Your business is not two-dimensional, so why is your planning?

Many organisations plan substantial parts of their business using nothing more than Excel spreadsheets. Most of them are aware that, whilst Excel is an excellent tool for analysis and modelling, it really is not appropriate as the detailed system of record in which to build and store business plans. Until now, making the change to a better system has always been too frightening to contemplate, but Compas offers a simple, low-cost solution that can fit seamlessly into your existing processes.

The trouble with spreadsheets
There are many reasons why Excel is not ideal: the inherent fragility of a file-based system, the risk of overtyping a formula, the difficulty of collaborating with colleagues or the danger that someone will be working off the wrong version, to name but a few. Today I want to focus on just one problem inherent to the basic concept of a spreadsheet: its fundamentally two-dimensional nature.

A spreadsheet by its very design is defined in terms of rows and columns. Indeed, this is its great strength – it is a simple format that is easily understood and maps well to a sheet of paper (albeit a very smart one). To be fair, this design does cover many business and personal needs extremely well. However, planning and analysing a business is inherently more complex. It was to address these requirements that multidimensional (‘OLAP’) databases were first invented in the 1970s. Whereas a spreadsheet is defined by its two-dimensional structure, even the simplest sales data will typically have three or more dimensions: a classic requirement being what you are selling (Product), where you are selling it (Geography/customer) and when you sold it (Time). The key understanding of OLAP databases was that you are just as likely to want to split your reporting by any combination of these dimensions or none, so you might equally want to see a breakdown of all sales in a particular account by product category, or all sales of a particular product broken down by customer. The way the data is stored, and the syntax of the underlying language are ideal for this sort of analysis.

Real life is not flat
In reality, business planning typically requires a more complex data model than this simple 3-dimensional example. Even though the plan might be built at a high level, there are all sorts of effects that flow from planning any activities that drive business. For a start, there are many different measures to be calculated – orders, revenues, costs etc. For another thing, businesses frequently want several versions of a plan, so they can compare the current forecast with how it looked a month ago, or at the time of the budget. With a 2-dimensional representation, people are forced into all sorts of contortions to handle the true multi-dimensional nature of the business, including layers of nested rows, large numbers of tabs, and an ecosystem of linked spreadsheets, the accidental moving of any one of which causes the whole edifice to collapse.

Even with these contortions, there is the basic problem that a spreadsheet is really not designed to handle the volumes of data required to run a business properly. This means that the same tool cannot easily be used to compare the plan with actual sales data, which come in by individual transaction and SKU.

Whilst managing with spreadsheets is clearly possible (as so many businesses do), this approach can be:

  • More time-consuming and complex than it needs to be
  • Difficult to maintain as the business evolves
  • A source of business risk (what if the one person who built the critical spreadsheet leaves?)
  • Still vastly less capable than a proper multi-dimensional database, specifically designed for this purpose

Finally, this whole approach to planning typically still primarily ties sales to time periods. Dropping a campaign, or moving its start date by a couple of weeks requires a lot of work in a month by month spreadsheet, as does evaluating the success (or otherwise) of a marketing campaign or activity in itself.

Compas is the solution
Award-winning Compas software has been designed from the bottom up to address all of these problems and more. Originally designed for global companies that are leaders in their respective fields, such as Unilever UK and Direct Wines, it is now available to more modestly-sized businesses as a low-cost, low-risk cloud-based product for planning, monitoring and analysing all manner of marketing activity. Equally, it can be used to plan other business drivers and build detailed forecasts of the implications for Sales, Marketing, Operations and Finance. With Compas, you can:

  • Plan at the level of individual campaigns or high-level activities (optionally filling in more details as time progresses)
  • Automatically carry out detailed pre- and post-evaluation of ROI
  • Assign a start date and sales profile and have the system automatically phase sales, revenues etc. over time
  • Have the system automatically reforecast as activities progress and provide a revised view of YTD and YTG sales, revenues and profits
  • Take snapshots to maintain a record of how the plan has evolved over time
  • Do as much, or as little, product-level planning as you wish

Overall, Compas provides an industrial-strength planning, forecasting and reporting platform for sophisticated businesses. Easily tailored to your specific requirements, it provides the ability to see marketing, operational and financial data side by side and gives all departments the same high level of control and reporting flexibility as each other. Contact us now to arrange a demonstration.

Comments are closed.