Traditionally, your company likely focused on historical measurements based within your accounting function as a predictor of the business’s upcoming and long-range plans. This reactive structure worked well when you had the luxury to gauge and respond to events over a longer performance period.
However, today’s economy and technology have forced the volume and structure of financial data to evolve at an unprecedented level of criticality. Couple economic uncertainty with an unpredictable environment—for example, the earthquake and tsunami that struck Japan in 2011 and majorly disrupted the nation’s operations internally and internationally—and the need to rapidly gather information, manage changes, and implement a good decision becomes a necessity. To remain competitive, your company cannot simply react: it must meet events as they occur.
By applying the scenario-planning techniques used in strategic planning to all aspects of the enterprise-performance management process—including target setting, tactical planning, budgeting, and forecasting—you can quickly adjust plans to the changing marketplace. The scenario-based enterprise performance management model allows you to anticipate variances in the key drivers of business performance so that your company may take advantage of new opportunities or mitigate risks.
A seven-step process helps you implement Scenario-based enterprise performance management:
- Identify the factors that define various scenarios.
- Construct scenarios.
- Select a baseline scenario.
- Develop a baseline plan.
- Adjust plans under different scenarios.
- Identify triggers for adapting plans as scenarios change.
- Adjust tactics under various scenarios.
Scenarios can assist you with identifying the benefits and trade-offs in multiple situations, helping to drive growth in good times and mitigate risks during bad ones. Rational planning before a crisis occurs will also increase the success of your decisions under stressful conditions because you have the opportunity to test the outcomes without pressure. With action plans in place, your company can reap the benefits of improved organizational agility, confidence, decision-making speed, and overall performance.
If the market experiences a seismic shift, what’s your company’s response? If a natural disaster affects your business operations, do you have an action plan? The Accenture Academy course Understanding Scenario-Based Enterprise Performance Management
helps you develop scenario-based plans, budgets, and forecasts applicable to your organization to guide your business successfully through today’s turbulent times.