Continuous Planning replaces the traditional static and calendar-driven process. It is a dynamic and open-ended planning approach that responds to internal and external events as they occur. In addition, the use of technology facilitates planning agility and flexibility through real-time analytics and automation.
This article looks at the key concepts and definitions of both integrated and agile FP&A. Through the two case studies, we explore how to connect integrated FP&A from a finance view to deliver continuous and real-time planning through an operational and technology view.
It is commonly agreed that the traditional budgeting process is time-consuming and costly. It rarely focuses on strategy and adds little value. Although traditional budgets have evolved over the years, they hardly meet the challenges of the modern economic and business environment.
The New Normal means that planning is no longer an extrapolation of the past. Similarly, business drivers that worked last year may no longer be relevant for the future. The reality is that organizations face multiple possible futures. Each one can be triggered by a crisis or an unforeseen event that will require the company to adjust or even change course.
So how should FP&A adapt to this New Normal?
Today’s uncertain times mean that it is no longer good enough for organizations to have one fixed plan and forecast. Historic data by itself cannot help predict the future, nor can classical planning methods and standard variance analysis provide sufficient information to manage a business. It is time to change and adopt a fact-based mindset towards business decisions.
There has never been greater uncertainty and a faster pace of change than over the past months.
And yet, at a time that requires speed and agility, and in a function that needs these qualities more than others, we cleave to our traditional management accounting methods and adhere to our longstanding processes.