Businesses seldom perform as planned. The South African and international business environments are rapidly changing landscapes, and in these uncertain times the organisational budgeting process can be a waste of time without planning for many different (sometimes quite likely) eventualities.
Recently, a major commercial vehicle insurer was asked to reflect on where the biggest risks for their business lay.
Almost all the responses (and the associated budgeting requirements) focused on issues such as driver safety and health, road conditions and national legislation. But they were asked to look in a different direction: the rail network. A competitive rail infrastructure would immediately mean less commercial trucking, which would mean fewer trucks to insure, which would lead to a drop in business revenue for the insurers.
It’s this kind of thought exercise that leads to the necessity for specialist scenario planning budgeting tools. As the Institute of Chartered Accountants in England and Wales have said, “target setting should be flexible enough to incorporate uncertainty. Targets should move as business conditions turn planning assumptions upside down. How can this flexibility of target setting be achieved without triggering unintended consequences, such as diluting the motivational effects of targets or attracting mistrust for ‘reneging’ by re-setting targets?” (http://www.icaew.com/en/technical/business-and-financial-management/finance-and-management-faculty/free-trial-articles/fm-185-integrating-risk-and-performance)
What About Excel?
Relying on traditional tools and the conventional spreadsheet model makes budgeting for different scenarios clumsy, time-consuming and inefficient. It also weakens your reporting capacity, meaning that dissemination of information throughout the organisation is at best difficult, and at worst confusing.
Weaving the complex threads of multiple interdependent future possibilities for your business can be very difficult for large organisations – and impossible for small ones. But the simplistic, traditional management-by-exception approach no longer ensures that you can stay flexible, competitive and effective in the marketplace.
IBM Cognos: Collaborate, Analyse & Adapt
IBM’s premier business performance management suite is called Cognos. IBM Cognos allows for the following:
- High-participation planning – Build plans, budgets and forecasts with contributions from thousands of users on desktop and mobile devices.
- Sophisticated analysis – Perform complex multidimensional analysis on planning models based on large data sets.
- Contextual insight – With IBM Concert on Cloud, you can see metrics and KPIs in their full context, through an interface harmonized for multiple performance management capabilities.
- Collaborative user experience – Engage users across the organization and collaborate through a range of mobile devices.
- Cloud-based deployment – Enjoy all the functionality of an on-premise solution with optional cloud-based deployment.
Collaboration & Accountability
“Effective workflow management is essential to promoting collaboration during the budgeting process,” says Cortell’s Greg Bogiages. “Building, populating and changing complex models needs to be a simple and risk-free process to allow knowledge workers to focus on desired outcomes rather than the number-crunching process.”
But was about the accountability for budgeting and accurate forecasting that normally sits in the office of finance?
“Accountability really belongs in the business operations management space – where performance and planning is linked most accurately, and not as a distant function of finance and accounting,” says Bogiages.
So Why Cortell?
It’s obvious that without a solid toolset to build your budgeting and scenario planning processes, your business will be ill-prepared to deal with today’s changing landscape. Cortell offers both the industry knowledge and a detailed technical knowledge of the IBM Cognos suite of products to ensure you plan effectively for the future.