FDs rush to scenarios as annualised plans lose relevance

“Business agility has always been important but in 2021 it has become the driver of how companies will emerge from the global crisis,” says Rob Douglas, director of Workday Adaptive Planning.

Over the past few months, market forces have been encouraging more organisations to regularly build scenarios and reforecast – given how quickly and seismically changes have occurred.

“Since the emergence of the pandemic, we’ve seen an overall average increase of 15 times the amount of modelling and recalibrating as organisations everywhere attempt to make sense of the ripple effects this global phenomenon is likely to have on their business,” says Douglas.

Douglas was speaking to Financial Director as part of recent piece of research into how finance departments have changed their approach to planning.

More organisations are beginning to rely on rolling forecasts that can evaluate multiple scenarios, capturing for example tracking website visitors, average revenue per customer, product lines sold. “It’s about ensuring you are capturing your key performance indicators in your business and moving to a forecasting process which is driving the business,” says Douglas.

“People don’t just manage it at the level of the P&L. They are managing it at a lower level of detail, whether it be customer profitability or product line profitability,” he says.

To read the report, click here.

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