Planning

Finance and Controlling departments, in addition to top management, often use independent budgeting, planning and forecasting systems (BP&F) to reach out to individual sections of the organization and their managers. At the core of these systems is an application with a modelling engine that produces key financial data such as profit and loss statements, balance sheets or cash-flow statements. The data are stored and modelled in a database (usually RDBMS Oracle, Microsoft SQL Server, or Oracle Essbase in the case of Oracle Hyperion). Not only are standard dimensions like accounts, charts of accounts, times, departments or cost centres and versions (actual/planned period) used, but also products, customers, salespeople, regions, and other user-defined dimensions. Apart from financial statements, one can also project the number of employees needed, payroll costs or departmental expenditures. All changes are kept in files and the application is then used to display the history of any modifications and approvals of the plans.

BP&F systems allow financial planning in both top-down or bottom-up directions: top-down where senior executives set future budgets and allocate them to other business units via the workflow, and bottom-up where subordinate units make accounting plans for higher management. Modelling and forecasting is based on simple trends and complex statistical models.
BP&F is one of the most frequently used projects in the implementation of CPM although many large and most medium-sized enterprises still do their planning with Microsoft Excel. Integration of the outputs with Excel and the actual planning by entering data in Excel are other frequent features of the planning suites.

BP&F outputs are correlated to strategic maps and scorecard applications which enable connections between this area and other CPM components.

• Enterprises typically devise:
  • Financial plans
  • Profit and loss accounts
  • Balance sheets
  • Cash-flow statement
• Additional plans:
  • Sales plans
  • Wage, depreciation, professional development plans
  • When MS Excel is used:
  • Links to source systems (source data and number lists) do not exist
  • Batch modifications of data (automatic release of costs) cannot be made
  • There is no support for workflow, approving and monitoring processes
  • Problems arise in data security
  • There is no automatic real-time monitoring of plans
  • There are limited scenarios and predictive possibilities

•  BP&F tools permit:
  • A higher number of user-defined planning dimensions
  • Planning detailed charts of synthetic or analytical accounts and account items
  • Flexibility in setting planned periods, and the possibility of sliding budgets
  • Pre-filling planned values according to the current situation or previous plans
  • Activity Based Budgeting (ABB) for releasing planned items based on activities (e.g. by sales, employees, assets)
  • Consolidation and approval of plans according to the in-line workflow in concert with the organizational structure of the enterprise (be it top-down or bottom-up)
  • Integration of code lists with other information systems, such as financial accounting, controlling, HR, sales, and production
  • What-if analyses for modelling plans and budgets
  • Monitoring and logging the planning process
  • Integration with financial reporting
  • Integration with MS Office (essentially with MS Excel)