I recently attended the Anaplan customer event in San Francisco.
I’ve been following Anaplan for several years now, since their solution aligns very well with my Business Planning and Execution Research Practice. In fact, Anaplan once referred to itself as the business planning and execution platform. Still, this was the first time I’ve been able to visit with the Anaplan team in person.
If you’re unfamiliar with Anaplan, the company provides a planning software platform that helps organizations create holistic plans across functions such as finance, sales, supply chain, and HR. Traditionally, such software has fallen into the “Enterprise or Corporate Performance Management” category, with much of the messaging around it focused on financial planning, budgeting, and forecasting specifically.
Anaplan, on the other hand, positions itself as an essential tool for planning across the business. As such, the major theme to emerge from this event was “connected planning.” This theme remained consistent throughout my meetings with executives, customers, and partners, as well as in the general session.
I wholeheartedly buy into the concept of “connected planning.” Business planning just is not effective when undertaken in silos. Business leaders who are disconnected from day-to-day operations may not be aware of business realities and short-term prospects. Likewise, line of business managers can lack insight into longer-term business goals and strategies.
What’s more, individual functions cannot plan effectively without an understanding of what is going on in adjacent functions. For example, supply chain planning is ineffective without insight into sales and customer demand information. Similarly, no organization can support production and demand needs without insight into upcoming promotions and on-time events.
The bottom line is this: A business plan that is inaccurate will most likely do more harm than good. To avoid this, and ensure the overall success of the business, connectivity in planning is absolutely critical.
Connection and Collaboration
I recently published a report entitled, Enable Collaborative FP&A for More Accurate Forecasts and Budgets. While I used the term “collaborative” rather than “connected” in this case, the message is still the same. Those organizations that are most effective at planning, budgeting, and forecasting, connect more stakeholders with more data. They also provide them with more robust modeling capabilities.
For example, Leaders are not only more likely to have top-down and bottom-up collaboration, but Leaders are also 3.2 times as likely to enable collaboration across departments and divisions (Figure 1).
Figure 1: Improved Communication
Not only are individual functions at these companies working with finance on budgets and forecasts, they are also working with each other to create a more holistic plan. After all, sales cannot forecast revenue that manufacturing and supply chain cannot support, for example. By having standardized workflows for planning that enforce approvals and rationalization, top performers can improve accuracy and communicate requirements to all key stakeholders.
Of course, collaboration is useless if the people that are communicating are misinformed. You don’t want your planning process to be a case of the blind leading the blind. Top performers provide key stakeholders with the information they need and give them tools that help them utilize this information in a collaborative planning process (Figure 2).
Figure 2: Converting Information into a Plan
As you can see, Leaders are 90% more likely than Followers to have a centralized repository of financial or operational performance data. Using this information, they can get a full picture of how the business is performing and can link this information to holistic plans. As a result, using budget templates, standardized workflows, and scenario analysis, Leaders can enforce a process that includes all key stakeholders and aligns forecasts and budgets with realistic business conditions.
More than Forecasting
Connected planning is about so much more than simply forecasting. It’s about creating a strategy to push decision-making and business execution towards profitability. Anaplan is offering, all in one package, a way for its clients to bring together the data, collaboration, and insight needed for holistic business planning
My research supports the importance of connectivity in planning, and I was excited to see that reflected by Anaplan and its customers.