Plan without spreadsheets

Creating a realistic plan, and then building operational and financial forecasts from it, are vital to running an efficient enterprise. Sadly, many businesses depend on a set of ad-hoc spreadsheets for this vital task

All successful businesses need to plan. From mapping out a series of broad investments in marketing and other activities, to building a detailed weekly budget, businesses regularly make predictions about what they and their customers will do. Doing so helps them to generate realistic sales and profit targets, to understand what they need to do in order to meet those targets, and to have a sense, during the year, of how likely they are to achieve their goals.

By far the most common tool used for this among even quite large organisations is the Excel spreadsheet. Its ease of use and familiarity mean that it is easy to knock up a quick spreadsheet to start sketching out a plan and its immediate effects. Over time, these spreadsheets can become increasingly complex, with multiple tabs calculating different sets of numbers, until only one person really understands how they work, making them very difficult to adapt. More dangerous still, is when these spreadsheets become integrated into the planning or reporting process, with other systems or spreadsheets expecting a certain file with a certain name to be in a given location, and expecting specific numbers to be located in a given range of cells. At that point, the spreadsheet approach represents a significant source of business risk, and a drag on progress, as it becomes almost impossible to make changes without breaking other steps in the chain.

However, increasingly, companies are seeing the value in Enterprise Performance Management (EPM) software like Compas. These applications apply a similar integrated approach to that of ERP tools like SAP, but whereas ERP is primarily focused on supporting the day to day operations of the company, EPM tools are more strategic and focus on the broader planning and reporting needs of management.

Compas is a low-cost EPM tool that provides a powerful set of planning tools in a proper multi-dimensional database, allowing you to build a complete sales forecast and budget from the marketing plan or other business drivers. Typically, the process will start with a planned set of marketing activities, each of which has an expected response rate and profile associated. Compas then does the heavy lifting of turning those figures into a detailed sales forecast, along with the associated financial and operational implications. Everything is tied back to the original marketing plan, which means that any changes to the plan are instantly reflected in the operational and financial forecasts and available to all departments. The general term for this approach is driver-based budgeting and it enables companies to cut weeks off their budgeting and reforecasting processes, as well as respond much more nimbly to changes in their marketplace.

Compared to a spreadsheet, Compas is faster, more robust, and can support a much greater level of detail without grinding to a halt, which allows it to incorporate actual performance data for reporting and analysis. It is also possible to take periodic snapshots of the plan, so that the current forecast can be compared with the one from a week or a month ago. The time savings it allows, coupled with the operational efficiencies that it can support typically mean that it can start to pay back within a year of deployment.

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