Business Planning Software Unifies Siloed Planning

Having just completed the 2022 Ventana Research Value Index for Business Planning, I want to share some of my observations about the business planning software market and how it has advanced as an important part of our market coverage for almost two decades. Dedicated applications for planning and budgeting have been around since the 1980s and are, therefore, quite mature, with robust features and functionality as well as continual refinements in usability and performance. Outwardly, the specifications for offerings in this category appear very similar, but how the software works is at least as important to buyers’ preferences. Moreover, planning is not a mechanical process, so despite limited differentiation at the surface, an organization can find that one vendor’s offering is a better fit for its individual approach to planning than others.

There is also a wide gap between how well most organizations perform planning and budgeting today and what’s possible using the capabilities offered by these applications. We believe that each of the business planning applications we reviewed are capable of supporting — and probably improving — almost all organizations’ current budgeting processes as well as a wide range of business planning activities. The biggest challenge to any organization’s initiative to improve the business value of planning and budgeting is the change management element.

The purpose of business planning is not simply to create a plan — it is to make better decisions. Planning and budgeting software should make the process faster, more agile, less burdensome and more intelligent so managers can consistently make better decisions. Since the early 2000s, Ventana Research has advocated using a dedicated application to increase the business value of planning and budgeting. In the early 2000’s, we first articulated a new vision of using a planning software platform to improve the business value of corporate budgeting. This approach allows a business unit to plan in the way that best serves its needs while enabling the financial planning and analysis group to integrate plans to construct a unified operating plan and budget. This idea, called integrated business planning, has since been increasingly adopted by organizations and embraced by software vendors. By 2025, one-fourth of FP&A organizations will have implemented integrated business planning, bringing together operational and financial planning on a single platform to improve the business value of planning and budgeting. It is essential to have software that can help achieve this vision, which requires examining a comprehensive view of vendors to meet the overall requirements for business planning.

Organizations do a lot of planning — some formal, but in practice, much of it informal and almost always in business silos. People plan sales, they plan how to produce products and deliver services. They plan for the headcount they’ll need and how to organize distribution and the supply chain. They also produce a budget, which is a financial plan. When business managers are asked to prepare a budget, they first create a business plan (often informally) and then translate that into financial terms.

Although planning and budgeting are similar and connected, they have different aims. Budgeting sets limits, while planning seeks opportunities. Planning is about determining the best path to success, while budgeting imposes financial controls to prevent an organization from failing. Not failing is not the same as succeeding. Planning is about the things that departments do and the things they need to do them. Budgeting summarizes the monetary consequences of a plan in income statements, pro-forma balance sheets and cash flow projections. Successful organizations understand that planning for success while respecting financial objectives and constraints is more productive and strategic than just budgeting. Planning software enables organizations to do both faster and more effectively than using stand-alone spreadsheets, which remains the most popular software for planning and budgeting.

The enduring popularity of stand-alone spreadsheets is understandable, and many organizations are in a planning rut, the result of inertia, the power of vested interests and the perceived risk of change. Although the annual budget provokes grumbling, there is little impetus for change, especially from the top. For those in FP&A who manage the budgeting process, it is easy to lose sight of an objective when a job is wrapped up in a complex business process, especially if the individual in charge of that job is spending a considerable amount of time handling its mechanics and dealing with the inefficiencies of stand-alone spreadsheets. Technology allows organizations to streamline and redefine the process so that those doing the planning and budgeting can concentrate on its essential purpose.

Planning should be a structured dialog between executives and managers about objectives and the resources and tactics that people need to achieve them, not just a financial plan. Dialog is considered “structured” when it is grounded in measurable objectives rather than vague goals. For example, “our objective is to grow sales by 8%,” not “we plan to increase sales.”

In practice, planning is an inconsistent, fragmented and siloed process. Mostly, this stems from using legacy technologies. Stand-alone spreadsheet-based planning reinforces silos because it compartmentalizes plans. Each department plans part of the business differently because of different needs. Creating an integrated or connected business plan with spreadsheets is difficult because, while spreadsheets can handle the financial aspects of planning an organization, they are not good at simultaneously handling monetary elements and “things” like headcount, hours or supplies and materials needed to fulfill sales orders or contracts.

For years, people have been talking about finance transformation — that is, the remaking of the finance department into an organization that functions as a strategic asset to the corporation. By 2024, just 1 in 5 FP&A organizations will have redefined their mission to make planning easier for business unit leaders. Those that do will be a strategic asset to the organization. Such a department is strategic because it provides greater visibility and insight into how the organization and each of its business units is performing, and how to optimize that performance going forward, with a focus on what happens next, not merely on what just happened. A strategic FP&A group has the capability to provide data-driven advice to executives, not only explaining past results but using that context to provide insight into choices among next-step options and their ramifications. Building technology competence does not just benefit planning and budgeting — it raises the performance of every facet of the department.

Technology is essential to making planning and budgeting more strategic, more productive, and more consequential to an organization’s success. Planning software increases the business value of planning and budgeting because it serves the needs of the senior leadership team, business managers and the office of finance, thereby increasing an organization’s agility.

Our formalized market research on business planning — the Value Index — evaluates vendors that offer business planning software as we define it: Anaplan, Board International, IBM, Infor, insightsoftware, OneStream Software, Oracle, Planful (formerly Host Analytics), Prophix, SAP, Unit4, Vena Solutions, Wolters Kluwer and Workday. For almost two decades, Ventana Research has conducted market research related to business planning with the objective of increasing its strategic value to organizations. Our research as presented in the Business Planning Value Index is the distillation of a year of market and product research efforts along with our continuous Benchmark Research. It is an assessment of how well vendors’ offerings will address buyers’ requirements for business planning software. The index is structured to replicate a request for information/request for proposal process by incorporating all criteria needed to evaluate, select, utilize and maintain technology and relationships with vendors.

Ventana Research evaluates vendors’ software in seven key categories that are weighted to reflect buyers’ needs based on our expertise and research. Five are product-experience related: Usability, Manageability, Reliability, Capability and Adaptability. In addition, we consider two customer experience categories: Vendor Validation, and Total Cost of Ownership and Return on Investment. To assess functionality, one of the components of Capability, we applied the Ventana Research Value Index methodology and blueprint, which links the personas and processes for business planning to an organization’s requirements.

The business planning software category is well established, but Ventana Research expects the category to evolve significantly over the next five years. As they are not verifiable, we do not include future plans in this assessment. We advise buyers to pay close attention to vendors’ development roadmap and proven ability to incorporate advances on time and in scope. For example, artificial intelligence-driven improvements are being introduced that can enhance the user experience and facilitate rapid operational and financial planning cycles. Buyers should assess the vendor’s ability to deliver these sorts of advances in the context of importance to the organization’s process. The future architecture and capabilities of the vendor’s data platform should also be investigated. As organizations increasingly utilize operational data in forecasting, planning and budgeting, the data platforms used by the application must demonstrate the ability to scale while providing easy use by business planners.

Our market research-based Value Index is the most comprehensive assessment of the value of business planning software in the industry. Technology buyers can learn more about how to use our Value Index by clicking here and included vendors that wish to learn more can click here. Read the report here.

Regards,

Robert Kugel