are used efficiently to achieve its strategic objectives;
    • As one of the main vehicles for management dialogue and economic steering, the budget must make it possible to determine the level of delegation granted by head office to the operating units, and the nature of the performance expected.
  • Approach financial planning as a business project
    • Increase the involvement of business contributors to produce continuous, real-time forecasts;
    • Raise awareness of financial culture among business contributors;
    • Implement an agile business planning approach progressively, using short deployment cycles focused on specific departments, according to priorities.
  • Encourage the use of tools that make the forecasting process more collaborative and more accessible to users with practical experience of the operational activity.
    • Share a user-friendly, easily accessible tool that brings people and data together in a simple process, making it quicker and easier to collect up-to-date forecast data;
    • Deploy a solution to build and disseminate useful indicators to drive growth, measure performance and increase visibility;
    • Encourage managers to take ownership of forecast results by customizing their dashboards.

‍

What technologies are available and what are the market trends?

In the market for EPM1 solutions, dedicated to performance management and forecasting, a number of "pure player" publishers have been making significant inroads in recent years. Examples include Anaplan, Board, Onestream, Pigment, Workday Adaptive Planning, Tagetik and Jedox. These players, which were built in the digital age, offer innovative models: process-based approach, new technologies, sharing of information, applications and best practices between members of the user community, online documentation and training...

  • Cloud computing becomes the norm

Finance departments are gradually converting to the use of cloud-based EPM solutions. Perfectly secure, these solutions guarantee easy access and deployment, while reducing/eliminating maintenance costs.

  • Blurringthe boundaries between EPM and BI2

To strengthen their reporting and data visualization capabilities, these "EPM pure players" are developing partnerships with "BI pure players".

  • The user experience becomes central

Publishers, especially those who have entered the market in the last five years, have worked hard on the ergonomics of their applications to optimize ease of use: intuitive navigation, search bar, online help.... The user interface is aimed at functional profiles. Thus, model configuration is truly in the hands of management control teams. What's more, in cloud mode, users can access the solution with a simple Internet connection, from a computer, tablet or cell phone.

  • Increased computing power

The integration of data science and Big Data3 approaches and techniquesmeans that very large volumes of data can be processed within EPM platforms. New functionalities even enable predictive analysis using artificial intelligence.

‍

Faced with the onslaught of "pure players", generalist players such as SAP, IBM and Oracle are strengthening their offerings around integrated ERP4-EPM-BI platforms and promoting their solutions in SaaS mode.5 By way of example, let's cite :

  • SAP with the "SAP Analytics Cloud" solution on SAP HANA, bringing ERP and BI functionalities closer together,
  • Oracle with its "PBCS" solution - Planning and Budgeting Cloud Services, which combines EPM and BI functionalities,
  • IBM "Planning Analytics", which offers its "TM1" budgeting solution combined with "Cognos Analytics" for reporting and its integrated generative AI platform for Big data and predictive analysis.

‍

Better anticipation for better management

In the face of change and digitization in the economic environment, an organization has a real competitive advantage when it can anticipate and carry out simulations. Forecasts enable us to build up a picture of the company's future, based on imagined evolutionary hypotheses.

Financial planning teams will never have a crystal ball, but they will always be judged on the speed with which they draw up the annual budget, and the number of iterations they go through to arrive at the final version. In the future, they will increasingly be judged on their ability to support operational managers in the decision-making process.

It's now possible to use a forecasting management solution that allows you to quickly and easily build perpetual re-forecasts, in line with operational reality. This new approach to agile business planning, underpinned by innovative tools, is becoming a "must-have" for many companies seeking to improve their performance management.

‍

About the author

‍

David Hatchuel is a partner at Emerson audit & conseil. A graduate of the Master Banque et Finance de Paris Dauphine and a chartered accountant, he supports the digital transformation of finance departments in their projects to upgrade information systems, improve the efficiency of finance functions and manage performance.

‍

About Emerson audit & conseil

‍

With a team of 210 people, Emerson Audit & Conseil supports financial departments in :

  • Their operational needs: team building across all business lines: Accounting, Consolidation, Management Control, Internal Control and Audit, Treasury and..,
  • Their transformation/digitization projects: organization, optimization and implementation of tools, management of CSR/CSRD projects

For further information:

  • dhatchuel@emerson-groupe.com
  • Emerson audit & consulting
  • 27, rue de Berri 75008 Paris
  • 06 63 49 43 84
  • http://www.emerson-groupe.com/

‍

1 Enterprise Performance Management (EPM) covers the entire management cycle of a company: statutory consolidation, reporting, forecasting, simulation/predictive, modeling. EPM is aimed at the finance function, and more broadly at all corporate functions and operational departments, as part of the management of their activities.

2 Business Intelligence (BI) solutions provide tools for visualizing and analyzing information: reporting, indicator dashboards...

3 Big Data makes it possible to process any type of data (structured and unstructured) and to address any type of use (queries, reporting...) with a speed and volume unattainable with traditional BI.

4 An ERP (Enterprise Resource Planning) or Progiciel de Gestion Intégré (PGI) is a software package that integrates the company's main functional components: production management, sales management, logistics, human resources, accounting and management control.

5 Software as a service (SaaS) is a commercial operating model for software, in which the software is installed on remote servers rather than on the user's machine.

"The only purpose of economic forecasting is to make astrology respectable" joked the famous economist John Kenneth Galbraith. Can the new "agile" business planning approaches lend greater credibility to corporate financial forecasts? What are the challenges of forecast management? How can we improve the efficiency of the budgeting process? What technologies are available to support operational and financial staff?

What are the main difficulties encountered in planning?

Many companies are questioning their budgeting process, which they consider to be time-consuming, costly and of little added value. Forecasts often arrive too late to help steer the business. The CFO is overwhelmed by the demands of reporting and budget monitoring, and is unable to free up sufficient time to fulfil his role as advisor to senior management. The main limitations observed are as follows:

  • The budget process is often disconnected from strategy, with ambiguous objectives based on assumptions that quickly become obsolete, using indicators that are too accounting-based, and poorly articulated with the assessment of economic and individual performance;
  • Even if each department has a detailed understanding of its business, financial forecasts remain isolated in spreadsheets and rarely connected at corporate level. This situation limits the ability to assess the impact of strategic changes on operational departments;
  • All too often, the information contained in different systems is inconsistent. Companies lack the resources to quickly reconcile, consolidate and share results to present a single view of forecasting data.

However, alternative approaches are not widely deployed and are often deemed disappointing: outright abandonment of budgeting, Activity Based Budgeting, Zero-Based Budgeting, external performance benchmarks, etc.

‍

What are the keys to agile forecasting?

There are three main areas for improvement to give the budgeting process real added value:

  • Ensuring that the budget is consistent with strategy implementation
    • By definition, the purpose of a budget is to ensure that a company's resources are used efficiently to achieve its strategic objectives;
    • As one of the main vehicles for management dialogue and economic steering, the budget must make it possible to determine the level of delegation granted by head office to the operating units, and the nature of the performance expected.
  • Approach financial planning as a business project
    • Increase the involvement of business contributors to produce continuous, real-time forecasts;
    • Raise awareness of financial culture among business contributors;
    • Implement an agile business planning approach progressively, using short deployment cycles focused on specific departments, according to priorities.
  • Encourage the use of tools that make the forecasting process more collaborative and more accessible to users with practical experience of the operational activity.
    • Share a user-friendly, easily accessible tool that brings people and data together in a simple process, making it quicker and easier to collect up-to-date forecast data;
    • Deploy a solution to build and disseminate useful indicators to drive growth, measure performance and increase visibility;
    • Encourage managers to take ownership of forecast results by customizing their dashboards.

‍

What technologies are available and what are the market trends?

In the market for EPM1 solutions, dedicated to performance management and forecasting, a number of "pure player" publishers have been making significant inroads in recent years. Examples include Anaplan, Board, Onestream, Pigment, Workday Adaptive Planning, Tagetik and Jedox. These players, which were built in the digital age, offer innovative models: process-based approach, new technologies, sharing of information, applications and best practices between members of the user community, online documentation and training...

  • Cloud computing becomes the norm

Finance departments are gradually converting to the use of cloud-based EPM solutions. Perfectly secure, these solutions guarantee easy access and deployment, while reducing/eliminating maintenance costs.

  • Blurringthe boundaries between EPM and BI2

To strengthen their reporting and data visualization capabilities, these "EPM pure players" are developing partnerships with "BI pure players".

  • The user experience becomes central

Publishers, especially those who have entered the market in the last five years, have worked hard on the ergonomics of their applications to optimize ease of use: intuitive navigation, search bar, online help.... The user interface is aimed at functional profiles. Thus, model configuration is truly in the hands of management control teams. What's more, in cloud mode, users can access the solution with a simple Internet connection, from a computer, tablet or cell phone.

  • Increased computing power

The integration of data science and Big Data3 approaches and techniquesmeans that very large volumes of data can be processed within EPM platforms. New functionalities even enable predictive analysis using artificial intelligence.

‍

Faced with the onslaught of "pure players", generalist players such as SAP, IBM and Oracle are strengthening their offerings around integrated ERP4-EPM-BI platforms and promoting their solutions in SaaS mode.5 By way of example, let's cite :

  • SAP with the "SAP Analytics Cloud" solution on SAP HANA, bringing ERP and BI functionalities closer together,
  • Oracle with its "PBCS" solution - Planning and Budgeting Cloud Services, which combines EPM and BI functionalities,
  • IBM "Planning Analytics", which offers its "TM1" budgeting solution combined with "Cognos Analytics" for reporting and its integrated generative AI platform for Big data and predictive analysis.

‍

Better anticipation for better management

In the face of change and digitization in the economic environment, an organization has a real competitive advantage when it can anticipate and carry out simulations. Forecasts enable us to build up a picture of the company's future, based on imagined evolutionary hypotheses.

Financial planning teams will never have a crystal ball, but they will always be judged on the speed with which they draw up the annual budget, and the number of iterations they go through to arrive at the final version. In the future, they will increasingly be judged on their ability to support operational managers in the decision-making process.

It's now possible to use a forecasting management solution that allows you to quickly and easily build perpetual re-forecasts, in line with operational reality. This new approach to agile business planning, underpinned by innovative tools, is becoming a "must-have" for many companies seeking to improve their performance management.

‍

About the author

‍

David Hatchuel is a partner at Emerson audit & conseil. A graduate of the Master Banque et Finance de Paris Dauphine and a chartered accountant, he supports the digital transformation of finance departments in their projects to upgrade information systems, improve the efficiency of finance functions and manage performance.

‍

About Emerson audit & conseil

‍

With a team of 210 people, Emerson Audit & Conseil supports financial departments in :

  • Their operational needs: team building across all business lines: Accounting, Consolidation, Management Control, Internal Control and Audit, Treasury and..,
  • Their transformation/digitization projects: organization, optimization and implementation of tools, management of CSR/CSRD projects

For further information:

  • dhatchuel@emerson-groupe.com
  • Emerson audit & consulting
  • 27, rue de Berri 75008 Paris
  • 06 63 49 43 84
  • http://www.emerson-groupe.com/

‍

1 Enterprise Performance Management (EPM) covers the entire management cycle of a company: statutory consolidation, reporting, forecasting, simulation/predictive, modeling. EPM is aimed at the finance function, and more broadly at all corporate functions and operational departments, as part of the management of their activities.

2 Business Intelligence (BI) solutions provide tools for visualizing and analyzing information: reporting, indicator dashboards...

3 Big Data makes it possible to process any type of data (structured and unstructured) and to address any type of use (queries, reporting...) with a speed and volume unattainable with traditional BI.

4 An ERP (Enterprise Resource Planning) or Progiciel de Gestion Intégré (PGI) is a software package that integrates the company's main functional components: production management, sales management, logistics, human resources, accounting and management control.

5 Software as a service (SaaS) is a commercial operating model for software, in which the software is installed on remote servers rather than on the user's machine.

"The only purpose of economic forecasting is to make astrology respectable" joked the famous economist John Kenneth Galbraith. Can the new "agile" business planning approaches lend greater credibility to corporate financial forecasts? What are the challenges of forecast management? How can we improve the efficiency of the budgeting process? What technologies are available to support operational and financial staff?

What are the main difficulties encountered in planning?

Many companies are questioning their budgeting process, which they consider to be time-consuming, costly and of little added value. Forecasts often arrive too late to help steer the business. The CFO is overwhelmed by the demands of reporting and budget monitoring, and is unable to free up sufficient time to fulfil his role as advisor to senior management. The main limitations observed are as follows:

  • The budget process is often disconnected from strategy, with ambiguous objectives based on assumptions that quickly become obsolete, using indicators that are too accounting-based, and poorly articulated with the assessment of economic and individual performance;
  • Even if each department has a detailed understanding of its business, financial forecasts remain isolated in spreadsheets and rarely connected at corporate level. This situation limits the ability to assess the impact of strategic changes on operational departments;
  • All too often, the information contained in different systems is inconsistent. Companies lack the resources to quickly reconcile, consolidate and share results to present a single view of forecasting data.

However, alternative approaches are not widely deployed and are often deemed disappointing: outright abandonment of budgeting, Activity Based Budgeting, Zero-Based Budgeting, external performance benchmarks, etc.

‍

What are the keys to agile forecasting?

There are three main areas for improvement to give the budgeting process real added value:

  • Ensuring that the budget is consistent with strategy implementation
    • By definition, the purpose of a budget is to ensure that a company's resources are used efficiently to achieve its strategic objectives;
    • As one of the main vehicles for management dialogue and economic steering, the budget must make it possible to determine the level of delegation granted by head office to the operating units, and the nature of the performance expected.
  • Approach financial planning as a business project
    • Increase the involvement of business contributors to produce continuous, real-time forecasts;
    • Raise awareness of financial culture among business contributors;
    • Implement an agile business planning approach progressively, using short deployment cycles focused on specific departments, according to priorities.
  • Encourage the use of tools that make the forecasting process more collaborative and more accessible to users with practical experience of the operational activity.
    • Share a user-friendly, easily accessible tool that brings people and data together in a simple process, making it quicker and easier to collect up-to-date forecast data;
    • Deploy a solution to build and disseminate useful indicators to drive growth, measure performance and increase visibility;
    • Encourage managers to take ownership of forecast results by customizing their dashboards.

‍

What technologies are available and what are the market trends?

In the market for EPM1 solutions, dedicated to performance management and forecasting, a number of "pure player" publishers have been making significant inroads in recent years. Examples include Anaplan, Board, Onestream, Pigment, Workday Adaptive Planning, Tagetik and Jedox. These players, which were built in the digital age, offer innovative models: process-based approach, new technologies, sharing of information, applications and best practices between members of the user community, online documentation and training...

  • Cloud computing becomes the norm

Finance departments are gradually converting to the use of cloud-based EPM solutions. Perfectly secure, these solutions guarantee easy access and deployment, while reducing/eliminating maintenance costs.

  • Blurringthe boundaries between EPM and BI2

To strengthen their reporting and data visualization capabilities, these "EPM pure players" are developing partnerships with "BI pure players".

  • The user experience becomes central

Publishers, especially those who have entered the market in the last five years, have worked hard on the ergonomics of their applications to optimize ease of use: intuitive navigation, search bar, online help.... The user interface is aimed at functional profiles. Thus, model configuration is truly in the hands of management control teams. What's more, in cloud mode, users can access the solution with a simple Internet connection, from a computer, tablet or cell phone.

  • Increased computing power

The integration of data science and Big Data3 approaches and techniquesmeans that very large volumes of data can be processed within EPM platforms. New functionalities even enable predictive analysis using artificial intelligence.

‍

Faced with the onslaught of "pure players", generalist players such as SAP, IBM and Oracle are strengthening their offerings around integrated ERP4-EPM-BI platforms and promoting their solutions in SaaS mode.5 By way of example, let's cite :

  • SAP with the "SAP Analytics Cloud" solution on SAP HANA, bringing ERP and BI functionalities closer together,
  • Oracle with its "PBCS" solution - Planning and Budgeting Cloud Services, which combines EPM and BI functionalities,
  • IBM "Planning Analytics", which offers its "TM1" budgeting solution combined with "Cognos Analytics" for reporting and its integrated generative AI platform for Big data and predictive analysis.

‍

Better anticipation for better management

In the face of change and digitization in the economic environment, an organization has a real competitive advantage when it can anticipate and carry out simulations. Forecasts enable us to build up a picture of the company's future, based on imagined evolutionary hypotheses.

Financial planning teams will never have a crystal ball, but they will always be judged on the speed with which they draw up the annual budget, and the number of iterations they go through to arrive at the final version. In the future, they will increasingly be judged on their ability to support operational managers in the decision-making process.

It's now possible to use a forecasting management solution that allows you to quickly and easily build perpetual re-forecasts, in line with operational reality. This new approach to agile business planning, underpinned by innovative tools, is becoming a "must-have" for many companies seeking to improve their performance management.

‍

About the author

‍

David Hatchuel is a partner at Emerson audit & conseil. A graduate of the Master Banque et Finance de Paris Dauphine and a chartered accountant, he supports the digital transformation of finance departments in their projects to upgrade information systems, improve the efficiency of finance functions and manage performance.

‍

About Emerson audit & conseil

‍

With a team of 210 people, Emerson Audit & Conseil supports financial departments in :

  • Their operational needs: team building across all business lines: Accounting, Consolidation, Management Control, Internal Control and Audit, Treasury and..,
  • Their transformation/digitization projects: organization, optimization and implementation of tools, management of CSR/CSRD projects

For further information:

  • dhatchuel@emerson-groupe.com
  • Emerson audit & consulting
  • 27, rue de Berri 75008 Paris
  • 06 63 49 43 84
  • http://www.emerson-groupe.com/

‍

1 Enterprise Performance Management (EPM) covers the entire management cycle of a company: statutory consolidation, reporting, forecasting, simulation/predictive, modeling. EPM is aimed at the finance function, and more broadly at all corporate functions and operational departments, as part of the management of their activities.

2 Business Intelligence (BI) solutions provide tools for visualizing and analyzing information: reporting, indicator dashboards...

3 Big Data makes it possible to process any type of data (structured and unstructured) and to address any type of use (queries, reporting...) with a speed and volume unattainable with traditional BI.

4 An ERP (Enterprise Resource Planning) or Progiciel de Gestion Intégré (PGI) is a software package that integrates the company's main functional components: production management, sales management, logistics, human resources, accounting and management control.

5 Software as a service (SaaS) is a commercial operating model for software, in which the software is installed on remote servers rather than on the user's machine.

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