This blog article originally appeared on the Digitalist Magazine website on February 20, 2019. Here is a link to the original article:
By: Pras Chatterjee, Senior Director of Product Marketing for Enterprise Performance Management, SAP
Part 1 in a 2-part series
As companies strive to move from good to better to best, leading organizations’ planning techniques have evolved from static to agile, with an emphasis on strong collaboration across the business. According to a new study by Ventana Research, the leaders in collaborative enterprise planning have found that this approach has increased the success of their strategic plans while decreasing the odds of disruption. But what is collaborative enterprise planning, and why is it gaining momentum as a best practice with forward-looking companies?
How collaborative enterprise planning works
Collaborative enterprise planning is the process of linking and aligning all plans across your organization. Supported by enterprise technology, this approach breaks down silos and brings your teams together – finance, HR, sales, marketing, IT, supply chain, even departments and regions – to collaborate on plans and drive better business outcomes. The main idea is to link the planning and budgeting activities of all departments and business units, compare results to the plans, and dynamically adjust strategies as needed. Refining the plans at shorter intervals enhances accuracy.
Operations and finance departments work together to consolidate operational and financial data. This way, plans can incorporate hybrid key performance metrics – for example, employee productivity and revenue.
However, while leaders are adopting the collaborative approach, what about everyone else? Ventana’s recent white paper, Collaborative Enterprise Planning: Improving the Business Value of Planning and Budgeting across the Enterprise, explores how well businesses are collaborating internally and how many are using a collaborative methodology. What the research found may surprise you.
A “pulse check”
All business leaders agree that internal collaboration is essential for continuously improving business performance. However, how well organizations are actually collaborating may be a wake-up call for many modern organizations. According to Ventana’s research, just over half of midsize and large companies report that they collaborate “effectively” (52%). The number of companies that say they collaborate “very effectively” is a shockingly small 10%.
What is the cause of this collaboration trouble? One major issue is departmental silos, which limit communication and hinder planning capabilities. To be effective, planning needs to be a collective process that spans the organization and improves communication and visibility, allowing stakeholders to see and understand the impact of their activities on other areas of the business.
Ventana’s research found that the companies that excel at collaborative planning also tend to be good at process management. The majority (85%) of companies that collaborate “effectively or very effectively” in planning said their process is managed well. Unfortunately, on the other side, companies that struggle with collaborative planning often suffer from negative impacts that extend past the planning phase, also affecting their process management and plan implementation. Of the companies that reported that they collaborate “only somewhat effectively,” only 11% consider their process to be well managed.
Ultimately, the research highlights the fact that, for most organizations, there is still a lot of room for improvement. Even those that collaborate very effectively still have opportunities to streamline process management. To adopt a best-practice approach to collaborative planning takes more than a collaborative mindset. Why? Because the discrete applications in use in most organizations have disparate operating standards that isolate lines of business.
Adopting a collaborative planning approach
According to Ventana’s research, organizing and orchestrating planning in a single system makes collaborative enterprise planning possible. This approach enables departments across the business to work together – breaking down departmental silos and granting cross-departmental insights into the information that matters to leadership. For example, operational data, such as headcount or units produced, can easily be combined with financial information like revenue and expenses. This access to information enables leadership to make strategic decisions quickly based on reliable, holistic information.
The next blog in this series looks further at the technology underpinnings that enable this collaborative approach.