ValQ for Enterprise Planning, Forecasting & Budgeting – Part 2

In the previous blog, we took a quick look at the common challenges associated with planning, budgeting & forecasting as outlined below:

1. It sucks in a lot of time & effort
2. Too many details and too little value
3. It is susceptible to market volatility & changes
4. Promotes a culture of conservatism that reduces appetite for risk-taking

We’ll now explore challenge #1 a bit further, and explore how ValQ can help.

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#1: IT SUCKS IN A LOT OF TIME & EFFORT

Many surveys have repeatedly shown that financial planning activities are complex, iterative and time-consuming. According to a survey of 500+ senior finance professionals, 42% of organizations take one to three months to complete their budget, and 32% take three to six months.

A lot of this effort goes towards consolidating, summarizing, communicating, explaining & reviewing information. In another survey of CFOs, over 50% of respondents indicated that their companies spend an overwhelming amount of time & effort on five of the six core activities that are part of budgeting.

Overall, there is a uniform consensus that the amount of time that goes into planning & budgeting is way too high to justify the value it delivers.

Leading companies have acknowledged this problem and have been paying attention on (a) simplifying the overall process and (b) automating parts of budgeting & forecasting activities. Even then, it continues to remain highly resource-intensive in many enterprises.

Best in class Finance organizations that have successfully revamped their planning processes can today complete a forecast in two (2) days or less and develop an annual budget in less than three (3) months with three (3) iterations or fewer. (Source: Realizing the value of Budgeting & Forecasting, PriceWaterhouseCoopers)

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HOW CAN VISUAL BI’s ValQ HELP REDUCE TIME SPENT ON PLANNING, FORECASTING & BUDGETING?

Solutions such as Visual BI’s ValQ can help you cut down time spent on planning & budgeting in several ways.

Using ValQ, you can quickly define key planning parameters using a top-down approach before embarking on a full-blown bottom-up validation of targets. This ensures that there is consensus on high-level targets (for metrics such as target volume, prices, sales mix and variable costs), before the organization proceeds to create budgets in greater detail.

Enterprises have found that this balanced approach of combining top-down and bottom-up planning helps them leverage the best of both worlds. Using ValQ in the process:

1. Encourages upfront target discussions: ValQ is an excellent communication tool, with instantaneous & intuitive simulation capabilities that can be easily understood by senior executives in a meeting.
2. Streamlines number of planning iterations: Since ValQ helps clarify expectations and arrive at benchmarks earlier in the cycle, and the teams have a frame of reference that they try to meet, thereby avoiding large deviations. This initial alignment saves time on planning iterations.
3. Reduces the need for more time-consuming changes in bottom-up plans: These savings are significant when you consider that typical bottom-up plans leverage highly sophisticated and complex platforms such as SAP BPC or Hyperion, where each planning iteration expends a lot of time & resources.

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ValQ is Visual BI’s solution for business modeling. It is an innovative self-service business planning and simulation solution that lets you instantly visualize and optimize profitability & growth. ValQ is designed to enable executives, decision-makers and business analysts to seamlessly connect to data to make effective decisions. ValQ is fully customizable, mobile-compatible and has a highly engaging and intuitive interface. It is now available for SAP and Microsoft Power BI.

In our other blogs, we’ll review more topics of interest such as tips on getting the most out of value driver trees, best practices, how-to recommendations, software evaluation considerations, exciting features of ValQ and more.

To learn more, tune into one of our ValQ Webinars or try our product for free here.