Business, Planning Analytics

Pillars of Planning: Identify the Drivers that Matter

The fourth pillar of planning identifies key business drivers (read about the first, second, and third pillars in our previous articles). These drivers may be resources, processes or conditions that are crucial to the success of the organisation. Once these drivers are identified, mathematical models can show how these drivers are affected by different variables.

 

How does this help business?

The goal of driver-based planning (DBP) is to focus business plans around the drivers that are most likely to deliver success. This helps managers, financial professionals, CFOs, CEOs and business owners:

 

  • Understand the true value-drivers of their business, and how changes to these drivers impact future business outcomes.
  • See detail that is more closely aligned with operational reporting and KPIs.
  • Build rolling, trustworthy financial forecasts that can be re-forecast with minimal effort.

 

In its most basic form, DBP can be set up in an Excel environment. Most time will be spent coordinating inputs across the business, and the rest on tweaking different levers to analyse various outcomes. Stepping up involves programs and tools that make key drivers incredibly easy to model. It’s about helping businesses perform endless what-if scenarios and creating smarter corporate plans.

 

When giants make huge decisions

We can imagine Emirates, which flies over 50 million people across the world annually, coming to the decision to reduce its flights by 28% from April 16 to May 30 while Dubai International Airport upgrades one of its two runways, after complex and numerous scenario and what-if analyses based on a broad range of key business drivers that might have included: fleet maintendance schedules, route seasonality, the opportunity to replace its Boeing 777s with its larger flagship Airbus A380s on select routes, and fuel costs. Considering it cost the airline $467 million in lost revenues when Dubai International Airport closed one runway for 80 days in 2014, you can bet that they spent significant resources optimising their operations for this year’s shutdown.

 

The decision-maker’s best friend

DBP gives businesses the ability to adapt and make decisions quickly, saving time, effort and money. CFOs love DBP because they are able to pull different levers right through their corporate plans and see the impact on variables. Finance professionals don’t need to go through the pain of managing Excel to deliver what their CFOs want. And CEOs can use DBP to create value for shareholders.

 

Check out our enhanced corporate planning approach that utilises driver based planning, or get in touch with one of our consultants to discuss how your business can get started with game-changing corporate planning optimisation.

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