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The volatility of latest years has pressured many finance leaders to contemplate upgrading their capabilities quickly, particularly in relation to enterprise planning. In a September 2022 survey performed by Harvard Enterprise Evaluation (HBR) and sponsored by Workday, nearly 60% of enterprise leaders deliberate to extend funding in enterprise planning instruments over the subsequent 12 months. 80% mentioned they supposed to extend their use of superior planning instruments that incorporate synthetic intelligence and machine studying.
To this finish, planning and forecasting should essentially evolve. With the intention to help decision-making, forecasting and planning have to be based mostly on business-driver methodology. This, in flip, requires connecting operational and monetary knowledge in new methods, and unlocks the potential of AI and machine studying to assist inform decision-making.
In my conversations with different CFOs, we’ve shared the pressures of needing to run a number of eventualities and assess the monetary implications of various selections, typically every day. This degree of agility requires adopting agile planning processes and trendy instruments, but many groups are unable to ship in opposition to the calls for of boards and administration groups for higher perception and steerage. Living proof — greater than 60% of HBR respondents say they nonetheless depend on legacy instruments to consolidate and roll up knowledge, with the precise state of affairs modeling nonetheless finished in Excel.
I joined Workday in 2014 as director of monetary planning and evaluation (FP&A), throughout a time of hyper-growth, when the corporate was experiencing a CAGR of 40+% yearly. In 2018, we carried out Workday Adaptive Planning, a extra versatile device that enabled us to push decision-making out to the perimeters of the enterprise and embrace steady planning and forecasting.
What we realized throughout that course of and our transfer to steady company-wide planning is that groups want trendy planning instruments which might be highly-automated, intuitive and simple to make use of; they should interact with knowledge and features of enterprise in new methods; and, they need to embrace a development mindset to seek out these alternatives to steer in an more and more aggressive atmosphere for expertise and earnings.
Trendy planning instruments
The HBR survey confirmed what my FP&A workforce and I hear nearly every day from Workday prospects and prospects — organizations have very clear concepts about what capabilities they want in trendy planning instruments. On the high of the checklist are instruments that automate as a lot of the planning and forecasting processes as attainable (60%), adopted by instruments which might be higher built-in with methods of file (55%), and are extra clever and predictive (52%).
Dallas-based Staff Automobile Care is one such group that knew precisely what it wished from an automatic planning answer, with clever automation and ease of use being among the many high necessities. With nearly 500 Jiffy Lube Service Facilities throughout america, Staff Automobile Care wanted an intuitive device that non-technical District Managers might use to simply enter gross sales knowledge for forecasts and plans. Workday Adaptive Planning was chosen, together with Workday Monetary Administration and Human Capital Administration options, in order that collaborators throughout firm operations could make selections based mostly on the most recent data.
For Matt Castonguay, SVP Finance at Staff Automobile Care, the distinction between its legacy planning system and Workday Adaptive Planning has been dramatic. He famous lately:
The outdated system was extra like a database. It wasn’t predictive, it wasn’t actually a spot the place you possibly can construct forecasts out, have driver-based forecasts based mostly on machine studying fashions, or be capable of collaborate and have steady forecasting with the sector like we’ve with Workday Adaptive Planning.”
With the brand new platform, Staff Automobile Care specialists started experimenting with methods to make use of machine studying — a type of synthetic intelligence that permits software program purposes to ‘be taught’ how one can predict future outcomes utilizing historic knowledge — with out counting on extra programming. The corporate is utilizing Workday’s Clever Forecasting device with embedded machine studying to forecast what number of prospects will cease by particular person Jiffy Lube shops at varied occasions through the day, then feed that buyer depend into the corporate’s gross sales and workforce plans. Machine studying may also assist Staff Automobile Care forecast what number of of every of 500 merchandise it might want to have in inventory at every retailer, to automate replenishment.
Have interaction with knowledge in new methods
Due to advances in knowledge extraction and visualization, finance groups really feel a brand new freedom to entry knowledge and manipulate it in new methods. At Workday, Finance owns the monetary knowledge mannequin and knowledge governance. That allows us to mix monetary, human capital, operational, and third-party knowledge in new methods within the format that we wish it, versus ready for help from IT. Much more importantly, proudly owning the monetary knowledge mannequin modifications the connection between Finance and IT away from being a help mannequin to develop into co-innovation companions.
We enhance confidence within the knowledge at Workday by utilizing our clever knowledge basis because the supply of knowledge for company-wide planning, in order that Finance and the strains of enterprise by no means need to argue over the numbers, as a result of they’re all the identical. In consequence, there’s full constancy between the monetary plan rolled up underneath company finance with the mannequin utilized in gross sales planning by our gross sales leaders; and for Finance and HR to forecast attrition, information expertise investments, and reconcile headcount.
Having one planning platform for workforce, monetary and gross sales planning with Adaptive Planning and utilizing a single finance-owned knowledge hub will increase confidence and accountability between what is definitely being rolled out versus what’s being deliberate within the company finance mannequin. That is important as we speak, given market volatility, rising inflation, and fluctuating shopper demand.
Managing market and provide chain volatility and bettering working capital forecasts have been on the coronary heart of why Alcoa adopted Workday Adaptive Planning. The Pittsburgh, Pennsylvania-based producer of bauxite and different supplies wanted a single supply of fact for stock valuations and forecasting working capital extra successfully.
Standardizing on Workday Adaptive Planning has enabled Alcoa to consolidate international demand in a single system, analyze actuals versus forecast knowledge, and generate new eventualities to course-correct a lot sooner. Planning and forecasting cycle occasions have been diminished by 50% and the time it takes to run what-if eventualities has been lowered from 4 days to 1.5 days, enabling the workforce to raised assess the affect of unpredictability in key market segments on manufacturing and dealing capital necessities.
At Workday, we’re working to mitigate the affect of market volatility on earnings by bettering how we forecast Annual Recurring Income (ARR), the metric that determines the well being of any SaaS enterprise. We use a shared forecasting mannequin that includes our gross sales and product groups’ views of deliberate investments, then takes historic tendencies based mostly on three-year historic averages of key drivers, and combines these with product inputs, gross sales inputs and monetary inputs to get a multi-dimensional view of ARR by product, area, section, business, and extra.
Embrace a development mindset
At Workday, we additionally perceive that processes aren’t static, however are literally residing issues that may be constantly optimized in response to market modifications or administration methods. That necessitates a mindset shift as nicely to 1 that prioritizes steady studying and innovation.
We’re continually searching for methods to streamline and automate processes end-to-end, versus working in silos, in order that we’ve extra time to concentrate on strategic enterprise partnering. Along with hiring individuals who embrace change and have an innovation mindset, we’re instructing our finance groups to be simpler undertaking managers, to have the ability to oversee their automation and finance innovation initiatives from begin to end.
An important instance of an innovation undertaking owned by our vp of Tax at Workday is round tax provisioning. We now have a daring imaginative and prescient to automate the built-in tax lifecycle, from tax modeling, provisioning and switch pricing, to compliance. Below her steerage, we changed an Excel tax mannequin with Workday Adaptive Planning to: 1) allow integrations with our Enterprise Finance forecasts and Workday actuals, 2) automate authorized entity switch pricing, and three) set the muse for future tax fashions corresponding to non-GAAP efficient tax charge and state of affairs planning. Utilizing this new tax provisioning answer has already saved us two days of guide work over the previous two quarters alone.
TexMex restaurant chain Chuy’s is a superb instance of an organization that has efficiently managed the transition to agile planning, to assist climate the uncertainties of the previous a number of years and capitalize on new development alternatives. The chain, with 90+ eating places throughout 17 US states, used Workday Adaptive Planning to carry out state of affairs planning round money wants all through the pandemic and mannequin working outcomes. With forecasting flexibility, the corporate was in a position to perceive and undertaking tendencies in occasions of uncertainty and exclude particular time intervals from forecasting if knowledge wasn’t related or predictive of future operational efficiency.
Utilizing these instruments to information efficiency, Chuy’s was in a position to enhance the general restaurant degree working margin considerably forward of its friends in 2021. In the present day, the chain is trying to increase restaurant areas utilizing a novel actual property planning prototype mannequin so the agency can use historic knowledge to see how comparable eating places have carried out in comparable areas. FP&A has additionally been in a position to talk plans and forecasts extra successfully with enterprise companions and administration utilizing the OfficeConnect function in Adaptive Planning to create high-quality studies, board books, and shows with Microsoft Workplace purposes.
Managing the transition
Transferring to trendy planning instruments and managing change successfully requires new expertise, up to date processes, and a special tradition. That is undoubtedly not a one-time change that entails rolling out new planning know-how, upskilling workers after which shifting onto the subsequent undertaking. Steady planning, by its nature, is iterative and evolving — it needs to be agile and able to persevering with to adapt as necessities change.
For Finance groups, there will probably be nearer collaboration and interplay with stakeholders throughout the enterprise as they’re introduced immediately into the planning course of; they may also must be taught new technical expertise to help a planning platform. Extra broadly, organizations must undertake a cultural and course of shift to make planning one thing that’s steady and a part of the DNA of the enterprise.
To get began, we advocate that CFOs prioritize knowledge high quality and consistency, steering the event of knowledge governance and knowledge working mannequin selections as half of a bigger transition to enterprise planning. CFOs are nicely positioned to do that and produce knowledge administration to the highest of the company agenda. They need to additionally spend money on an agile, tech-enabled knowledge spine with a standard knowledge layer and the finance workers wanted to make sure that it’s high-quality knowledge.
Listed below are some suggestions we’ve realized by means of our personal experiences and people of the 6,100+ Adaptive Planning prospects that we help:
Search government buy-in and help earlier than you kick off the analysis course of and guarantee that there’s a willingness to be taught and embrace change amongst key workers.
Choose instruments that provide consumer-grade consumer expertise which might be straightforward to be taught and use, and versatile sufficient to help additions and enhancements.
Perform formal undertaking administration measures across the course of change.
Prioritize cross-functional collaboration and create a way of belief that Finance has earned the appropriate to handle different individuals’s knowledge.
Over-communicate, to make sure that everybody understands the targets and advantages of the change undertaking.
Associate carefully with IT to unlock future potential to construct on the success of your pilot program.
At Workday, we consider that doing nothing is now not the protected alternative. The pandemic and digital acceleration modified the whole lot. For those who haven’t already, now could be the time to get began with trendy enterprise planning, not solely to climate present uncertainty but additionally place your group for development popping out of the downturn.