• Performance Management
  • February 27, 2017

Efficient, High-Quality FOPM with an Advanced Planning and Forecasting Solution

FOPM, short for Financial and Operational Performance Management, is a long-standing favorite among financial officers. Two years ago, the tech buzzword was big data. Last year, everyone talked about IoT and Robotic Process Automation (RPA), and it looks like 2017 will be the year of artificial intelligence. FOPM, on the other hand, enjoys perennial and well-deserved popularity among senior managers. After all, ensuring that the company is capable of implementing its vision profitably is one of the primary tasks of CFOs.

Planning, forecasting, and metrics

FOPM refers to procedures, metrics, processes and information systems that make strategies implementable and measurable. It is a combination of several capabilities, the most important of which are planning, forecasting, and metrics. A forecast is the company's expectation for its future revenue and expenditure. Forecasts can be submitted by several members of middle management. Planning is the process of documenting the steps needed for realizing the expected revenue. Forecasts and plans are then assessed with different performance metrics and KPIs that are derived from these. Success requires seamless, coordinated collaboration between controllers, executives, and business intelligence experts. A functional FOPM solution makes the management process measurable, enabling executives to ensure adherence to company strategy.

The field of FOPM is far from complete at the moment. At Finnish companies, the strongest areas are probably metrics and business intelligence. There have been notable advances in these areas, and many companies have adopted BI technologies that automate their dashboards and monthly reporting, minimizing the potential for errors. On the other hand, planning and forecasting still require a notable amount of manual labor. There is still room for improvement when it comes to quality and efficiency. Challenges include the fast turnaround times of planning and forecasting processes, and the need to compare data across departments and functions. Many companies are also thinking about switching to rolling forecasts. These are typical examples of challenges that can be solved with an advanced FOPM solution.

From Excel sheets to expedient planning tools

Excel is probably one of the most common tools used for planning and forecasting, even in largish companies. And up to a certain point, the agile office software serves this purpose well. But there usually comes a time when the manual labor required to work on the Excel sheets outweighs the information they provide. At this point, the company needs a fully-fledged FOPM solution. For example, error tracking can be extremely labor-intensive in Excel. Moreover, some of the templates used in Excel might be outdated or incompatible, making the figures and analyses incomparable. However, companies can continue to use Excel for certain tasks alongside more advanced FOPM tools.

Excel can be used as the user interface of an FOPM tool, while the more advanced solution streamlines the planning and forecasting process in cases that involve data from several functions and persons. It enables a systematic monitoring of workflows and data entry. The process owner sees the origin of the forecasts directly and can track errors easily. The integrated planning system guarantees that everyone uses the right template and has access to, for example, year-on-year figures. It is possible to achieve the fast turnaround times of the planning and forecasting process without compromising quality, keeping the figures comparable, even in large organizations.

Integrating the planning tool with the BI tool

The FOPM tool can be integrated with the company's Business Intelligence solution. The integrated solution includes a clear BI view, which shows how different scenarios affect the big picture. This feature is important particularly at more complex organizations. An advanced FOPM tool can produce what-if analyses right away, for example, from a company or business perspective. Alternatively, the tool can produce scenarios for any level of business, including product, personnel, factory or regional levels. It is also possible to simulate the business effects of various investments, as necessary. The clear visuals attract the team's attention to relevant facts. The aim is that financial officers can dedicate their time and expertise to playing with different scenarios and base any decisions made on strategic choices.

Quick start with a SaaS solution

Choosing a fully cloud-based SaaS solution is the fastest way to get started. A SaaS solution can generate the first forecast templates in just a few weeks, its costs are predictable, and it is fully scalable to meet future needs. If you'd like to see how an advanced FOPM solution could boost your planning and forecasting, drop us a line. We'll let you test the solution and create scenarios using your own business data and figures. These tests will make you see the value of the solution in concrete ways.

Author: Markus Hellas