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The ultimate guide to scenario planning

Move from spreadsheet chaos to a streamlined approach

  • How to overcome typical pitfalls in scenario planning
  • Excel: These challenges you should avoid
  • Six tips for simplified scenario planning
  • Roadmap for AI-supported scenario planning
ultimate guide scenario planning mockup en
Contents

It’s time to reimagine scenario planning

Excel spreadsheets are useful for getting results with simple formulas, but they aren’t designed to handle large data volumes and complex scenarios. These limitations become even more apparent as business models change and market dynamics shift. As a result, finance teams often become overwhelmed and burnt out as they strive to meet tight deadlines with the tools available to them.

At the same time, the use of predictive planning technology is skyrocketing: one in four organizations already use predictive algorithms and machine learning productively to produce their plans and forecasts in less time and with more accurate results, according to BARC research.1

One thing is clear: a more efficient scenario planning process can uncover advantages for finance teams and their organizations. This guide addresses the limitations of traditional, spreadsheet-based scenario planning and lays out a streamlined approach. Finance teams in any organization can elevate their process – whether they’re seeking a step up from Excel or exploring AI and predictive planning.

Source: 1BARC, Predictive Planning and Forecasting on the Rise – Hype or Reality, 2022

Overcoming scenario planning roadblocks

Scenario planning is an intricate process, requiring significant effort to create comparisons between several assumptions and scenarios. As finance teams endeavor to plan for multiple futures and meet tight deadlines, they often encounter disruptive obstacles that prevent them from achieving their goals. Overcoming these roadblocks is key to boosting efficiency and delivering accurate results:

ROADBLOCK

Time-consuming tasks

Simulating just one scenario often means duplicating dozens of spreadsheets. By the time the process is complete, the information is out of date.

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SOLUTION

Automated scenario modeling

Automating repetitive tasks means reacting to changes quickly, as well as more time for strategic business partnering and preparing plans for each scenario.

ROADBLOCK

Collecting input from stakeholders

Coordinating input and validation from stakeholders contributes to delays. Teams struggle to efficiently gather critical data and insights.

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SOLUTION

Streamlined collaboration

Using a shared platform enables stakeholders with diverse expertise to collaborate seamlessly and provide feedback in real time.

ROADBLOCK

Incomplete insights

Factoring in existing KPIs as well as internal and external drivers is challenging. A lack of relevant insights undermines decision-making.

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SOLUTION

Access to all the data that matters

Seamless data integration from various sources enables holistic planning. View relevant KPIs and make confident decisions based on real-time, accurate information.

ROADBLOCK

Lack of detail

Granular scenarios are essential for integrated financial planning, but this increases the number of potential outcomes exponentially, making the process even more complex.

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SOLUTION

Multiple granular scenarios

Creating more scenarios faster enables finance teams to generate highly detailed scenarios and equip decision-makers with rich insights.

Untangling spreadsheet chaos

Finance teams often rely on Excel for planning, budgeting, and forecasting, but basic spreadsheets lack the advanced capabilities needed to react quickly to changes and take decisive action. The outcome is hundreds – even thousands – of spreadsheets, quickly culminating in spreadsheet chaos. The following challenges often arise:

Manual errors:

Spreadsheets rely on manual data entry, making them susceptible to human errors such as typos, copy-and-paste errors, or accidental deletions.

Broken formulars and templates:

Spreadsheets with complex formulas can break when new rows or columns are inserted or deleted, and without the proper safeguards, users can inadvertently damage formulas or formatting.

Limited data and modeling:

Excel’s data modeling capabilities are not scalable, making it difficult to handle complex and interconnected scenarios that require sophisticated modeling techniques.

Unmanageable data volume:

Excel isn’t designed to handle large, complex data volumes. This prevents finance teams from effectively managing and analyzing data and scaling their efforts, leading to performance issues and reduced efficiency.

Limited what-if testing:

Excel lacks automation features specifically designed for what-if analysis, requiring users to manually modify input values and assess the impact on calculations. Users cannot compare multiple scenarios concurrently.

Poor collaboration:

Without the ability to collaborate in real time, finance teams often manually collect and consolidate input from various stakeholders, resulting in lengthy back-and-forth and version control issues.

Lack of ETL capabilities:

Without extract, transform, load (ETL) capabilities, spreadsheets aren’t equipped to quickly integrate and consolidate relevant information from multiple data sources and disparate systems.

No single source of truth:

Relying on multiple spreadsheets prevents cross-organizational teams from accessing a centralized view of real-time data.

Lack of adaptability:

Spreadsheets cannot account for internal and external changes, such as new product lines or fluctuations in demand, preventing organizations from responding to evolving business conditions.

Six ways to elevate scenario planning

Many organizations invest in financial planning software, which brings together all the data that matters within a central platform. However, not all solutions offer scenario planning benefits. Finance teams can streamline their scenario planning process with a few powerful capabilities – without abandoning Excel. The Jedox Add-in is a simple tool that integrates Jedox functionality into Excel, enabling finance teams to produce more scenarios faster in a user-friendly setting.
The Jedox Add-in for Excel 365 elevates scenario planning by:

  • 1
    Creating an unlimited number of scenarios to explore various possibilities
  • 2
    Conducting driver analysis to understand which drivers impact the business most
  • 3
    Comparing summaries of profit-and-loss statements based on scenarios
  • 4
    Communicating clear insights with highly visual charts and dashboards
  • 5
    Automating data collection for continuous, granular planning
  • 6
    Easily creating comparisons with built-in analytics

Uncover the potential of AI

Machine learning, predictive forecasting, and other AI tools enhance traditional scenario planning methods, providing deeper insights into drivers of KPIs to build data-driven plans. Cloud-based planning tools, such as Jedox, make it easier to factor in external drivers, illuminate trends and opportunities, and compare multiple scenarios.

Combined with human expertise, these tools can help uncover trends and patterns that would otherwise go unnoticed. For example, finance teams could more accurately predict regional demand to lower inventory and free up working capital.

Keep in mind that data quality determines the effectiveness of AI-powered forecasts. Finance professionals must ensure that all relevant data and commentary are included to enrich forecasts and deliver accurate plans.

94% of users
already benefit, or expect to benefit, from predictive planning technology.

BARC, Predictive Planning and Forecasting on the Rise – Hype or Reality, 2022

Explore how generative AI can add valuable context to reports.

Five steps to driver-based scenario planning

AI-powered tools empower teams to deliver accurate and informed planning, budgeting, and forecasting outcomes. Jedox AIssisted™ Planning is designed to meet finance teams where they are and adapt to their organization’s needs. The tool guides users through a step-by-step process to assist at each stage.

Using AI and predictive planning, the solution delivers driver-based forecasts that predict what-if scenarios. The tool produces three forecasts for each new scenario, freeing up finance teams to focus on more strategic activities. Use these five steps to progress to AI-powered scenario planning:

1. Data preparation:

The first step involves identifying outliers and excluding them from predictions in advance. Jedox handles the data-cleaning process, ensuring relevancy and setting the foundation for accurate forecasting.

2. Traditional forecasts:

Perform traditional forecasting based on all the data that matters. Create annual, quarterly, or monthly forecasts based on actuals to date and budget write-forwards. This ready-to-use tool streamlines the process and drives data-backed decision-making.

3. Rolling forecasts:

Automate forecasting so actual figures are transferred to forecast figures on a rolling basis. Easily set the frequency and deliver rolling forecasts based on the previous 12 months or a specific time frame. Get started immediately without configuration or customization.

4. Time series forecasts:

Link seasonal, monthly, and other time-based trends to forecasts with the AIssisted™ Time Series Prediction wizard. This tool leverages advanced algorithms and historical data to automatically detect patterns, ensuring accurate and reliable time series forecasts.

5. Driver-based forecasts:

Link inflation, weather, and other key drivers to forecasts with the AIssisted™ Driver-Based Prediction wizard and determine which drivers are most meaningful for the business. The process is automated, delivering actionable insights and an accurate view of future outcomes.

aissisted driver analysis dashboard

Plan confidently for the future with Jedox

Jedox simplifies budgeting, planning, and forecasting across the organization to enable faster, more data-driven decisions. The Jedox Add-in for Excel 365 is a simple way to instantly streamline scenario planning with Jedox while still working in a familiar Excel environment.

Finance teams can also leverage Jedox AIssisted™ Planning to gain the meaningful insights they need to plan and forecast intelligently, including:

  • Revenue forecasting:
    Analyze large datasets and identify drivers with the greatest impact on the business. Evaluate and compare forecasts based on the team’s confidence in the model, and recognize risks and opportunities for different regions, products, or customers. Get transparent results with best-case and worst-case scenarios.

  • Demand planning:
    Understand drivers of the business to optimize resource allocation to meet demand. Leverage historical data and train machine learning algorithms to unique business needs. Augment internal data with third-party datasets to refine predictions based on commodity fluctuation, political risk, seasonality, and weather forecasts.

  • Customer churn predictions:
    Cluster customers and understand which drivers impact customer loyalty the most. Identify at-risk customers before they churn so teams can implement mitigation strategies.

  • Cash flow forecasting:
    Identify drivers with the greatest impact on cash flow. Make confident decisions about capital expenditures, investments, or expansion plans through automated forecasting of future cash flows.

Deliver rich scenarios faster

Getting started with a streamlined approach to scenario planning requires the right tools. With the Jedox Add-in for Excel and AIssisted™ Planning, finance teams can seamlessly move from endless spreadsheet duplication to effortlessly crafting rich scenarios based on accurate data. By empowering finance teams to achieve their goals, organizations can navigate the future with clarity and precision.

“With Jedox AIssisted™ Planning, we can plan at a level of detail that was not possible before.”

Mitsui Chemicals Europe GmbH

Request a demo to uncover the power of streamlined scenario planning with Jedox