Building a house involves many resources like bricks, concrete, electrical wiring, plumbing etc., understanding these costs and requirements involves working with people who are experts in each of these areas, and can help provide the right inputs and estimates.
Now imagine if you were to build a house and you decided to create a plan and budget for the project yourself, how accurate will it be if you didn't have inputs from these resource experts?
For those within a finance department, the tasks involved in planning, budgeting and forecasting can sometimes look like a process of building a house. Even if you are using the world's best templates and have highly aligned processes within finance, there is potentially a load of information which is sitting with your colleagues in other departments. Unless there is a way for them to collaborate with finance and share the inputs with finance systems, it's always going to be a painful cycle of validating assumptions and cleansing data.
While 100% accuracy in planning, budgeting, and forecasting may not be an achievable goal, you should still be able to get as close to it as possible.
Effective organizations connect functions and provide input from the bottom-up, to the top-down, to make sure all essential information is accounted for in budgets and forecasts. With a plethora of tools and cloud technologies available at much more affordable costs (than 5-10 years back), no longer should IT be a roadblock to this data exchange.
There are some key findings and recommendations organizations can leverage, some of those are listed below:
Leaders are predictive. They are 40% more likely to run ‘what-if’ scenarios on data. Which enables employees to predict possible outcomes leading to better forecast.
Top performers are informed. 51% of leaders in the industry are able to incorporate business drivers into the forecasts. This is made possible by providing real-time data to decision-makers, which removes the guesswork from forecasting process.
Leaders are efficient. Lengthier the process of data collection, the older data becomes and hence leads to inaccurate budgets and forecasts. Leaders in the industry avoid this situation by training their employees on available tools, ensuring system is being fed data correctly.