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The Rolling Forecast Webinar

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Rolling Forecast WebinarFor businesses, rolling forecasts built on driver-based and project-based planning create a framework that supports better decision making across the enterprise.The webinar content focuses on how to define your company's objectives in creating a rolling forecast, best practices in analyzing the dynamics of revenues and expenses in your business, and how to access how external conditions impact your company's performance.

This Rolling Forecast Webinar video is from the Proformative webinar "The Rolling Forecast" held on July 17, 2012.  The webinar features a presentation by Bryan Dehmler-Buckley, Principal Product Manager, Host Analytics.

 

Rolling Forecast Webinar

 

Is around rolling forecasting and to set that stage we really want to understand where we see finance sitting today. Meaning what is finance's role within the organization and how can finance leverage, technology and, specifically, certain processes like rolling forecasting to really put themselves, not only in an excellent position to be part of the decision-making process within an organization, but help to make all of the users and participants in the budgeting and planning processes much more efficient and effective.

So I'm first going to start with talking about finances evolving role. As you can see on the screen here we're really got a timeline of how finance has been engaged within an organization. Traditionally, in the past, finance has really been seen as kind of reporter of financial results. Right? So doing the reporting, dealing with the auditors, being the go-to resource for figuring out the questions around "What happened," "Why did this happen," "What happened to my data," What is the reason for the actual results that we're seeing?" Pretty much they were dealing with rigid data. It's very controlled by systems that's either IT managed and they had to make requests for information and/or they were held in Excel spreadsheets and very hard to manipulate.

What we're seeing is that this evolution is happening within the finance organization where they're becoming much more of a business partner. What does that mean? That means that finances is involved in more of the decision-making in setting the strategic direction for the company and having a seat at that table with all the other strategic partners within the organization. The reasoning for that is because the role of finance is becoming much more proactive. It's less looking back into the past to determine what the trend was and then applying that same trend to the future, but looking more to the future around "Where do we want to be," "Where do we want to take this company," and "How are we going to get there?" Associated with that is establishing the processes that allow the company to get there.

The information that they're dealing with is much more real-time. So they have the ability to look more into the future because the availability of the data is enhanced significantly. Meaning there's no spending the majority of the time gathering the data and just getting it into a form at where we can pull it into a system and have some come and look at it. The information is available at their fingertips and as such is available for much more modeling and scenario building and what if considerations that traditionally in the past there just wasn't enough time for it.

Lastly, they've become the driver of the business results. So through the flexible information that not only that they are receiving and being able to analyze, but also sharing across the organization they are the real driver behind the actual business results within the company. So it's not just financial results, but it's financial results, it's operation results, risk results, pretty much anything across the organization that needs to be captured and reported on, finance is helping lead that directions.

The reason that they are in such a central role for that is because technology is a significant enabler within this process and finance is at the heart of enabling technology to get to this information and to provide that information across the organization to allow a lot more users to participate in the process.

So we've also see that finance executives are . . . they're priorities are changing to some extent. Right? We have the traditional questions around, "I need to have access to my business performance." Right? "I need to understand as a finance executive how do I get visibility into that?" Additionally, "How do I become more of a business partner with a functional executive." So finance is the days of sitting in their central tower and just kind of talking from on high or even just being considered last in the line depending upon the organization, they're much more integrated, they're much more involved in the activities of the business more so than they have in the past.

Lastly, finance is at the heart of the processes that are really driving the companies around allowing them to execute on the strategic plan. The wild west ways of just letting everybody go off and do their own thing. Divisions that had entirely different systems and/or methodologies has been abstracted and now you have companies that are driving process throughout the organization to help them be much more efficient and you see finance at the leading edge of that.

What we hear a lot is how am I going to be involved in driving that fact-based decision-making throughout the entire organization. As I mentioned, finance executives are saying that they want the traditional visibility into the corporate performance, but the key thing that's really changing is that they really want to be a partner in the overall organization and a partner in helping drive these fact-based decisions. To that end they're realizing that it's not just surrounds process and effecting change within an organization, but it's also delivering vehicles and tools that will help solidify those processes within the organization.

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So we've done a few studies ourselves at Host Analytics and most recently we've done one of about 540 finance execs to ask them some questions around how they saw the changing role of finance evolving. We saw some pretty interesting results. We've just got a couple of snippets of what we found out here. The key thing is from a CFO perspective two-thirds of the CFOs that we queried indicated that they are much more involved in the strategic discussions than even just five years ago. That's a huge shift in a short period of time which really shows the commitment within companies to have finance as a partner around the strategic direction of the company.

Now some of the more interesting things that we saw were that roughly a little bit over half say strategy and planning and then roughly about a third say communication are the most important skills for CFOs. So strategy and planning, that's probably not a surprise. Right? Because traditionally what finance has been involved with. But 30 percent indicated that communication is the most important skill for a CFO is significant from the standpoint that finance is involved in the discussions. They're participating in the communication of processes and direction across all functional areas. So this isn't just the CFO, but this trickles down to all of the other individuals within the finance organization that are continually communicating now with the functional areas and other users within the organization to ensure not only that they are adopting the processes that finance is putting in place, but also taking the feedback from those individuals and in making modifications so that the processes continue to evolve. So those skills are really important.

Kind of on the flip side of that we thought it was really interesting to hear that CFOs were saying that financial reporting and accounting seemed to be pretty low in terms of priority lists around the skill set that is required to be a CFO. Now this just shows the evolution of the finance organization. That it's not just about the abacus and cranking numbers out. It's about the much more strategic and having that vision for the future and helping drive the company towards that.

We've also heard, as far as the desire to have better planning processes, that roughly three-quarters of the individuals that we queried really wanted to have those better processes and they felt that it would really give them a competitive advantage in the marketplace should they have those. They're much more agile in terms of how they're gathering their information and then making decisions based off of that.

But, unfortunately, the sophisticated planning approaches aren't really being adopted. So you consider scenario modeling which is really just "what if" modeling. Only a quarter of these roughly 500 individuals are actually doing any of that in their planning process. Right? So they're not considering those black swan events. If the market happen to take a nosedive, what impact would that have? Or if the European debt crisis continues to escalate or . . ."

End partial; Rolling Forecast Webinar

 

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