Advice and Information for Finance Professionals

Brexit: Figuring Out the Best Way Forward

Guest Author

By Malcolm Brock, Managing Director of Brovanture, Platinum level member of Oracle PartnerNetwork and NetSuite Partner

Since the financial crises of 2008, the term "unprecedented period of uncertainty" may have been somewhat overused. Since then, the finance world has continued to experience turbulent times and it is looking like "uncertainty" is the new normal.

Since the UK referendum result, markets across the world have moved sharply and with dramatic speed. With the Brexit deal not done, and any deal likely to take time to negotiate, it looks like there will be many more ups and downs to come. Add to this the recent election results in the UK, a vote in Germany this year, and of course new administrations in the United States and France.

With this level of global uncertainty, organizations need the ability to immediately change course if they are to mitigate risk and take advantage of new opportunities that may well arise. 

The Need for Continuous Forecasting and Planning

Changing course begins with a new plan, setting out where to go and how to get there. This is the reason best practice planning is even more important today than it has ever been in the past. The unexpected will happen along the way, so this is where the ability to quickly re-forecast and act becomes important.

Transform planning and forecasting into a modern, digital experience. Get the paper from Ventana Research.

So what should organizations do? What constitutes best practice planning and forecasting in 2017? Here are my suggestions:

  1. Don’t do it yourself using spreadsheets. Using a personal productivity tool for an enterprise system will definitely not deliver what you need in 2017. Spreadsheets invite errors and introduce issues around integration, scalability, and risk.
  2. Integrate across the entire organization. Agility will be the key to successful planning and forecasting in a time of rapid change, and every boundary will waste time and effort and introduce the risk of error.
  3. Exploit the "wisdom of crowds." Theory says aggregated crowds predict better than individual experts, and this applies to business, where employees at the "sharp end of the stick" are more likely to know what is happening than an "expert" back at corporate FP&A.
  4. Use probability, not possibility. Your plan will never be 100 percent accurate; it is just one prediction of what could happen. Look at the probability of multiple scenarios using statistical algorithms, and understand what decisions you can make to really influence the outcome.
  5. Operate a rolling plan and forecast. Annual and quarterly reports are just markers along the way; business does not restart or reset at these points, so why should plans or forecasts? They should reflect the continuum of the business and be adjusted as new factors come to light.
  6. Use everyday terms and be consistent. Often known as "driver-based planning," this means planning in units you use every day—like units shipped, liters used, etc.—and to therefore be consistent in the conversion to monetary values through system-wide "drivers."
  7. Favor agility over accuracy. While your plan will never be 100 percent accurate, one fact is 100 percent true: it will get less accurate over time. Get the plan done quickly and take action. If you can do it quickly, you can do it more often.

By now you might be thinking, "This is all very well, but I don’t have an enterprise-wide planning and forecasting system—and I can’t afford to wait until we get one in place." Traditionally, enterprise-wide planning systems could take 6-12 months (or even longer) to implement. But today, with the cloud, there are many examples of organizations implementing a cloud-based enterprise planning system in 6-12 weeks. Two examples include Redballoon and Western Alliance Bancorporation.

This means that if you act today, you could have a new enterprise-grade planning and forecasting system in place and operational, ready to use as soon as the nature of the Brexit deal (hard or soft) becomes clearer. No matter which way it goes, you will be ready! 

Ready to learn more? Read the paper from Ventana Research.

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