The Benefits of Rolling Forecasts Over Annual Planning
Published on 05 Jun 2021
Conventionally businesses have relied on annual plans to guide their operations and help achieve their short-term goals. This has been the way things have been done for over a decade. However, it is time to reconsider this practice. Rolling forecasts have significant advantages over annual plans. They allow businesses to take advantage of the latest opportunities, technological advancements, and transformational practices. In this white paper Frank Calderoni, CEO, Sara Baxter Orr, Head of CFO Practice, and Simon Tucker, Chief Planning Officer at Anaplan, explain the benefits of rolling forecasts and why annual planning was outdated even before the COVID crisis.
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The limitations of annual plans
Traditional annual plans are time-consuming, expensive, and limiting: As per estimates, it takes on average between two to five months for businesses to construct their annual plans. These plans are made by looking at historical data to predict what might happen in the future, which is often variable and volatile. It is a resource-heavy exercise that requires finance teams to work long hours. Often people from other departments are pulled in. There is a cost associated with this investment of time. It is also not a fun exercise for the people involved, it can be draining, exhausting, and distracting for the organization.
Predicting business environments is complicated: We will continue to feel the impacts of the Covid-19 crisis for years to come. It has fundamentally changed the landscape of business. There is a lot of uncertainty right now and no way of knowing when that uncertainty will be resolved. Trying to predict future business environments has always been a complex and difficult task. It has only become harder. Any annual plan created in the current situation would quickly become outdated and require revisions.
Executed on outdated tools: Annual plans are generally tied to a finite calendar. There are limitations to what information can be viewed. They limit the ability of management to make adaptive decisions and be agile. Often the methods and tools used to make these plans are outdated, bloated, and rely on old technologies. Discrepancies and errors are generally part of these legacy systems.
Benefits of switching to rolling forecasts
Rolling forecasts allow organizations to plan throughout the year instead of planning for the year. Resources and efforts required are spread out over the entire 12 month period instead of being clustered over a quarter. The pace at which technologies and business environments are changing has increased. In order to keep up with evolving demands and stay ahead of the competition, businesses need to be able to make fast decisions. Rolling forecasts support this type of agility. They are agile, adaptive, and continually updated.
Download this eBook by Anaplan to learn more about why your organization should move away from annual plans and adopt rolling forecasts. The document also covers information on why this is an important step to take now. Subscribe to whitepapers.online for high-quality resources like this.