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Mastering Information Management in Business Planning

Culling insight from information

In business planning, it pays to apply a critical eye to all the information sources feeding into your review and refresh cycle over the course of a year.
Key Takeaways
  • Vetting your information and having a rigorous, organized way to analyze it are essential for setting an organization on its best path for the upcoming year.

  • Planning resets consist of breaking data down into digestible chunks that are the basis for management discussion and tracking metrics needed.

  • Expressing company data in narrative form helps managers understand not just what to do, but why they are doing it to achieve financial goals.

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In business planning, it pays to apply a critical eye to all the information sources feeding into your review and refresh cycle over the course of a year.

Bob McCarrick, Chief Commercial Officer, Lending for GE Capital, Corporate Finance, explains it like this: “It’s critical to assess where market and competitive information is derived from and how it may differ from what you see. Intuitively, our managers know how we are performing relative to the market. So if market data doesn’t match your intuition, then you need to investigate further.” Vetting your information and having a rigorous, organized way to analyze it are essential for setting an organization on its best path for the upcoming year.
 
For Steve Torres, COO and CFO of the full-service IT infrastructure solutions provider Vology, Inc., the numbers are the starting point for defining “the company that we want to be three years from now. What are all the things that we need to do now to get there?” Torres sets two goals for his company’s incorporation of information in its quarterly planning “resets”:
  • Break the data down into “more digestible chunks” that are the basis for management discussion and defining specific initiatives to tackle, and
  • Track the metrics that allow you to “demonstrate progress towards achieving the end goal.”
Ideally, the metrics used to direct the annual planning process are tied closely to a longer-term strategic plan. Annual plans and the more frequent reviews and updates to the annual plan all cascade from that strategic vision. Scott Hamilton, CFO for the Musco Family Olive Company, notes, “We maintain a three-year strategic plan that begins with a vision for the company and a quantification of the enterprise value that we want to drive to. From that, we set our aspirational targets and the key initiatives required for us to achieve our goals.” 
 
At the manufacturing firm Overhead Door, explains CFO Paul Lehmann, information gathering and analysis is “an iterative process, with a very high level of communication and dialog—locking in on the targets, doing the detailed plan, then coming back and reviewing the results regularly to make sure there’s alignment between the spending expectations and the top line in project initiatives.” 
 
For Overhead Door, he continues, maintaining the rigor of its information gathering helps to ensure that managers focus on answering the key questions determining the actions they will need to take: “Are we making progress in achieving our goals? If not, why not? If we need to make adjustments, then what adjustments need to be made for the balance of the year? “ 
 
However, streamlining the growing volume of information available can pose a challenge, notes Patti Glassford, VP and CFO of GE Energy Management. In fact, she says, “having so much data can paralyze you.” For that reason, she advocates prioritizing the information and addressing it in stages: “What are the top three to five metrics for your business? Deal with those, then go on to the next five.” 
 
So, for example, Vology bases its 90-day planning “sprints” on the four key measures underlying its strategic plan, according to Torres. These include traditional metrics coming off the financial statement—revenue growth, EBIT or profitability—combined with “softer” metrics for employee engagement and customer satisfaction, which the company collects regularly from surveys and other sources.
 
The ideal, according to Overhead Door’s Lehmann, is “instant visibility—a real-time, interactive environment in which to do planning.” That allows you to make the right information available to the right decision makers at the right time. Performance dashboards with operational and financial metrics or strategy scorecards can be used to capture the key metrics and make them accessible on a single page. 
 
At GE’s businesses, developing the “single version of the truth” on which to base business responses requires involvement from a wide range of contributors, according to Bob McCarrick. He says, “We always work to involve as many people in the planning process as possible. To collect ‘voice of the customer’ data, we go to the front line (sales and risk). Marketing is key in collecting the market data, while finance is key in running the scenario analysis. Then, we hold workouts with managers to identify what’s working and what’s not, and define the upper and lower ends of performance: best case, worse case, expected case.” The back-and-forth between what the numbers show and what your people tell you is important, McCarrick notes. 
 
But a useful plan also must go beyond the numbers and get at the insights central to a business’ success. Consequently, when GE recently revamped its planning process, it made a conscious effort to slim down the reams of data that had been the primary output of the previous process. 
 
Importantly, going through the exercise of expressing the data in narrative form helps managers understand not just what to do, but why they are doing it. “Now, we have fewer pages and more conversation” among business managers, McCarrick notes. “We are translating all that data down to the key business issues and imperatives.”
 
In the end, sums up Vology’s Torres, the effective use of information in the planning process is a truly integrative exercise, with finance and the business teams working closely together to “really understand what’s driving cost and profitability, so we can come back and begin to help the operating departments connect the dots financially.

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