INTRODUCTION 1
SECTION 1: BACKGROUND TO THE PLANNING FRAMEWORK 5
1 PLANNING FUNDAMENTALS 7
What is Planning? 7
Components of Planning 8
Planning in Today’s Business Environment 10
The Increasing Speed of Business and Globalisation 10
The Increasing Complexity of Business 11
The Decreasing Planning Time Horizon 11
Planning Challenges 12
Dissatisfaction With the Planning Process 12
Issues With the Planning Culture 13
Need for a Holistic Approach 13
Need for Better Planning Technologies 13
Planning Principles 13
Principle 1: Planning Connects Inputs and Outputs and is Therefore Directly Related to Organisational Activities 14
Principle 2: Planning is About Maintaining a Shared Understanding of the Economics of a Business 14
Principle 3: Planning is About Shifting Focus From the Past and Onto the Future 15
Principle 4: Planning is About Aligning Budgets With Strategy to Achieve Corporate Objectives 16
Principle 5: Planning is a Continuous Process 16
Principle 6: Planning is a Learning Process 17
Objectives of the Planning Framework 17
2 PLANNING METHODS AND METHODOLOGIES 21
Planning: Who, What, When, and How 21
Planning Within a Sole Trader 21
Planning as a Small Manufacturer 22
Planning as a Listed Company 23
Planning as an International Group 23
The Rise of Management Frameworks and Methodologies 24
Popular Management Methodologies 25
Budgetary Control 25
Quality Management Movement 26
Lean Management 27
Balanced Scorecard 28
Beyond Budgeting 29
Planning and Success 30
Planning Process Maturity 31
Planning Objectives 31
Planning and Forecasting Maturity Levels 33
Basic Planning 33
Financial Integration 34
Partial Integration 35
Matrix Planning 35
Dynamic Planning 36
3 PLANNING TECHNOLOGIES 39
Supporting the Decision-Making Process 39
Planning Technologies: The Spread Sheet 40
Two or Three Dimensional 41
Cell Meaning 41
Limited Business View 42
Single User 42
Lack of Workflow Capabilities 43
Planning Technologies: Multi-Dimensional Databases 43
Multi-Dimensional 44
Business Hierarchies 45
Name-Based Rules 45
Multi-User, Role-Based Security 46
Unlimited Size 46
Financial Intelligence 46
Spread Sheet Access 47
Multi-Dimensional System Issues 47
Comprehension 47
Complexity 48
Data Uniformity 48
Effort and Price 49
Modelling Tools 49
SECTION 2: BUSINESS PLANNING FRAMEWORK 53
4 BUSINESS PLANNING FRAMEWORK 55
Logical Overview of the Framework 55
Framework Components 56
Operating Activity Model (OAM) 56
Cash Funding Model (CFM) 59
Detailed History Models (DHM) 59
Target Setting Model (TSM) 61
Detailed Forecasting Model (DFM) 61
Optimise Resources Model (ORM) 61
Performance Measures Model (PMM) 62
Strategy Improvement Model (SIM) 62
Management Processes 64
Knowledge 65
Reporting From the Planning Framework 66
Case Study Overview 66
About the Case Study Organisation 66
Company Structure 67
Company Strategy 68
Versions and Other Information 68
5 OPERATIONAL ACTIVITY MODEL 69
Overview 69
Model Structure 69
Measurement Types and Relationships 70
Step 1: Define High-Level Objectives 71
Step 2: Define Core Business Processes and Assumptions 72
Step 3: Identify Core Business Process Activities 73
Step 4: Identify Support Activity Measures 79
Step 5: Define Profit and Loss and Other Financial Measures 80
Putting the Model Together 85
Measures and Attributes 85
Model Dimensions 86
Model Rules 86
Reporting From the OAM 87
Departmental Outcomes, Activity, and Resources 87
Outcome Versus Activity 89
Outcome Versus Assumptions and Resources 90
6 CASH FUNDING MODEL 91
Model Purpose 91
Defining the Model 92
Model Content 92
Additional Data Requirements Within the OAM 93
Identifying Cash Payment Profiles Within the OAM 93
Defining Payment Profiles Within the CFM 94
Other Cash Measures and Rules 95
Reporting From the CFM 97
Displaying Cash Requirements by Department 97
Evaluating Sources of Cash 99
Scenario Analysis 100
7 DETAILED HISTORY AND PERFORMANCE MEASURES MODELS 101
Reporting Past and Future Performance 101
Relevance 101
Context 102
Data Issues 103
Reporting Performance From the Planning Framework 104
Identifying DHMs 105
Case Study—DHMs 106
Sales Analysis 106
HR 107
General Expenses 108
Defining the PMM 109
PMM Content 109
PMM Business Dimensions 110
Case Study Measures for XYZ, Inc. 110
Reporting From the PMM 112
8 PREDICT AND OPTIMISE PLANNING MODELS 113
Predicting the Future 113
Target Setting Model (TSM) 115
Driver-Based Modelling 115
TSM Content for XYZ, Inc. 116
Using the TSM 120
Detailed Forecast Model (DFM) 121
Overview 121
Developing the DFM 121
Linking the DFM to the OAM 123
Optimise Resources Model (ORM) 123
Overview 123
Case Study Example 124
9 STRATEGY IMPROVEMENT MODEL 127
Responding to Change 127
Model Focus 128
Link to the OAM and CFM 129
Defining SIM Content 130
Linking SIM Content to Management Methodologies 131
Planning Capabilities 132
Communicate Goals 132
Propose and Validate Projects 133
Select and Approve Projects 133
Monitor and Forecast Projects 133
Assess Alternatives 134
10 THE PLANNING AND MONITORING PROCESS 135
Defining Processes 135
Components of a Process 135
Performance Management Processes and Tasks 137
Strategic Planning 138
Purpose 138
Tasks: Inputs, Outputs, and Sequence 138
People and Planning Models 139
Tactical Planning 140
Purpose 140
Tasks: Inputs, Outputs, and Sequence 141
People and Planning Models 141
Financial Planning 142
Purpose 142
Tasks: Inputs, Outputs, and Sequence 142
Forecasting 143
Purpose 143
Tasks: Inputs, Outputs, and Sequence 144
Management Reporting 145
Purpose 145
Tasks: Inputs, Outputs, and Sequence 145
Moving Toward Continuous Planning 145
SECTION 3: IMPLEMENTING A PLANNING FRAMEWORK 147
11 LATEST DEVELOPMENTS IN PLANNING AND ANALYTICS TECHNOLOGIES 149
Corporate Performance Management (CPM) Applications 149
The Rise of Business Analytics 150
The Next Competitive Edge 150
BI Versus Analytics Versus Decisions 151
Business Analytics, Big Data, and Decision Management 151
Predictive Business Analytics: The Next New Wave 152
Game-Changer Wave: Automated Decision-Based Management 153
Application Integration 153
Cloud-Based Applications 154
In-Memory Chip Technology 155
12 IMPLEMENTING THE PLANNING FRAMEWORK 157
Planning and the Role of the Chief Executive 157
Entrenched Beliefs Concerning Performance 157
Organisational Culture 158
The Unwritten Rules of Budgeting 158
Rewarding Bad Behaviour 159
Failure to Execute 159
Implementing Change 159
Agree on the Role of Planning 160
Model Existing Processes 160
Establish Improvement Themes 161
Plan- and Resource-Specific Change Programmes 161
Monitor Implementation 161
Use Technology to Support Change 162
Continually Develop the Planning Models Within the Framework 162
APPENDIX I: CGMA BUDGET AND PLANNING SURVEY RESULTS 165
APPENDIX II: REQUIREMENTS OF A PLANNING SYSTEM 213
