Planning and Forecasting Tips

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Is there a way to test run a BI capability?

Using BI Planning And Forecasting To Generate KPIs

Consider using BI planning and forecasting tools to generate your company's key performance indicators (KPI). An interesting test run of how an investment in BI software can help your business is the tip.

Use your traditional forecasting process in an attempt to create the appropriate KPIs for your business. Research the topic to understand the salient characteristics of your performance indicators and get to know how vendors develop KPIs in a BI environment. After you do it traditionally, ask a vendor to take a subset of your data and run it with their software and compare the differences. You may be pleasantly surprised and make the move to the BI world.

How does performance streamline planning?

Performance Planning: A Framework For Continuous Planning, And Adaptive Control

A trend is appearing in the performance management arena that is directed at improving the planning and control function areas. Performance planning is the most common name for this trend. Aspects of the techniques employed are applicable to all areas of business planning and are especially useful when an organization attempts to improve forecasting accuracy.

Most planning and forecasting models identify four factors that influence aspects of the planning process:

Planning and Controls

Resources and Coordination

Organization and Culture

Targets and Rewards
All four are closely related and serve to ensure that all salient considerations of effective planning and forecasting are addressed. For example, in traditional practice, rigid annual planning exercises are employed where tracking of variances is tightly controlled. In such plans, resources are allocated in a quasi-fixed manner and centrally coordinated. This centralized control is spread about the organization structure and the end result is a focus on managing numbers. As a result of the above, performance incentives have a tendency to become preset and supporting incentive targets tend to the incremental.

Performance planning suggests that a process of rolling planning and forecasting be utilized. When coupled with identification of key performance indicators (KPI) with adaptive controls, an organization can reach an iterative state of plan then adapt in real or near-real time based on performance, not numbers.

A similar process occurs when dealing with resource allocation. Assigning resources on demand opens the door to a better utilization of key talent that can be further spread throughout the company. Coordination can then become dynamic and applied wherever needed.

At this point, this dynamic entity empowers a significantly larger, distributed, action group to act freely when needed and swiftly. Instead of responding to arbitrary numbers, the focus shifts to enhancing customer value. And, as one would expect, performance targets grow to be relative to performance variables and increased value to the customer and the organization can be rewarded.

One word of caution; Resources on demand, dynamic coordination, and decentralized control can, unless wisely employed, lead to serious problems.

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