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If there’s one thing that’s for certain, it’s that nearly nothing is. While 2020 made us wonder what our ‘new normal’ might look like, 2021 has cemented the fact that we are in (and will likely remain) in a state of never-normal.
Besides new guidelines, approaches, and requirements for how we live, work and travel, nearly all sectors of business remain in flux too – some to great benefit, others not so much.
Inflation is just the latest example of the continuous change that businesses must be prepared for daily, because the new standard of operating revolves around constant uncertainty.
Recent Consumer Price Index figures show the fastest rise of inflation since the Great Recession. Economists are stymied, unable to come to a consensus on whether this is a short-or-long-term trend. As a result, business leaders are grappling with how to prepare their organizations for the future. Do they ride it out and hope it soon stabilizes? Or do they pass along these costs to consumers, assuming inflation will continue its upward trajectory?
While CFOs and their teams can’t control how our inflationary environment nets out, there is one sure-fire way to ensure your organization doesn’t just manage, but thrives, through economic volatility: Continuous planning.
Let’s break down continuous planning into two parts. First, the cultural shifts that leaders must make; and second, the emerging technologies that can make that change far simpler than you might think.
Changing your planning and forecasting mindset
When economic factors are this unpredictable, the old-school approach of doing quarterly or annual forecasting with manual spreadsheets just isn’t good enough. To keep pace and remain competitive, you need to continually forecast 24/7. And to do that, you’ll not only need to redesign, but also reimagine, your planning processes.
When planning takes place constantly in the background, and changes to the business and external environment occur (and they will), you can react with the most up-to-date information to get ahead and pivot quickly. Finance teams can model what-if scenarios, run Monte Carlo simulations, and plan for any number of possible outcomes easily and most importantly, before a crisis hits. In short, there should be no more singular planning cycles. Every day should be a planning cycle.
Additionally, a strong change management strategy is also key. It’s important to relay to the organization that this uncertainty isn’t almost over. You can’t just ride it out. Repercussions of Covid will continue to play out for another few years, and once that’s under control, we’ll likely be faced with a new business disruption.
But this state of never-normal does not have to hinder business success. Tools and technologies exist that can make a shift to continuous planning and forecasting far simpler and less onerous than you might think. And these days, no one needs things to be harder.
Cloud is key for continuous and connected planning
What happens when tax policies change, inflation rates go up, and stores, partners or suppliers shut down? These events happen all the time. But if your systems aren’t connected and using common data, or you’re working in manual spreadsheets, you can’t simply press a button to get an updated forecast in real-time. Continuous forecasting requires an agile environment, a system that breaks down silos and allows coordination across all functions.
The most effective way to integrate all your organization’s processes on a single foundation is with suite of cloud-based applications. Connecting data across your entire organization means you can build forecasts and scenarios that update automatically as both internal and external factors change, ultimately allowing for better planning with more accurate results.
Machine learning is the cherry on top
A given: Cloud-based forecasting is the way of the future. But leveraging advanced capabilities like AI and machine learning takes you to the next level. Not every economic crisis is going to have a precedent – meaning there will be points in the future where we lack relevant historical data to aid our planning and forecasting abilities.
Technologies like predictive intelligence fill that gap by using machine learning algorithms to identify and leverage potential patterns in financial and operational data – rather than solely relying on proven past data – when faced with a new situation. By using predictive intelligence capabilities in the cloud, business leaders can take advantage of machine learning to leapfrog into the future even in the absence of historical data.
Shifting to real-time planning and forecasting requires process changes on several fronts. The first step is realizing that we’ll likely never return to the pre-pandemic status quo – and accepting this uncertainty is the only way to succeed in today’s economic environment. Once that mindset has shifted, the next step is to embrace the best technology to help.
Today, inflation and supply chain shortages are the big concerns. Tomorrow, something else. But taking a continuous approach to planning and using the latest emerging technology to fill the gaps is the secret to navigating this volatility and setting your organization up for success no matter what happens next.
Jennifer Toomey is the vice president of ERP product marketing at Oracle.