Agile financial planning through Strategic Modelling and What-if analysis
Strategic modelling and long-term planning with Oracle’s Enterprise Planning & Budgeting Cloud Service (EPBCS)
Earlier we already told you, in a webinar, about agile financial planning, and how you can implement this by using Oracle Planning Budgeting Cloud Services (PBCS), and we published a blog post about the differences between PBCS and the Enterprise version of Oracle Enterprise Planning Budgeting Cloud Services (EPBCS)*.
In this blog post, we will explore in more detail the agile planning module of Oracle EPBCS for long-term planning, What-If modelling, corporate finances and treasure initiatives, specifically Strategic Modelling.
On-the-fly scenario analyses and modelling
For simulations on a larger scale, there are more advanced options within EPBCS via the Strategic Modelling module. Amongst others, it offers What-If analyses for creating financial model variations for long-term planning:
- Scenario Manager: This can be used to simulate responses to industrial and economic changes by defining scenarios and modifying scenario hypotheses. With the Scenario Manager, you can create scenario variations on a model, with accounts that are specific to that scenario. You can create countless scenarios for each Business Unit. Scenarios can copy accounts as well as the input values and forecasting methods of other scenarios. You can for instance create a What-If scenario that copies the hypothetical assumptions of the base scenario, assigning the accounts that need to be modified. Then use the What-If scenario to create and calculate modifications so you can identify values that do not deviate from the base scenario.
- Sensitivity Analysis: You can also manipulate values for accounts, to evaluate the effects on important statistics and variables. You can for instance see how many more products need to be sold to compensate for an increase in production costs. You can use Sensitivity Analysis to isolate the factors that determine value in financial models. Factors that determine value are key variables that can be manipulated to influence the business value. Knowing which accounts affect the business will help you make informed decisions!
- Goal Seek: This enables us to set target values for accounts and evaluates the changes that are necessary in other accounts in order to reach those target values. It is a simple way to perform impact analyses, because you can identify how value factors and accounts need to change in order to reach a certain goal. In an expansion scenario, for example, it is possible to determine the growth in volume that is necessary to reach a net income of 10 million in 3 years. The required change in volume and the impact on net income can then be shown.
This means that Strategic Modelling can provide on-the-fly scenarios and modelling with financial forecasting models, ensuring that operational and long-term plans are in line with the financial strategy.
Even more out-of-the-box functionalities
By deploying operational plans based on the current targets, and updating models to incorporate the latest forecasts, it becomes possible to ensure that long-term plans and plans for business initiatives, treasury initiatives and marketing analyses are aligned with the strategic initiatives. Other functionalities that support this include cross-model consolidations, custom account forecasting, audit trail and a built-in list of accounts with integrated reports… Functionalities that we want to discuss in the next blog.
Using this mixture of standard functionality and customisation options, Strategic Modelling in any case contains a perfect agile toolset (robust, flexible and versatile) for strategic modelling and long-term planning, including integration with the operational plans.
Would you like more information about Strategic Modelling with Oracle EPBCS? Are you curious to see what a successful implementation of a planning solution could mean for your organisation? We could also take a look at it together, based on your own requirements for the planning process and the application. Feel free to contact us. We would be happy to help you along in your process.
If you would like to view the Agile financial planning webinar, or watch it again, please complete the following form and we will send the webinar link to you.