How Anaplan Transforms Financial Planning Processes

Deflytics 📋 blog 📅 July 23, 2024

Financial Planning and Analysis

In today's high velocity business landscape, financial planning has become more than just a yearly exercise—it's a dynamic process that requires agility, accuracy, and strategic foresight. Traditional spreadsheet-based methods often fall short in meeting these demands, leading to inefficiencies, errors, and missed opportunities. Enter Anaplan, a revolutionary platform that redefines financial planning and analysis (FP&A) by offering a robust, flexible, and collaborative solution. This blog explores how Anaplan transforms financial planning processes, enabling organizations to navigate complexity with confidence and clarity.

Let’s see how Financial Planning with Anaplan enables each of the key FP&A sub-processes: 

1. Long range planning (LRP): LRP involves identifying and lining up your strategic initiatives to meet your 3/5/10 year goals. These objectives could be 5-yr market share objective, reducing carbon emissions by 50%, or 3-yr ROCE goal. Whereas the initiatives could be setting up a new manufacturing plant, entering new territories or inorganic growth pursuits. Organizations need to track their progress and achievements of such initiatives aligned to their long range business plan and objectives. 

Financial planning with Anaplan enables organizations to define the revenue and cost objectives associated with such initiatives and tie them to relevant organizational metrics. They can instantly see the status and any effect of it on other elements of the LRP or AOP. Where Anaplan shines is in its ability to (a) seamless LRP to AOP or any other organization-wide plan and (b) enabling organizations to execute their LRP in the minutest grain.

2. Annual Operating Plan (AOP): The 1-year version of the LRP, an AOP is looks at the more immediate time frame. Organizations define their P&Ls/ objectives by month on all the key for revenue, costs and EBIDTA. This is done with top-down, or bottom-up or in a mixed approach.  At the end of the AOP plan everyone knows what the organizational objectives are, what are the available resources, and what will constitute success.

This process involves cross-functional collaboration, iterations, and multiple versions. Anaplan is fundamentally a connected planning platform. It tops capability with all the necessary collaborative capabilities to make the AOP process synchronized across various stakeholders.

3. Budgeting: Very closely tied to the AOP, the budgeting process involves allocating revenue and cost objectives across different business units functions territories or any other business dimensions. All of this obviously rolls up into the AOP which is the organizational plan but in order to track respective business units or functions’ objectives and performance it is necessary to break the AOP into functional plans. So there will be a P&L for a product, plant, function , segment, etc.

While the terms AOP and budget get used interchangeably, the key difference between the LRP and AOP is the details and dimensions of planning. Anaplan’s patented Hyperblock in-memory technology powers the details and speed at which organizations want to define and track their budgets. Financial planning with Anaplan makes that happen without compromising on any of the two factors – details or the dimensions. 

4. Actuals: Once the plan is set, the next step to track the progress on a regular basis. Which means comparing how the business actually performed versus the plan. Here organizations need to bring in data from their ERP and other relevant transaction systems in order to compare versus the plan and the budget.

Financial Planning with Anaplan not only offers multiple ways to integrate the data from the ERP or the transaction systems but also provides readymade connectors for some of the leading ERPs and CRMs  such as SAP, Oracle, etc. This makes the job of integrating the data as well as massaging it before moving it to an Anaplan much simpler.

5. Variance analysis: Both the executive and operational leadership of any organization would like to understand how their performance is tracking versus plan. It's important to understand which KPIs are doing well and which ones require attention. 

Once the data from the ERP system is available in Anaplan the analysis process begins. Anaplan provides a robust reporting, analysis and dashboarding capabilities to enable this. Whether you want to prepare standard monthly MIS  or whether you want business dashboards to get loaded or you want to analyse some ad hoc measures. Anaplan provides powerful analytical capabilities you need to arrive at the root cause of the variance.

6. Forecasting: the next step in the process is to develop a forward looking plan based on the actual performance of the most recent period. In doing this organizations will take into account fast trains recent sales forecasts and any other relevant information to derive a new plan for the remainder of the year called the forecast. Multiple organizations do it at different frequencies depending on the nature and velocity of the business. Some do it on a quarterly basis, some on a monthly basis and some do on a 6 monthly basis. 

This is where Anaplan truly shines i.e. in its ability to make a forward looking plan. It provides multiple ways in which organisations can create a new forward looking plan e.g. individual functions can develop their plans (finance, sales), which can be then developed into a consensus plan. It also provides prebuilt forecasting techniques and machine learning algorithms which the organizations can use to develop a machine enabled plan. Both together can give the organizations a proper view based on which they can arrive at the best forward looking plan.

Anaplan also provides capabilities to help organizations develop multiple scenarios which can be used for forecasting or for taking any other business decision. Whether you want to launch a new marketing promotion to correct the recent sales or whether you want to increase the head count to cover a territory better, the entire impact of these decisions on the cost and revenue can be calculated and presented in a jiffy. In conclusion, Financial planning with Anaplan represents a paradigm shift in financial planning processes, offering organizations a powerful platform to navigate complexity, drive innovation, and achieve sustainable growth. By centralizing data, enhancing collaboration, and delivering real-time insights, Anaplan empowers businesses to make informed decisions and adapt swiftly to changing market conditions.


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