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Strategic planning is a vital activity of any business. Not having a clear idea of the opportunities and challenges ahead is like driving at night with the headlights off.
The manner in which this planning is carried out is also crucial. Rather than an annual process that sets goals and actions for the year ahead, it must be an ongoing activity that is constantly revised to meet changes in customer requirements and market conditions.
The need for such agile planning has been greatly alleviated by the Covid-19 pandemic. No business in the world could have predicted the disruption it caused or anticipated the long-term impact that would follow. Any annual plans laid out in January are now essentially a fiction.
Sydney Airport Corporation’s financial transformation and strategy manager, Louise O’Byrne, says the virus completely changed the playing field for her organization with virtually no warning. “We’re typically a company with four revenue streams that have historically been very stable,” he says. “They relate to our aviation business, our retail, real estate and ground operations. The virus has put us in a situation where all our businesses have been severely disrupted.
Speeding up decision making
In the face of such disruption, the ability to do agile planning isn’t just a nice to have, it’s something that can mean the difference between a business continuing to operate or closing its doors. “The Covid-19 crisis has really highlighted the need for collaboration across teams,” says O’Byrne. “The importance of having access to data in a sensitive way was clear all the way up to the C-suite.”
The ability to make agile or accelerated decision-making depends on such access to underlying data. To accurately reflect current conditions, plans must be based on the most up-to-date and reliable data available. The challenge is that it is highly likely that the data needed to support accelerated decision making will not be available in one place. It will need to be drawn from different parts of the business and from external sources such as suppliers, partners and customers.
This is especially important when things change so quickly and unexpectedly. For example, over the past few months, businesses such as supermarkets and hardware stores have actually seen a surge in business. But that came at a time when others, such as restaurants and bars, were watching their revenue fall off a cliff. Tracking customer demand data and supply chain performance has never been more important.
However, a business needs more than just data to make decisions and plan in these conditions. They must also have the tools to make sense of this data and use it as a basis for informed decisions.
“There was a lot of interest in digital decision-making among our clients before the pandemic,” says KPMG Financial Strategy and Performance Advisory Manager Georgina Woolf. “It has now shifted from interest to prioritizing transformation.”
Woolf says that her firm’s clients want to be able to make decisions faster and to have them based on reliable information. They also want strategic planning to move from something done once a year to an ongoing process that can respond to changing business conditions.
This process is made more efficient by the availability of tools that allow different data sources to be combined to create what is called a “single version of the truth”. This allows managers and decision makers to be confident that the data they are viewing is as up-to-date as possible and reflects the latest impacts of changing conditions.
Tools can also help represent data in different ways, says Mark Sands, managing director APAC at Board, an international provider of financial software solutions. “Instead of digging through multiple spreadsheets, data can be displayed on digital dashboards that allow for quick and easy trends. What if scenarios could also be easily tested. Managers can determine what the impact of closing down some operations or how continued government support such as JobKeeper will affect ongoing profitability.”
Rapidly changing external conditions can also be quickly taken into account in planning. For example, a sudden outbreak of viruses in one area could mean that strategies must be changed in essentially real time. Sands: “Having accurate data and powerful tools to analyze it ensures that the business can react as quickly as needed.”
Ready for the future
As the world emerges from the COVID-19 crisis, it is clear that conditions will be very different for a very long time to come. The business strategies that made sense in late 2019 and early 2020 are likely to be significantly different, requiring new ways of deploying capital and human resources.
Followmont Transport CFO Trent Fuller says having access to quality data and the ability to extract value from it will continue to be essential for his company.
“We need to know where it’s happening, if sales are falling, and with which customers so we can adjust,” he says. “There is also a forecasting element – not just waiting for the annual budget, but being able to forecast on the fly and make decisions is critical.”
Businesses that have this ability will be best placed to thrive as Australia and the world embark on the long road to recovery.
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