Jim Webb, Oracle Certified Implementation Specialist at CSS, wrote an Oracle blog about how small and medium businesses (SMBs) can modernize and improve both planning and forecasting with an integrated Cloud planning solution.

The business world is moving faster than ever. Are your planning and forecasting processes keeping up?

The Difference Between Planning and Forecasting

Planning and forecasting are both important, but they are not the same. Planning is about establishing where your business is today, determining where you want to go next, identifying what needs to happen in order to get there, and ensuring that needed resources are available. Forecasting sets performance targets that support the execution of the plan.

Webb gave the example of a football coach talking to a reporter after a game to help explain the difference. Think about how a football coach responds when a reporter asks what is going to happen in the coming season. The coach doesn’t offer up a win-loss ratio (a forecast). Instead, the coach provides specific details about players acquired during the off-season and what staff coaches and players have been working on in practice (a plan). Based on that information, others inside and outside the organization determine a win-loss estimate. One feeds into the other, and the same is true in business.

Growing small and medium businesses (SMBs) can modernize and improve both planning and forecasting with an integrated cloud planning solution. Your business will benefit from more agile forecasting and reporting, as well as improved collaboration and support for non-finance functions.

How Cloud Improves Planning and Forecasting

More Frequent Forecasts Improve Agility

Usually, companies set a plan, also known as a budget, once a year. Forecasting usually happens after that, as well as, ideally throughout the year as events that could impact business occur. Many companies use a monthly rolling forecast as a way to “bake in” forecast updates to their processes.

The ability to update forecasts frequently is critical today because planning assumptions can be affected by technological advancement, geopolitical events, demand fluctuation, customer preferences, materials availability, and other fast-changing variables. The refresh keeps performance targets aligned with change so that resources are not wasted in pursuit of out-of-date goals.

Unfortunately, many SMBs cannot update their forecasts with ideal frequency because they are using legacy applications and spreadsheets. The re-forecasting process is slow, and it can take as long as two weeks to update a forecast. By that time, several weeks’ worth of work and opportunities may have been wasted. However, with Cloud applications, SMBs can operate with more agility by quickly changing expectations when circumstances change.

Another aspect to consider is the quality of forecasting. If your team cannot respond quickly to executive and business requests for reports, it is likely because you are using disconnected applications and data sets that are not normalized and kept-up-to-date. This is another limitation that can be turned around with Cloud applications.

Better Collaboration Improves Execution

While more forecasting is better than less forecasting, no amount of forecasting or refreshing can make up for poor execution. Disconnected planning can prevent the type of collaboration and information sharing that improves the execution of annual plans.

An integrated planning and forecasting solution facilitates frequent collaborative conversations because workflows and data reside in one system instead of separate systems. This makes it easier for finance teams to support individuals, lines of business, and departments as they work to meet their plan targets. Additionally, consolidating forecasting and planning activities into a combined SaaS solution instills more confidence and trust because everyone is using the same methods and tools. The applications are updated to the latest in best practices regularly, so once the Cloud is adopted, processes are always up-to-date for all groups.

This integration also contributes to agility because people spend less time gathering and verifying data and more time acting on requests for information. With the right information sooner, executives and lines of business can make decisions faster and with more confidence.

As businesses grow, it’s a good idea to assess applications and systems periodically and ask, “Are they keeping up with our needs?” If you’re still using desktop applications for planning and forecasting, probably not. Modernizing with a combined planning and forecasting cloud solution can elevate both of these practices, so they’re more effective and align with requirements to be more agile and responsive.

To learn more about how to improve planning and forecasting in the Cloud, check out the additional resources attached below.