Steelwedge Enables Actionable and Continuous Planning

Supply and demand chain planning and execution have grown in importance over the past decade as companies have recognized that software can meaningfully enhance their competitiveness and improve their financial performance. Sales and operations planning (S&OP) is an integrated business management process first developed in the 1980s aimed at achieving better alignment and synchronization between the supply chain, production and sales functions. A properly implemented S&OP process routinely reviews customer demand and supply resources and “replans” quantitatively across an agreed rolling horizon. The replanning process focuses on changes from the previously agreed sales and operations plan; while it helps the management team understand how the company achieved its current level of performance, its primary focus is on future actions and anticipated results. Adoption of S&OP has increased as software to support the process has become more powerful and affordable and as a growing list of companies demonstrated its value in producing meaningfully improved business results. Even without adopting a full-scale S&OP management approach, companies can benefit from better coordination and collaboration between their supply and demand functions. Software plays an important role here, too, in facilitating this coordination and collaboration.

Steelwedge, founded in 2000, is one provider of it, offering cloud-based software for sales and operations planning as well as for supply and demand planning, related revenue and margin planning. It recently introduced its PlanStreaming platform, which provides a unified space in which organizations and their individual business units can create plans. PlanStreaming is specifically designed to support integrated continuous planning between demand chain roles (sales, marketing and demand planning, to name three), supply chain roles (including supply chain management, purchasing, manufacturing and operations) as well as finance. The software gathers input from both multiple enterprise systems and data sources outside a company to “sense” the condition of the supply and demand chains, incorporates plans and forecasts from multiple perspectives and applies advanced analytics to assess, predict and prescribe the best courses of action. PlanStreaming is designed to apply a continuous planning methodology to supply- and demand chain execution. The objective is to improve execution across the company: higher fulfillment rates with more rapid inventory turns resulting in increased revenues at wider margins.

“Continuous planning” is an approach that uses frequent, short planning cycles that can help organizations achieve greater agility, coordination and accountability in their operations. Such an approach includes establishing an ongoing dialogue between supply- and demand chains as well as finance to track current conditions and how they are evolving. It is an action-oriented methodology and approach to planning processes. To manage planning in such a comprehensive way requires dedicated software that enables flexibility in all phases. Continuous planning requires software to streamline and shorten planning cycles to rebalance the focus of the process from assembling a plan to acting on a plan rapidly and in a coordinated fashion. PlanStreaming addresses these requirements by automating the collection and normalization of data to make it continuously available for analysis. Data can be automatically monitored to provide alerts to risks and opportunities as business conditions evolve. It provides analytical tools that support rapid, action-oriented “what-if” scenario and contingency planning that conforms to a company’s strategic priorities and capabilities.

The need to improve planning processes is there. Our recent benchmark research on next-generation business planning finds limited satisfaction with the planning areas that Steelwedge addresses. Only half of participants that engage in demand planning (54%) said that they are satisfied with their company’s planning process. For sales forecasting the number is 47 percent; for sales and operations planning it is 43 percent; and for supply chain planning only about one-third (35%) said they are satisfied. The leading reasons given for their lack of satisfaction are that plans are not reliable, that processes are too slow and inflexible and that they involve using models that are difficult to build and maintain. We also find that a large majority of participants in our research use spreadsheets for these planning processes, which is likely an important factor underlying the lack of satisfaction. The research also shows that fewer than one in five companies collaborate very effectively in these planning processes. Here, too, dedicated software such as Steelwedge’s that integrates planning processes across multiple functions and business units can support deeper, more consistent collaboration among them.

A defining characteristic of supply and demand chain planning is that the details matter a lot. For example, accurately forecasting total revenue from some product isn’t enough to manage operations well. Companies need to accurately predict what individual customers at each location will want to buy. And they need to correctly identify which products – even down to the individual stock-keeping unit (SKU) – each customer will need. Dedicated software such as Steelwedge facilitates the collection, analysis and communication of this level of detailed information that streamlines planning and reporting to enable action-oriented supply- and demand planning.

Another significant characteristic of this type of planning is that the individual functional groups responsible for supply and demand chain execution have different objectives, which often are at odds with one another. Sales and marketing people want to maximize revenue, which can conflict with the ability of those in manufacturing to produce the goods. Manufacturing units want to maximize efficiency, but too-long production runs of one SKU may lead to stock-outs of another and require more investment in inventories. Rushed deliveries may keep customers happy but cut into profits. Sales and operations planning is a cross-functional process and discipline that is designed to bring all parties involved in supply and demand chain execution into a planning process that mediates the conflicts between these functions to produce a plan that aligns the objectives of each to achieve the company’s strategic objectives. PlanStreaming makes it easier for corporate executives to mediate the different objectives and incentives of the various supply and demand groups in their organization. This enables them to align the integrated plan to a company’s strategy to achieve a more optimal result.

A dedicated software application is superior to using desktop spreadsheets for creating actionable demand and supply plans because it eliminates time-consuming chores that impede effective planning. Creating an organization-wide plan from multiple business units requires integrating the details of individual planning units to create a unified view. Our spreadsheet research determined that even individuals with more than a decade of experience have difficulty combining spreadsheets to create a consolidated view and find the process time-consuming. Arriving at a plan that balances the needs and objectives of individual business units within the corporation’s overall objectives is an iterative process. Integrating desktop spreadsheets often forces companies that rely on them to spend a great deal of time on the mechanics of planning. This of course extends the time required to create a plan and hampers the organization’s ability to respond promptly to changes in supply and demand. In this respect, spreadsheets are a barrier to action-oriented planning. Nevertheless, our business planning research shows that 80 percent of companies use them for supply chain planning, 75 percent use them for S&OP and 63 percent use them to support sales planning. The research also found that more than half of participants in these planning areas say that spreadsheets make it difficult for them to manage their planning process. A core defect of spreadsheets when used for operational planning is that it is difficult to separate units and currency in analyzing and reporting the information that individuals need for their particular role (for instance, looking at input/output ratios in production or logistics or assessing customer profitability). Even for midsize companies, spreadsheets fail to scale to handle the scope and detail needed to support this type of planning.

As noted, Steelwedge’s product for S&OP, supply and demand planning is cloud-based. One important advantage of the cloud is that it offers ready access for everyone who might be involved regardless of where they are. Steelwedge also offers mobile capabilities because people who are involved in the process (such as those in field sales, those in warehouse operations or managers and executives) often are on the go yet need to be able to view and approve details without holding up the process.

Our research shows that direct links between interconnected plans produces better results. Two-thirds (66%) of companies that have direct links between plans said they have planning processes that work well or very well, compared to 40 percent that copy data manually from one plan to another and just 25% of those that have little or no connection between plans. Steelwedge’s PlanStreaming platform provides the integration point between the various supply- and demand planning groups in a corporation to improve accuracy as well as the effectiveness of its planning process. The quality of planning processes also correlates with the accuracy of the plans: Four out of five companies that plan well or very well said they have plans that are accurate or very accurate, compared to 24 percent that have processes that are managed adequately and just 5 percent that have poor management.

Implementing sales and operations planning or simply achieving better coordination between supply chain planning, demand planning and sales forecasting can be facilitated by a dedicated software platform such as PlanStreaming that supports all of the planning processes as separate activities and addresses the needs of the different groups. This approach allows companies to avoid organizational issues that result from imposing changes on well-established processes because of technology limitations. Such an approach also allows organizations to phase in the technology and to build competence in planning before transitioning to an integrated business planning effort. If the organization is committed to implementing integrated sales and operations planning, it can do so right away if all of the component pieces reside on a single platform.

Most companies would benefit from being able to plan more effectively for supply and demand chains. Those that face long or complex supply and demand chains need to adopt S&OP to ensure that the inherent differences in the objectives of various planning groups are mediated by senior management. (This is not easy because an S&OP culture must be instituted.) I recommend that companies that want to improve their supply or demand chain planning process evaluate Steelwedge. I include both those that want to move off spreadsheets to make their supply chain and sales planning faster and more nimble, and those that want to begin to implement an S&OP discipline or move their S&OP efforts from spreadsheets to a more capable, easier-to-use platform.

Regards,

Robert Kugel – SVP Research

Tidemark Enables More Effective Business Planning

Tidemark Systems offers a suite of business planning applications that enable corporations to plan more effectively. The software facilitates rapid creation and frequent updating of integrated company plans by making it easy for individual business functions to create their own plans while allowing headquarters to connect them to create a unified view. I coined the term “integrated business planning” a decade ago to highlight the potential for technology to substantially improve the effectiveness of planning and budgeting in corporations, and it remains true that integrating business planning can produce superior results. Companies that maintain direct links between functional or departmental plans more often have a planning process that works well than others. Our next-generation business planning benchmark research shows that two-thirds (66%) of those that maintain such links have a planning process that works well or very well, compared to 40 percent that copy information from individual plans into an overall plan and just 25 percent in which plans have little or no connection.

Businesses commonly do a lot of planning within individual silos: There are sales plans, marketing plans, manufacturing plans, R&D plans and various others. However, in most companies the only unified plan is the corporate budget, which is a financial plan used mainly for allocating resources and controlling spending. Because they are focused almost exclusively on monetary consequences, budgets are not especially useful for planning the operations of a company, which requires attention to the things of a business (such as head count, numbers of purchased parts and tons of materials).

Tidemark has made significant progress with its software that I have previously assessed with how it unifies business planning and the company’s Fall 2015 release includes a new feature, Tidemark Complete, that enables companies to benchmark their performance against that of competitors. In almost all organizations, performance reviews compare results against the current plan or the previous quarter or year. While this is essential, it’s insufficient because business is not an “us-vs.-us” game; it’s an us-vs.-them competition. Even so, most companies don’t assess their results against the market because they find it too difficult and time-consuming to assemble the data. Tidemark Complete addresses this issue. The latest release also adds packaged configurations and metrics tailored for the insurance, hospitality and retail industries that enable such companies to accelerate their implementation of Tidemark. In the Spring 2015 release the company introduced packages for higher education and subscription commerce. The subscription commerce app is especially useful for companies with recurring revenue businesses for two reasons. One is that managing these types of businesses requires using metrics that are not directly available from the accounting process. These include the annual recurring revenue (ARR) and annual and total contract value (ACV and TCV). Typically, the finance staff assembles data from one or more sources in desktop spreadsheets to do the calculations, analyze the results and create reports. As well as time-consuming, this method is prone to errors and incompleteness in the data. The second reason is that revenue recognition in subscription businesses is often complex. For planning purposes, it’s useful to be able to automate the translation of booking events into reported revenue because it saves time and results in more accurate projections of future financial statements.

Ventana Research rated Tidemark a Hot Vendor in our 2015 Business Planning Value Index. Tidemark’s software offers all of the capabilities necessary to support state-of-the-art planning. That is, it offers engaging visualization and reporting functionality that enhances understanding and insight in developing plans as well as communicating results. It has workflows to manage plan creation and periodic updates that cut the time and effort required to supervise the process and thus shorten planning cycles. It offers integrated analytics to support the planning and review phases of the process as well as Storylines and Playbooks, methods that present an organization’s performance in narrative form with engaging data visualizations. An important reason why companies invest time in creating plans is to set objectives so they can periodically review their performance to those objectives. By organizing all business planning on a single platform, Tidemark allows each planning unit to review its results faster and headquarters to review the overall financial and operational performance sooner. Our research finds that companies that use a dedicated third-party planning application such as Tidemark are more able to uncover details during a review meeting because they can drill down to uncover underlying details while the meeting is under way. This enables managers and executives to get to information that can promote agility and provides an environment that encourages action in the whole organization.

Tidemark also offers built-in social collaboration capabilities in context. Collaboration is essential in the process of planning in corporations because it helps ensure that activities are coordinated. Companies have multiple objectives for their planning processes. Chief among these is accuracy. But since things don’t always go to plan, companies need agility in responding to changes in a timely and coordinated fashion, and collaboration facilitates this also. In a small business, planning can be informal because of the ease of communications between all members and the ease with which plans can be modified in response to changing conditions. In larger organizations the planning process becomes increasingly difficult because communications become compartmentalized locally and diffused across the enterprise. Facilitating collaboration across geographies or business silos addresses the communications issues. Tidemark’s collaboration capabilities address this issue more readily and completely than email or instant messaging. Setting and changing the company’s course require coordination to ensure that the actions of one part of the organization complement (or at least don’t impede) the actions of others. Better communication across the organization promotes coordination because it enables better understanding of the impact of policies and actions in one part of the company on the rest of it. Yet only 14 percent of companies are able to accurately measure that impact, and fewer than half (47%) have even a general idea. Integrated business planning coupled with a collaboration capabilities addresses that issue.

Using the most capable technology also helps. Using limited tools is a major barrier preventing companies from integrating their planning efforts; spreadsheets in particular are a major culprit. Our research reveals that across the spectrum of corporate planning activities, seven out of 10 organizations use spreadsheets to manage their planning processes. Tidemark’s common planning platform for individual departmental and functional plans, plus built-in analytics and reporting and its focus on ease of use, provides a compelling reason to switch from spreadsheets. Also, compared to using spreadsheets, Tidemark’s applications can make the planning process far more interactive by utilizing in-memory processing to speed calculations. When even complex planning models with large data sets can be run in seconds or less, senior executives and managers can quickly assess the impact of alternative courses of action in terms of their impacts on key operating metrics, not just revenue and income. Furthermore, having the means to engage in a structured conversation with direct reports can help executives implement strategy and manage their organization more effectively.

Integrated business planning applications are changing the conversation from a finance-centric approach to one that supports planning operations and finance in parallel. Companies that are dissatisfied with their current approach to business planning and are looking to improve important aspects of it including accuracy, insight, speed and alignment should consider dedicated business planning tools. When they do that, they should consider the kind of software that will enable them to support a better process. We recommend that they include Tidemark in their evaluation.

Regards,

Robert Kugel – SVP Research