(3 minute read)
Revenue planning is fundamental to successful business operations, but for many organizations it’s a challenge to gain visibility into all the necessary data. With information residing in spreadsheets, loaded into SAP systems or rolled into a third-party planning solution, it can be difficult to gather the necessary data to build an accurate forecast.
There are many components to revenue planning, but it always starts with understanding the conversations your sales team is having with customers about the volume of products they’re going to purchase, contract terms, pricing and discounts. Ultimately, this information must be fed back into the organization and combined with other items that deduct from revenue – coupons, discounts and allowances, etc. in order to estimate net revenue. From there, you’ll also need to consider the cost of goods sold (COGS) in order to get to the gross margin.
The challenge lies in capturing all the necessary sales information in a planning application and combining that information with historical data to do statistical analysis based on seasonality, drivers, and other factors. From there, you may want to look at the planned volume and run several “what-if” scenarios, or models, to look at projected outcomes.
The output from that modeling ultimately feeds into a much higher P&L – or income statement – because revenue is just one piece of the puzzle. Usually there is a process within the planning solution that allows you to perform modeling, then feed the data over to an enterprise planning model. From there, you are able to factor in your operational expenditures (OpEx) budget – salaries, G&A, etc. – to determine your projected net income.
We Can Help You Visualize and Analyze Your Data
itelligence has worked with hundreds of customers to help solve their revenue planning challenges. Our consultants are finance experts that understand P&L, balance sheets, and the components that make up working cash flow. We understand how clients want to do their revenue planning and bring best practices to the organizations we serve.
No matter whether it is SAP BPC or SAP Analytics Cloud, we have experience pulling data from demand-planning solutions at the operational level and integrating it into the financial plan. From there, we help our clients to analyze different financial planning scenarios that would affect revenue based on the operational demand plan data.
If you’d like to learn more about the capabilities of SAP BPC and SAP Analytics Cloud solutions, check out our video series that features a fictional company, Aster Snack Brands, visualizing and analyzing their data with these tools. You’ll be amazed at the business insights that can be uncovered.