Business planning with data analytics

Budgetary planning is an inevitable, comprehensive and above all complex component for the development of the vast majority of businesses. Unpredictable specific situations, such as the COVID-19 crisis, revealed the importance of dynamic and flexible budgetary planning. The requirements are many: Planning at different hierarchical levels, drill-down to planning at corporate, customer or product levels, flexibly selectable time lines and flexibility in selecting scenarios. Customary applications which are used by most finance departments, such as Microsoft Excel, are stretched to their limits in particular in relation to their flexibility for different hierarchical levels and their interactivity. Planning models enhanced by data analytics can overcome these limitations.

Warth & Klein Grant Thornton enables access to interactive budgetary planning with the help of data analytics as a means to overcome extreme situations. For this purpose, we are using modern analytics software such as Alteryx for data processing and modelling scenarios and tableau dashboards for visualisation. We create multidimensional planning which may be adjusted interactively by all users to their individual needs. While the focus of strategic management is on the whole year, an interactive user interface permits weekly planning for operative management. Revenue planning on a price-volume-basis does not only show aggregated figures by regular presentation of the accounts beyond the accounting level, but also significant drivers for changes in revenues. On the basis of a number of hierarchy levels, revenue drivers may be identified and planned specifically at the levels of business units, regions, locations, product groups and products. Dynamic planning reduces the time required for management decisions and provides immediate feedback to the profitability (contribution margin, EBITDA) and liquidity position of the business on the basis of the adjustments made to planning criteria. In addition to revenue planning, also other items up to the EBITDA as an important key ratio may be planned. The financial analyses can be issued to the relevant users in various formats, e.g. pdf, Excel or PowerPoint.

Changes in corporate structure such as the extension of the branch network, the sales territory or changes in the product portfolio can be integrated by simply entering the parameters in an input mask and lead to an automatic adjustment of the model. For an international clientele, geographical views permit quick filtering of country-specific data, e.g. the number of customers, revenues and price-volume effects. The dashboard-supported interactivity allows targeted navigation and dealing with regions, customers and products heading towards a crisis.

The current COVID-19 pandemic has increased the liquidity requirement unexpectedly and shows the weaknesses and vulnerabilities of a rigid budgetary planning. Interactive planning permits quick responses to unexpected crises, shows their effect on the liquidity requirement and helps to identify liquidity gaps in the near future. Sales slumps during the COVID-19 shutdown, for example, can be integrated in a related liquidity plan. Ad-hoc feedback from the financial situation can be vital in particular in the current phase.