Performance Management Solutions

What is Strategic Business Planning?

Business planning is the effective co-ordination of resources and activities across the enterprise and matching them against anticipated future demand avoiding both bottlenecks and unutilised capacity.

Strategic business planning is a key part of the strategic management process and focuses those business plans on the preferred strategic objectives of the enterprise.

Budgeting

A budget is a plan of action that forecasts future transactions, activities and events in financial and non-financial terms that will meet agreed targets usually over a one-year time horizon.

Strategic analysis

Strategic analysis of an enterprise and the environment in which it operates should yield insights and opportunities that deliver real competitive advantage.

These might include:

• understanding the real source of customer profitability
• recognising the true cost of customer churn and the corresponding benefit of customer retention
• identifying the true cost of business complexity and change
• knowing the full advantage of efficient business processes
• designing for lowest unit cost to serve
• optimising enterprise performance and capacity utilisation
• pricing to deliver market penetration
• planning for effective resource utilisation and avoiding step changes
• predicting successfully the impact of customer demand on the resources of the enterprise
• understanding the full advantage of developing a resilient, adaptive, learning culture across the enterprise

Good strategic analysis can make a profound difference between an organisation simply working hard and being a sector leading enterprise.

Traditional planning and budgeting in a volatile world

Increasingly, organisations can be characterised as high volume - low margin operations, particularly following the recent period of recession.

In this situation, forecasting future revenues independently of the related costs, and in financial terms alone, is no longer sufficient.

What is needed is the ability to simulate various scenarios in terms of what they mean for cost drivers, processes, activities, resources, costs and therefore the customer and product profitability of the business as a whole.

In short, planning and budgeting simulations should reflect the "cause-and-effect" relationships that describe how resources are consumed in an enterprise.

Testing alternative planning and budgeting scenarios

As competition becomes increasingly global, so demand becomes more volatile.

Under these circumstances, the ability to continuously and closely match resource levels with demand is critical to success.

What is needed is a business planning and budgeting software that meets this requirement and can provide information to support the development plan for the organisation be it a non-profit, small business or major multi-national.

Interactive Business Planning and Process Simulation

Conventional business planning programmes and budgeting typically conforms to the function hierarchical structure of organisations. This exacerbates an often poor understanding of the cost dynamics of the enterprise, resulting in multiple budgeting iterations until an acceptable answer is generated.

By contrast, an interactive approach to business planning and budgeting brings knowledgeable managers together with a sound understanding of the profit and cost dynamics of the business interactively.

This exploits the "cause-and-effect" that has been encapsulated in an activity based costing model of the enterprise, allowing management to exercise their strategic and operational judgement at a much earlier stage, reducing the number of iterations in the planning and budgeting process, and leaving more time to think.

Planning for capacity constraints

Interactive business planning is based on the causal relationship between costs, activities and product and customers developed for Activity Based Management purposes.

Understanding the dynamics of resources plays a key role in all planning models and budgeting simulation, so every business scenario or process simulation tested needs to reveal where the anticipated capacity constraints, or bottle-necks exist, and where there is excess capacity, all based on how managers understand their organisations and how they might respond if faced with the scenarios under consideration.