Written by Heather L. Cole, January 20th 2022

The world has changed!  Your business has changed!  Technology has changed!  When was the last time your Financial Planning team and your Executive team sat down and discussed how they want to run the business?  When was the last time you redesigned your operating planning models?  It is Time to Update Your Operating Planning Models.

What is an Operating Planning Model?

An operating planning model is the link between strategy and execution within a business.  The operating model should define how an organization is organized and aligns how they do business including decision making, leveraging assets, and delivering to their clients.  When done properly the operating plan defines who does what, where it’s done, and how assets are leveraged.  Because the operating model defines how an organization operates, it provides a structure to monitor performance of the various areas of the business.  Performance Management of the operating model is a key to achieving the strategic goals for the organization. 

Reality of Operating Planning Models

An operating model should be updated as conditions change.  I think it’s safe to say in the last two years conditions changed for every organization.  Yet, many organizations are using operating plans they created years ago.  Sure, they have made modifications to the operating planning models like adding business units or changing assumptions but often this is just a patch to get them through the annual budgeting and planning process.  Due to time and resource restraints, they put off properly assessing their models.  When the financial planning and analytics teams feel the pain of trying to work with old models but without executive support, they will struggle.  Or worse they will join many in the great resignation and leave.

Risk of Avoiding a Redesign of Planning Models

I recently met with a CFO and CEO of a company that was feeling the pain of years of avoiding redesigning their planning models.  They brought me in because they believed they needed new performance management software and wanted to look at IBM Planning Analytics.  Although most software resellers will immediately jump into pitching their software, at Lodestar Solutions, we know that software is rarely the problem. 

We needed to get to the root of the challenge they were facing.  As the discussion began, they shared their extreme frustration in feeling handcuffed by their current planning system.  I listened as they provided details on how cumbersome their system was and how it didn’t meet their needs.  Then it was time to get to the meat of the situation, I ask questions about their business, and it turns out their models had been designed years ago when they had a very simple business.  But over the years they had expanded to several complementary service offerings that all had unique business operations.  The FPA team had used the initial models and simply added to them.  I call this the duct tape and super glue method of operating planning.  This method works in an emergency but is not a long-term solution.  The executives were now feeling the pain of years of duct tape and having a difficult time gaining visibility into their business.  Not only could they not measure the real impact of business decisions, but they could also not leverage AI and Predictive Analytics to guide them in their decision making.  Covid only exacerbated the situation.

If you are experiencing similar frustrations, we need to talk.  It doesn’t need to be that way!

Your Software is Not the Problem

As an executive coach I meet with many executives that are feeling the pain that is a result of avoiding a planning model redesign, but their first instinct is to blame the software tools.  If you are a mid-size organization, and you are using Excel, you probably need to look at an enterprise planning tool because your team is wasting a lot of time trying to manage your business.  But for organizations that own an enterprise planning solution like IBM Planning Analytics, your tool is probably not the problem.  The fact you have not committed to taking a step back to redesign your models is the issue.

IBM Planning Analytics and other competitive tools have made great strides over the years.  Each new release brings amazing new functionality, but many companies either fail to upgrade to the latest version or they just move their existing models to the new release.  They don’t appreciate that their models were designed based on the limited functionality the software had years ago.  So, even if they are on the current version of the software, they are not able to benefit from technology advancements made by the software vendors.  This is like having a new car with Bluetooth and Navigation but not using it.

Time to Act, Time to Redesign –

If you can relate to the scenarios above, now is the perfect time to act.  It all starts with a few questions and a phone call.  Yes, it just takes a few small steps to identify if you can benefit from an operating planning model redesign. 

7 Questions to Ask to Determine if It’s Time to Redesign your Planning Models.

How can you confirm it is time to update your operating planning models?  If your models were designed more than 2 years ago, if your business has grown, if you have new executives… it’s time to discuss a redesign.  To start ask yourself the following questions. 

1.  When were your models originally designed?
2. Have you added complimentary business offerings since the original design?
3. Have mergers and acquisitions been part of your growth strategy?
4. Have you implemented the new functionality offered by the software you use?
5. Have you had a change in the executive team since the original design?
6. Do the executives want to view the business from a different perspective?
7. Are you able to leverage your data for Predictive and Prescriptive Analytics?

Contact Lodestar Solutions

Now, reach out to Lodestar Solutions to discuss your unique situation.  You don’t have to be an IBM Planning Analytics client to pick our brains and leverage our decades of experience working with mid-market and large enterprise teams.  Model redesigns should be based on your business not your software so regardless of your current tool, let’s start the conversation.  Email Services@lodestarsolutions.com to schedule a complimentary discussion. 

It is Time to Update Your Operating Planning Models.