In the last few months, every business in the world has learned that black swan events can happen. Any plans based on past events had to change when the COVID-19 pandemic hit and most of the workforce began working remotely.
In a recent webinar, available on demand now, we addressed how planning has to be fluid enough to keep up with changing conditions. Organizations need to know how to react to rapidly changing business conditions so that appropriate actions can be taken to mitigate adverse impacts and, in some cases, find new opportunities.
Business planning in the age of COVID-19
The current pandemic will probably be the most life-changing event any of us will experience. Just a few short months ago, all of us were living what was then a normal life. Since then, normal has changed. Public events have been halted all over the world. Thousands of stores have closed. Buying patterns changed completely, altering supply and demand. No one knows when this will end or what the ending will look like.
Supreme Court Justice Louis Brandeis coined the phrase “laboratories of democracy” to describe the states in our American union in 1932, and the description fits with how U.S. states have approached their respective pandemic responses. Each state had to adjust their ways of doing things differently, depending on how hard the virus hit them. Big cities like New York City had to be more careful about reopening businesses, while some smaller cities could reopen earlier with less risk. These variables, both planned and unplanned, will have continuous and impactful downstream effects on our businesses.
SAP Cloud Planning combines the capability of analytics and “what if” financial modeling, allowing clients to run multiple model scenarios quickly, alter plans based on those scenarios, and collaborate with other parties. This beats the spreadsheets and legacy planning applications that businesses have historically used.
During the volatile environment of the pandemic, the fast, complete planning that SAP Analytics Cloud (SAC) provides to its users proved to not be just a convenience but a necessity, giving businesses that used it an absolute competitive advantage.
Real-time and multi-scenario planning
The COVID-19 pandemic is just the latest example of an unpredictable element to which businesses must adjust. However, the simple fact is that both people and businesses deal with unknown variables virtually every day. All companies need to develop multiple response plans based on scenarios that could potentially happen.
SAP Cloud Planning allows organizations to create those scenarios quickly and easily. Packages like Protiviti’s extended planning and analysis accelerator (xP&A), found in the SAP App Center, are also available, providing businesses with prebuilt, common modeling scenarios.
Using SAP Cloud Planning, companies can compare the outcomes of many scenarios and see how the changes will affect the business in real-time. While none of us may know what the future will bring, SAP Cloud planning ensures we will be able to adjust plans on the fly, which will, more importantly, lead to actionable decisions.
Data-driven forecasting and predictive analytics
SAP Cloud Planning has a feature called Smart Insights, which uses the power of machine learning to help an analyst learn more about their data. This feature allows users to determine which part of the business will be affected by the changes in models, so planning can be laser focused on just those parts.
Adjust payroll, salaries, revenue, expenses and other business factors in real-time, and see exactly which parts of the business will have to adjust, should those changes happen. This also allows for comparisons between scenarios to determine the range of outcomes the company may be facing.
The SEC rule for advertising mutual funds states that “past performance does not necessarily predict future results.” This statement also applies to predicting the future of any business. Alternative data like syndicated consumption data, survey results and consumer sentiment from social networks like Facebook and Twitter can provide insights that private business data cannot. The automatic forecast feature of SAP Cloud Planning can incorporate this and other supporting data to provide a more accurate representation of the future of business.
Tribal knowledge or historical experience was something that guided businesses in the past. But, as the current pandemic environment has shown, they won’t provide the right guidance for every scenario. For more reliable commercial guidance, organizations need to incorporate additional techniques such as statistical and predictive modeling to help forecast the future. That’s exactly the sort of direction SAP Cloud Planning provides.
Agile collaboration with a remote workforce
Collaboration used to be important because a small segment of the workforce worked from home. With the pandemic, entire companies have had to move to a remote workforce model virtually overnight, making collaboration one of the top priorities for any business. Even though large portions of the global workforce may return to the office in the coming weeks and months, remote working is here to stay, and we will definitely see more of it now than we have in the past.
Collaboration with a remote workforce can be hard. The home environment can be distracting. It’s hard to reach agreements when everyone is working from home. The challenges of a scattered workforce can be frustrating – particularly when organizations may have been grounded in the standard office environment of just a few months ago.
Even though nothing can replace the water cooler, SAP Analytics Cloud is designed for mobile collaboration of model building and group decision-making. The ability to document and track conversations and topics help the organization discover what the new model for the business is, but also why it was chosen and how the decision was made. Users can even contribute to past conversations with new comments that may help to shed light on the discussion.
Historically, companies have used a planning process that was based on past performance. Performance was fairly predictable, so a quarterly or annual operating planning process was all a business needed. In the volatile environment created by the COVID-19 pandemic, that old-school kind of planning is not enough. Businesses may need a monthly, weekly, or even daily plan to adjust to the changes.
Old processes are just too slow to provide results that quickly. Email collaboration and Excel spreadsheets just won’t cut it. Continuous planning is what’s needed, and what SAP Cloud Planning provides. Technologies like the SAP HANA database allow calculations that took hours or days of manipulating spreadsheets to be done in seconds, allowing adjustments to plans for any segment of the business in real-time.
The COVID-19 pandemic has affected every life and every business, and it will change how we do business from now on. Companies that use modern analytical techniques like those available in SAP Cloud Planning will weather this and future storms that threaten the security of businesses that still use older methods of planning.