While forecasting is always a helpful and important aspect of your annual budgeting practices, a scenario planning process is invaluable to getting your company through sudden or rapid times of change. The two are equally important to the future success of your company, but should not be confused for each other. To know how your company will fare in an ever-changing and uncertain climate, make sure you are using both of these tools to their fullest capacity so that you can look to the future with both hope and confidence.
What is a scenario planning process?
The goal of scenario planning is not to try and predict the future – far be it from any of us to try and do such thing – but rather to describe the possibilities. Used for situations in which sudden or rapid changes could occur, the scenario planning process is absolutely crucial to your ability to respond and be flexible with any changes that might be coming down the pipeline. Whether those changes are financial hardship, or staggering success, you need to have an action plan for both. The scenario planning process will not only help you in responding to big and sometimes unpredictable changes, but they will also help you to realize that the sands are shifting before the earthquake really happens.
What does the scenario planning process look like?
Scenario planning often takes place in a workshop setting where all managers, stakeholders and industry experts sit down and put their heads together to consider different possible scenarios that could determine industry and company policies and decisions. The idea is to have a wide range of views represented to get the biggest possible picture of any such event. Managers should always be interviewed in the scenario planning process, as they will be responsible for implementing the strategies devised when the time comes.
The benefits of the scenario planning process
The scenario planning process helps to break people away from traditional forecasts and ways of thinking about business and challenges them to consider the big picture. By using the workshop setting you also begin the conversations that, should the scenarios come about, could be quite tense or long winded. This is an incredibly important asset to scenario planning as it will set managers up to work together better because they will already understand where their differences lie, and hopefully remain united on how to overcome them for the best interests of the company. Foresight in predicting and approaching change is another great benefit of the scenario planning process, as you will ideally be able to identify the preliminary signs.
Budgeting software can be a powerful tool in the scenario planning process in that it aggregates all your data allowing you to make quick and easy maps of your financial histories and other key figures that will help in the process. With technological changes being among the most likely reasons for sudden changes in any industry at the present time, it stands to reason that investing in budgeting software would be one easy way to stay ahead of curve and help you streamline your forecasting powers to make the most of your scenario planning.
Turn to Questica, a powerful budgeting and performance analysis tool to help your organization. Our team of experts can walk you through the process of what you need to know about scenario planning and being a cloud based software, you can access your financials from anywhere. Learn more by signing up for our free monthly informational webinars, and requesting a demo to see how Questica can be of use to your organization.