Why Your Operational Plans Aren’t Matching Your Financial Plan
by Robert Howell
Increasingly, I find myself talking with businesses whose financial plans look perfectly reasonable on paper but become increasingly difficult to manage as the company grows.
When we dig a little deeper, I’m rarely surprised to find that the operational planning and financial planning are happening separately.
The finance team could be working within a single budget, that is split between recruitment, sales and suppliers. And, these plans from operations through to procurement are often built in different spreadsheets and updated at different times. Everyone believes they’re working towards the same objectives, but they’re using different KPI’s
The result?
Finance finds itself chasing departments, manually reconciling figures and explaining variances. Or businesses commit to ambitious sales targets without the operational capacity to deliver them. Others have approved recruitment plans without fully understanding the financial impact until months later. In almost every case, the issue was disconnected planning.
The businesses that tend to navigate change most successfully are the ones where operational decisions are made alongside the financial plan. When a department updates its forecast, recruitment plan or project schedule and finance can instantly see the impact on budgets and profitability. Ultimately, conversations become more proactive because everyone is working from the same version of the truth.
Technology can play an important role in bringing connected planning to your company. Solutions such as IBM Planning Analytics allow companies to connect operational and financial planning within a single model, giving every department visibility of how their plans affect overall business performance.
That said, there isn’t a one-size-fits-all approach. Every organisation plans differently, and the right solution depends on your processes, your people and your objectives.
If your operational plans and financial plan aren’t telling the same story, let’s have an informal conversation about your current planning process and explore the most appropriate approach for you.