Driver based planning example

In this post i want to share some of the most common benefits of the driverbased budgeting and planning approach. When i first came across the term driver based planning and forecasting i was confused. Read on to learn how to make driver based budgeting and planning work for your organization. Identifying those key business drivers can be tricky if done in a subjective manner, however, and individuals within the same organization may have very different perceptions about what the key drivers for success are. The benefits of driverbased budgeting and planning centage. One of the most important challenges faced by managers is to deliver more with less. But only if you can elevate it from its typical piecemeal, spreadsheet involved exercise.

The challenges of creating a driverbased planning system. Driver based forecasting is the linking of operational activities to the calculation of key variable revenues and expenses. Our solution uses mathematics and linked relationships to create budgeting, forecasting and cost models. Toward this end, driverbased planning enables people to ask meaningful questions. Every journey to an integrated driverbased plan is a continuous process. In this example, advertising is calculated using a driver and is based on a percentage of revenue.

Benefits of driver based budgeting and planning in this post i want to share some of the most common benefits of the driver based budgeting and planning approach. So ive used excel offset formulas to come up with the forecast data so he can just submit the data. The adaptive team is developing a 5level driverbased planning maturity scale. Driver based enter global rate assumptions and other assumptions for example revenue drivers or expense drivers to take advantage of builtin accounts and calculations to drive the planning process trend based for financials only, enter trend based assumptions that let you plan and forecast based on trends. Aug 30, 2019 advances in technology particularly cloudbased solutions can help you move to a driverbased planning and modeling system because you can get both realtime and multidimensional analyses of your data. As an exinvestment banker having joined a finance team the concept of drivers when talking. Driverbased planning helps cfos put their focus forward. By taking the time now to work closely with my family, i can develop a plan to ensure my safety and the safety of others while also maintaining my mobility and independence. Driverbased planning is an approach to management that identifies an organizations key business drivers and creates a series of business plans that mathematically model how those things most necessary for the organizations success would be affected by different variables. Neubrains powerful driverbased planning and cost modeling solution incorporates a best practice methodology that bases financial forecasts on operational drivers. As figure 1 illustrates, 2017 was a game changer for guardian. Rather than make an estimate for total sales, for example, you can use drivers to model the variables that drive sales, such as the total number of customers. The level of detail should be aligned with its applicability to each planning cycle.

Tips on using prince2 product based planning ebalance. The driverbased planning model is the best practice methodology where. Our software enhances data visibility and allows you to build cash flow forecasts into the standard budgeting process. The details view is similar to an excel or webbased planning view where you can see the details of the driver across each time bucket and planning combination. Ask, share, learn within the largest community of corporate finance professionals driverbased budgeting and planning. The platformbased approach may make sense for ongoing businesses, but it is sheer folly when. About driverbased planning, trendbased planning, and. If you continue browsing the site, you agree to the use of cookies on this website. Oracle enterprise planning and budgeting cloud service epbcs. Performance in the driverbased planning app may be affected when you create or replace a driver. Model revenue streams based on drivers like interest rates.

Implementing driver based forecasting is something you can set up in a spreadsheet environment for the purposes of scenario analysis with a very small, limiteduse footprint. This simple example also illustrates the benefits of integrating financial and operational planning models and processes. Board turned out to be the best fit for cocacolas needs because one of its unique native features is the seamless unification of analysis, planning and simulation in. Internal and external constraints as drivers which. Rather than focusing on budgeting or forecasting the end dollar amounts, consider how they are calculated. Utilities expense is calculated based on square feet using a method defined as last years actual data plus or minus a percentage, in this case plus 5%. At corporate, consolidate store plans to conduct longerterm, driver based demand planning. Driverbased enter global rate assumptions and other assumptions for example revenue drivers or expense drivers to take advantage of builtin accounts and. Driver planning agreement i realize that the natural aging process may, at some point in the future, affect my ability to drive safely. This is a driver based model which invokes consistency and participative cooperation across functions in organizations. There are tremendous tools out there today, kalish said. Thats when guardian implemented advanced, driverbased planning processes. Driver based budgets do more than static budgets, and they do it faster. Integrate the resulting driver based forecasts with longterm financial plans and operational budgets to arm leadership for effective strategic and tactical planning.

Driver based refers to the variables that drive key results. When i talk to finance people, i tend to see two different definitions of driverbased planning. Read on to learn how to make driverbased budgeting and planning work for your organization. What is driverbased budgeting and forecasting and why do.

Revenue planning and forecasting totally separated from expense plan. Driver based planning is new feature introduced in ibp for demand. Making driverbased budgeting and planning work anaplan. Driverbased budgeting and planning dbbp can help you with a more agile and efficient cost planning and control process. Driverbased planning and cost modeling software solution. Sep 30, 2019 driverbased planning is an approach to planning and management that is focused on identifying an organizations key business and value drivers and then creating business plans and budgets based on these key drivers. Internal vs external drivers are important to differentiate as this will also impact the effectiveness on decision making. Why integrated, driverbased planning is key to your business. But to get even more value from driver based forecasting you need an integrated platform where you can see the consensus forecast across the company, measure performance. The benefits of driverbased budgeting have been touted repeatedly. Driverbased planning is an approach to management that identifies an organizations key business drivers and creates a series of business plans that mathematically model how those things most necessary for the organizations success would be affe. Broadly defined, the term could be applied to the use of any spreadsheetplanning model because these almost always have builtin volumetimesprice. Driverbased planning is an approach to management that identifies an organizations key business drivers and creates a series of business plans that. Read the texpoint manual before you delete this box.

In this case, advertising is calculated as 1% of revenue. Driverbased enter global rate assumptions and other assumptions for example revenue drivers or expense drivers to take advantage of builtin accounts and calculations to drive the planning process. The identification and management of key drivers clearly requires the knowledge, cooperation, and support of business stakeholders. A practical look at driverbased planning ventana research. The goal of driverbased planning is to focus business plans on the factors that are most critical to driving success, then creating mathematical models that enable managers to run scenarios based on these drivers to understand the impact on projected business results for example, driverbased planning can be useful in longrange strategic planning, where finance executives need to project. In addition to allocating resources based on past performance, driverbased budgets enable cfos to help drive business priorities, respond more quickly to changes in the marketplace, and create a dynamic, datadriven process, rather than one frozen in countless excel. I have a column driver that the user enters the number of months of actuals he wants to consider for forecasting for a particular account. Driverbased budgeting can provide for greater accountability and flexibility. Driverbased budgeting can be an effective tool to put these principles into action and help you thrive in these uncertain times. Agility, predictability, and alignment richard barrett, financial software expert, anaplan 2. Oct 21, 2014 making driverbased planning and budgeting work 1. Guardian industries journey to driverbased planning. About driverbased planning, trendbased planning, and direct input you can plan using several different methods. As the business environment changes these would be reflected in the drivers.

It starts with the simple premise that you need to identify and think about the project deliverables which, in prince2 are called products before you think about the tasks activities. In addition to allocating resources based on past performance, driver based budgets enable cfos to help drive business priorities, respond more quickly to changes in the marketplace, and create a dynamic, datadriven process, rather than one frozen in countless excel. The challenges of creating a driverbased planning cch. The hospitals planning process, both long and short term, is greatly enhanced by being viewed through the lens of effective service lines. Driver based budgeting dbb is a business planning process that links demand with the operational activities needed to fulfill that demand. Many organizations are driven to build a particular brand image and experience. Samplingbased motion planning pieter abbeel uc berkeley eecs many images from lavalle, planning algorithms texpoint fonts used in emf. The actuals that are on the excel are dynamically generated based on a property i have on the time.

These are based on standardized business dimensions company, version and currency that are important for meaningful reporting and planning. What makes driverbased planning dbp and budgeting an intriguing option to many organizations is that it looks at the key drivers from operational activities as the main source of information for the management teams strategic decisions. Analogous to the oakland as, the objective of driverbased planning is to develop a more accurate picture of expected future business performance via the intentional management. Epbcs driver based revenue planning what is driver based.

The platform based approach may make sense for ongoing businesses, but it is sheer folly when. This is because creating a driver involves a number of steps that the system carries out, like creating a new entry for the master data type, creating planning objects, creating time series entries, disaggregation of key figure values. The table below shows an example of possible business dimensions. Strategic drivers are things that shape an organizations plans for the future. The diagram below represents a servicelinebased process that can be used for longterm strategic planning and for annual budgeting. Driverbased budgets do more than static budgets, and they do it faster. Retail sales forecasting retail financial planning. You can follow the link to learn how to create one, but a simple example of one is shown below. For example, the acquisition of server machines requires drivers for the number of it server machines and the maintenance cost per machine. Driverbased planning for financial services adaptive insights. The below slide gives an example of the key driver the number of. How driverbased planning can help reduce your planning. Product based planning explained expert program management.

Its approach can be successfully implemented in nearly every industry due to its flexible methodology. A product breakdown structure is simply a hierarchical and complete decomposition of the overall product we are trying to create. The goal of driver based planning is to focus business plans upon the criteria that are most capable of driving success. The use of reference values is an important basis for the implementation of driverbased planning. One is planning process and you have to think about things like scales and changes to drivers within the timing of your planning process. A driverbased budgeting toolkit barrett, richard on. Driverbased planning takes all of the important growth factors within a company and uses them to construct a budgeting, planning and forecasting model that. Nov 19, 2019 the details view is similar to an excel or webbased planning view where you can see the details of the driver across each time bucket and planning combination. If you want integrated driverbased planning, were here to help. New complexities require a new approach to budgeting and. Key drivers will vary based on the industry and company, but here are some typical examples.

Driverbased planning is an area of emerging interest within the discipline of corporate performance management, also referred to as business performance management. Hi, im trying to create an input template that has say for example actuals for 6 months and 6 months of forecast that i want to save. Nov 18, 2017 driver based planning forecasting headcount revenue predictability duration. Planning and budgeting is one of the hottest topics in accounting.

For many organizations this approach has been a welcome change from traditional budgeting and forecasting. Driverbased modeling and how it works bpm partners. Driver based budgeting can provide for greater accountability and flexibility. If you have a driver that indicates the optimum number of customers per sales rep is 50 then if you have an opportunity to expand into a new market with 150 new customers. But to get even more value from driverbased forecasting you need an integrated platform where you can see the consensus forecast across the company, measure performance. Managing driver trends allow you to identify cost reduction opportunities. For example, a quick monthly forecast or the strategic plan would call for a less. In other words, they are factors that people consider when developing business strategies.

How might driverbased forecastingan approach that bases financial. The advantages of breaking down the overall product into lower and lower levels include that it makes it easier to estimate the project, it makes it easier to apply. Jan 23, 2020 an activity cost driver is a component of a business process. Driver based budgeting can be an effective tool to put these principles into action and help you thrive in these uncertain times. Making driverbased planning and budgeting work anaplan. The goal of driver based planning is to focus business plans on the factors that are most critical to driving success, then creating mathematical models that enable managers to run scenarios based on these drivers to understand the impact on projected business results for example, driver based planning can be useful in longrange strategic planning, where finance executives need to project. Implementing driverbased forecasting is something you can set up in a spreadsheet environment for the purposes of scenario analysis with a very small, limiteduse footprint. By modeling at the units and rate levels, you can get a more reasoned answer about software license revenue. Plan and forecast revenue across a broad range of businesses and products, including asset management, brokerage, mortgage lending, and feebased services. I hadnt thought about the exact definition of driverbased planning until the question came up in the context of our planning benchmark research showing that only 6% of companies with more than 100 employees do driverbased planning. Model revenue streams based on drivers like interest rates, customer demand, and personnel expenses. Driverbased planning is an approach to planning and management that is focused on identifying an organizations key business and value drivers and then creating business plans and budgets based on these key drivers.

For example, giving more weightage for the first 2 months than other months for the driver. On the driver and trend based tab, expenses are calculated using driverbased or trendbased assumptions. For example, driverbased planning can be useful in longrange strategic planning, where finance executives need to project longterm trends for revenues and costs. Driverbased planning and analysis at cocacola supply chain. Plan and forecast revenue across a broad range of businesses and products, including asset management, brokerage, mortgage lending, and fee based services. What is driverbased budgeting and forecasting and why do i.

Cash flow forecasting next level financial planning calculate cash flows at the record level, aggregating them into planning portfolios to improve accuracy in net interest margin planning and provide better focus on incremental new business. Tips on using prince2 product based planning the prince2 method offers only 2 techniques, one being the powerful product based planning technique. For example, driverbased planning can be useful in longrange strategic planning, where finance executives need to project longterm trends for revenues and. At corporate, consolidate store plans to conduct longerterm, driverbased demand planning. Performance in the driver based planning app may be affected when you create or replace a driver. Number of salespeople by region, number of customers and average demand by customer. Therefore, the development of driverbased planning systems is yet another example of the importance of strong finance and business partnerships. Driver based planning forecasting headcount revenue predictability duration. Jun 05, 2019 driver based budgeting can provide for greater accountability and flexibility. For example, the company had a number of key budgeting drivers that the system was able to replicate. Activitybased budgeting is a method of budgeting in which the activities that incur costs in every functional area of an organization are recorded and their.

Cocacola european partners needed a solution that could combine both financial and operational analysis and planning to effectively enable the driverbased planning approach. Nov 28, 2019 this driver based planning tutorial explains how planners can use this app to manage drivers on different aggregation levels in a driver planning view. For instance, think of how drivers anticipating sales based on periodical advertising have become eclipsed by new drivers related to sales generated through online advertising and social media. A practical look at driverbased planning posted by robert kugel on oct 12, 2011 11. Activity cost drivers are used in activity based costing, and they give a more accurate determination of the true cost of business. Advances in technology particularly cloudbased solutions can help you move to a driverbased planning and modeling system because you can get both realtime and multidimensional analyses of your data. This illustration from alight planning, the most visible vendor in driverbased planning, shows drivers in action. To dig deeper into the subject we invited paul hamerman, vice president and principal analyst at forrester research and richard. Seven considerations before launching driverbased planning.

This driverbased planning tutorial explains how planners can use this app to manage drivers on different aggregation levels in a driver planning view. Discoverydriven planning recognizes that planning for a new venture involves envisioning the unknown. Nov 20, 2015 11202015 26 driver based modeling is a framework aligns dollars to business processes based on cause and effect relationships every organization can identify a group of key metrics to server as the starting point for driver based planning organizations can use drivers for many different initiatives including. Revenue volume x price, volume category growth x share, share. Driverbased planning brings data modeling to epm software. Forecast the future with the power of integrated planning. With adaptive insights, you can extend a powerful yet intuitive retail planning solution to store managers so they can analyze key trends affecting customer growth and spend, such as revenue by product sku, gross margin, promotions, and new store roi.