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Advice and Information for Finance Professionals

Want effective scenario planning? Here’s what it takes.

Surrounded by uncertainty, business leaders are counting on finance teams to light the path forward. But typical leading indicators are unreliable as the world grapples with widespread illness and restrictive prevention measures. What will happen? Nobody knows for sure. The one thing we do know is that businesses need better tools to quickly plan for multiple outcomes as things change.

Scenario planning applications are rising to the occasion, helping financial planning and analysis (FP&A) teams to model multiple scenarios with confidence. And beyond the current crisis (or the next one), scenario planning helps with the everyday uncertainty that has become a part of doing business—even before the pandemic.

Setting the bar for scenario planning

Long before the world even heard of COVID-19, many businesses were challenged to do scenario planning because they used customized spreadsheets or inadequate tools. In an Oracle survey of more than 900 financial decision makers, 70 percent said they wanted closer integration between planning and ERP systems. Why? Because the faster and easier it is to get up-to-date numbers into your models, the faster you can respond to conditions that are changing by the day.

Traditionally, scenarios have been modeled using spreadsheets, using data exported from ERP and other systems. As soon as it’s exported, it’s frozen in time—already out of date as soon as it lands on your laptop. And modeling scenarios in spreadsheets is a painstaking process, requiring extensive calculations and formulas that can break as soon as you share them with another user.

In today’s fast-changing environment, slow and painstaking doesn’t work. You need to refresh your models frequently with the latest, most up-to-date information.

Our clients in highly affected industries such as retail are using rolling forecasts, updated weekly. They’re forecasting and planning for cash flow at a granular level, based on real transactional data from their ERP and operational systems. This is helping them remain competitive despite massive disruptions in global markets and supply chains. These customers are generating scenarios in minutes, rather than days.

Integration supports agility, accuracy

During tumultuous times like these, organizations with planning point solutions are finding that they can’t move fast enough to feed the urgent need for reliable, current numbers. Why? Because most planning solutions have very limited capabilities for scenario modeling, and they lack real-time integration with their other systems. The result is breaks in information flow and manual processes—leading to long prep cycles, an incomplete view of the enterprise, outdated information, and a higher likelihood of error.

Built-in planning intelligence and best practice scenario planning frameworks

In our above-mentioned survey, Oracle Fusion Cloud EPM customers said they spend less time on data gathering, have more time for analysis, use fewer admin resources for FP&A, and have better forecast accuracy.

Capabilities in Oracle Cloud EPM include:

  • Built-in integration with Oracle Fusion Cloud ERP, ensuring you always have accurate, up-to-date numbers based on your most recent financial transactions
  • Monte Carlo simulations, which lets you test the likelihood of various outcomes and plan for potential responses.
  • Built-in “goal-seek” capabilities, helping you run periodic checks to decide which operational variables to change to manage costs and optimize cash on hand
  • Simple and insightful reporting and analytics, helping you effectively communicate not just the numbers in the model, but the thinking behind the numbers
  • Real-time analysis and report distribution using a variety of report formats, available in both a web browser and SmartView for Microsoft Office

Try Oracle Cloud’s planning capabilities for free

Effective scenario planning and strategic modeling are essential to finance teams right now. That’s why we’re providing free access to Oracle Financial Statement Planning, including Strategic Modeling, to all existing Oracle Planning Cloud customers for the next 12 months. Try these tools to experience how a market-leading application for scenario planning can help your business stay competitive during times of crisis, and continue to excel in the new normal of uncertainty.

Learn how to chart a path to growth with scenario planning in Oracle Cloud EPM.

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