We were meeting with Peter, a client, the other day. He was commenting how powerful his TM1 model is, but also that it is in some ways complex and a little limiting as an analytical tool. He would have loved a model where he could pull the levers on different business drivers and see the effects instantly.
We explored what that meant to him and this is what we came up with. It’d need to be:
- top down, as distinct from traditional bottom up planning.
- designed for senior execs to do ‘what if’ analyses, rather than managers to build up their plans.
- highly flexible.
- full of multiple scenarios for what if analysis.
- capable of delivering the same sort of numbers as the full blown corporate plan.
- loaded with actuals which would then be used to calculate drivers and ratios that could be projected and manipulated easily.
- able to do all calculations using drivers.
- a ‘rolling forecast’ type model, rather than ‘planning to the wall’.
Then we compared that to their current corporate planning model, characterised by these attributes:
- built to be calculated bottom up and then rolled up through cost centres to business units.
- specialised calculations for Gross Profit, Labour, Capex and Depreciation, Opex, Factory Planning and output to P&L, Balance Sheet and Cash Flow.
- involves multiple people.
- takes many months to complete.
- is detailed enough to provide budget information for variance analysis by Planning Account in Cost Centres and GP analysis by Product Group.
- is the source for Budget reporting to their foreign parent company.
- has Actuals loaded daily.
- is used throughout the year for general ledger, gross profit and revenue analysis.
- is built as Rolling Forecast model, but used as a Budgeting model.
- plans are owned by the business managers because they prepared them.
So in reading through this list it became apparent that both approaches are needed. We need the detail and ownership of the full model, but the flexibility and analytics of the top down model. We then went away and thought this through and the Infocube Hover Car was born.
“Hover Car?!”, I hear you say. “You’re nuts, John!”
Well, it’s not really a Hover Car, but gee it’s a good analogy! Picture your old spreadsheet budgeting model as a round, German car from the 70s. Let’s call it a bug. Then picture reworking your spreadsheet model into a many-times-more-efficient, much faster and more powerful car. Maybe an Italian sports car. Possibly with a prancing horse logo.
Well the Hover Car is still a car, but it goes way faster, is powered by hydrogen, and is off-road (literally!). That’s what this new type of planning model does. It’s way more flexible, allows easy scenario analysis, gives comparable results, can be quickly manipulated by senior executives and fully integrate with the existing model.
Wanna know more about our Hover Car? Give us a buzz on 1300 136 755 or email us!
Photo credit: Denys Nevozhai on Unsplash