Few could have predicted the turmoil our country would be thrown into, when in June, the EU referendum resulted in a leave vote. Although many business leaders, economists, and commentators have warned of the likely repercussions - varying from a short period of uncertainty to forecasts of economic collapse – it appears that no plans have been made to take the country forward post-Brexit.
The Brexit vote was a shock to many and it is expected that few small businesses have plans in place for this outcome. But now is the time to act and plan, plan and plan some more.
Our country is full of flexible and driven entrepreneurs; but they also notoriously live by the skin of their teeth, and many do not have formal plans and strategies. If anything has been learnt over the last 10 years, where SMEs helped to really dig the economy out of one of the longest recessions in history, it’s that, yes, guts and ingenuity are needed by our country’s entrepreneurs, but common sense and a bit of foresight is also required, if not essential.
Where many failed to predict the impact of the recession over the past decade, this time there is no excuse. We do not know the impact of this vote over the next few months or years on the wider economy, but the currency and stock markets have still had billions wiped off their values.
This begs the question, how well can your business accurately plan and forecast its future in these uncertain times?
Companies are faced with a rapidly changing business environment. Constantly changing market dynamics can bring in demand, supply and price fluctuations that require decisions based on alternate outcomes. A key need to make informed decisions in such a market is to be able to understand the financial impact of key business drivers and revise forecasts reliably and quickly.
How is your business currently planning and forecasting its future?
The planning environment has changed considerably for most organisations in today’s global economy. Global recession, erratic growth and recovery, and market volatility all make accurate planning and forecasting a challenging process. In fact, a survey by CFO Research Services revealed that 40% of CFOs can only accurately forecast one quarter into the future
To make matters worse, a recent Oracle survey on planning and forecasting revealed that 93% of finance managers globally are drowning in spreadsheets. This was especially true in the area of budgeting, planning, and forecasting, with 75% of respondents indicating they used spreadsheets in this area.
While spreadsheets are easy to use and are the preferred tool of finance professionals, they are not well suited for enterprise wide processes like planning.
When organizations are overly reliant on spreadsheets to support planning activities, they face challenges around time, quality, flexibility, and cost.
Long planning cycles result in missed opportunities and obsolete plans. Data integrity and quality issues show up in the form of errors in Excel spreadsheets, version control problems, and lack of audit trails. Disconnected processes create a lack of flexibility and responsiveness to changes. And finally, too much time spent gathering information and not enough time to analyse it results in costly waste of resources with questionable benefits.
A recent poll of CFO's reveals it can be 3 to 6 months before they can see the impact of operational decisions on organisational performance. Considering the ever changing business climate we find ourselves in today this is not only costly, it is not responsive enough for business needs.
It’s been found that businesses that can use predicative analytics and forecasting to accurately predict the future, outrank their peers by up to 70% on measure of profit and revenue.
Cloud Based Solutions
New technologies like our cloud solution make it easier to get off of spreadsheets and adopt best practices, such as rolling forecasts and driving the planning process beyond finance to the broader community of line managers.
In conversations with CFOs, some of the reasons they cite in favour of cloud-based finance systems include the resource allocation flexibility that comes with avoiding large upfront investments, the ability to avoid fixed capital investments during periods of corporate or economic uncertainty, and timely access to the latest software capabilities.
The fact that traditionally risk-averse CFOs are open to moving their mission critical finance systems into the cloud should be a clear indication to all companies that cloud services are fast becoming the go-to strategy for finance executives looking to access the latest technologies quickly and cost-effectively to support their corporate objectives.
"Oracle Planning and Budgeting Cloud Service enables us to focus on our retail core business and empower financial analysts and controllers to improve our decision making by acting on the future rather than struggling to analyse the past.”
Bertrand David, CFO, Camaïeu S.A