Define driver based planning

To dig deeper into the subject we invited paul hamerman, vice president and principal analyst at forrester research and richard. When i first came across the term driver based planning and forecasting i was confused. Zerobased budgeting zbb is a method of budgeting in which all expenses must be justified for each new period. Oct 25, 2018 zero based budgeting zbb is a methodology that helps align company spending with strategic goals. Strategic drivers are things that shape an organizations plans for the future. Driverbased enter global rate assumptions and other assumptions for example revenue drivers or expense drivers to take advantage of builtin accounts and. Value drivers for balance sheet for balance sheet planning, companies should again adopt the concept of driverbased planning and the staff members responsible for planning can select preconfigured drivers for each balance sheet item. About driverbased planning, trendbased planning, and direct input you can plan using several different methods. Driverbased budgeting can be an effective tool to put these principles into action and help you thrive in these uncertain times. If you continue browsing the site, you agree to the use of cookies on this website. Ben is principal analyst with eckerson group and leads the enterprise goal management practice area. If, for example, growth drivers are important to a particular firm, management can direct strategic planning to focus on growth strategies. Economic planning, the process by which key economic decisions are made or influenced by central governments. The platformbased approach may make sense for ongoing businesses, but it is sheer folly when.

Click rolling forecast, and then cash flow uses planning rolling forecast. This driverbased planning tutorial explains how planners can use this app to manage drivers on different aggregation levels in a driver planning view. Define the right driverbased planning and assumptions for your business. Performance in the driver based planning app may be affected when you create or replace a driver.

Discoverydriven planning recognizes that planning for a new venture involves envisioning the unknown. Driverbased planning is an approach to management that identifies an organizations key business drivers and creates a series of business plans that mathematically model how those things most necessary for the organizations success would be affected by different variables. Forecast the future with the power of integrated planning. Driverbased planning takes all of the important growth factors within a company and uses them to construct a budgeting, planning and forecasting model that. Scenario planning, also called scenario thinking or scenario analysis, is a strategic planning method that some organizations use to make flexible longterm plans. To move forward, companies have to admit the mistakes of the past, implement continuous improvement programs to drive discipline, and carefully reimplement demand planning technologies to sense and shape demand. In this post i want to share some of the most common benefits of the driverbased budgeting and planning approach. Plan and forecast revenue across a broad range of businesses and products, including asset management, brokerage, mortgage lending, and feebased services. As an exinvestment banker having joined a finance team the concept of drivers when talking.

Broadly defined, the term could be applied to the use of any spreadsheetplanning model because these almost always have builtin volumetimesprice. Driverbased modeling and how it works bpm partners. The adaptive team is developing a 5level driverbased planning maturity scale. More specifically, a value driver refers to those activities or capabilities that add profitability, reduce risk, and promote growth in accordance with strategic goals. Click driver based, and then cash flow uses planning. Click rolling forecast, and then cash flow uses planning rolling forecast if necessary, select different point of view dimensions, and then click in cash flow impact assumptions, for each revenue account, specify the payment percentage you receive within 30, 60, or 90 days. Build financial models quickly and easily with driver based financial planning and modelling from jirav. There are four basic objectives of performance planning. Orderbased planning with sap ibp howto guide by sap.

Then analyze your planning results with sap fiori apps. Tools for implementing an evidencebased approach in public. But to get even more value from driverbased forecasting you need an integrated platform where you can see the consensus forecast across the company, measure performance. False in a scenario when the need for brakes depends on the need to produce cars, consumption based planning will be an appropriate strategy to use. Assumptionbased planning in project management is a postplanning method that helps companies to deal with uncertainty. What is driverbased budgeting and forecasting and why do i. If necessary, select different point of view dimensions, and then click. We launched the new demand driven replenishment ddmrp module, and further strengthened our planning capabilities with driver based planning and the webbased planning app incl business collaboration with external partners with this strong recognition, we are looking. Driver based budgeting is a process that links real resources and activities to the financials in the budgeting process. Companies talk about moving to driverbased budgeting or forecasting, but few actually make the leap. A value driver is an activity or capability that adds worth to a product, service or brand. The practice of evidence based public health ebph is an integration of science based interventions with community preferences for improving population health 1.

This type of approach builds the clients on their strengths, specifically seeing them as. Specifying driverbased cash use and source assumptions. In other words, they are factors that people consider when developing business strategies. Performance planning is a crucial part of an employees growth in the organisation. As a continuous planning practice, rolling forecasts are radically different from fixed forecasts, where projections are adjusted to fill gaps. I hadnt thought about the exact definition of driverbased planning until the question came up in the context of our planning benchmark research showing that only 6% of companies with more than 100 employees do driverbased planning. Quick tips for defining business performance metrics. Driverbased planning and cost modeling software solution.

Paul hoch, topdown consulting principal architect, discusses how identifying and measuring only the key drivers of the business helps companies stay competit. Such goals can include increasing shareholder value, competitive edge. Drivers also aid in explaining to nonfinance people what are the key factors that influence performance of the. Consumption based planning assumes that future consumption will follow the same patterns as current consumption. An effective performance planning system will be easy to understand, as well as to implement. This strategy usually involves learners working their way through a problem, which they are expected to solve. But to get even more value from driver based forecasting you need an integrated platform where you can see the consensus forecast across the company, measure performance. Read on to learn how to make driverbased budgeting and planning work for your organization. Jan 29, 2020 2019 was a fantastic year for sap ibp, with now more than 700 customers and four releases packed with innovations. Performance in the driverbased planning app may be affected when you create or replace a driver. The concept of ebph evolved at the same time as discourse on evidence based practice in the disciplines of medicine, nursing, psychology, and social work. Lamorte coaches business leaders to define and make measurable progress on their most important goals. To be the place where meeting planners meet mission a statement of the overall purpose of an organization which describes. Purpose is to populate the general ledger with budget data and set targets.

The benefits of driverbased budgeting have been touted repeatedly. Model revenue streams based on drivers like interest rates. Its approach requires organizations to build their annual budget from zero each year to help verify that all components of the annual budget are costeffective, relevant, and drive improved savings. Making driverbased planning and budgeting work anaplan. This information allows companies to define drivers for the partial plans of their business. Assumption based planning in project management is a post planning method that helps companies to deal with uncertainty. Strategic planning is an essential preliminary step in the corporate world in which senior management defines the organizations strategy, direction and decisionmaking. In this post i want to share some of the most common benefits of the driver based budgeting and planning approach. The process of zerobased budgeting starts from a zero base, and every function. Your supply chain wont always run according to plan. Neubrains powerful driverbased planning and cost modeling solution incorporates a best practice methodology that bases financial forecasts on operational drivers. Jirav enables you to create custom drivers, define rules for growth rates and assumptions, and deliver contextual plans. This is usually achieved with support of a computer system that enables the process of planning and budgeting to be managed.

What distinguishes driverbased from not driverbased is the use of mathematics to create budgeting, forecasting, and planning models. At the management level, barrett offers what he terms a driverbased approach to planning. Nov 28, 2019 this driverbased planning tutorial explains how planners can use this app to manage drivers on different aggregation levels in a driver planning view. A driverbased model is only as good as the relationship between the input and the outcome. So just as an agiletype method for computer programming involves frequent recourse to increment changes and then iterating, so too for planning and budgeting. Seven considerations before launching driverbased planning. Driverbased budgeting and planning dbbp can help you with a more agile and efficient cost planning and control process. The topic of the evenings discussion was driverbased planning, a subject that ensured a lively debate, and a wide range of opinions around the table. Our solution uses mathematics and linked relationships to create budgeting, forecasting and cost models. About driverbased planning, trendbased planning, and direct. Driver based planning is an approach to management that identifies an organizations key business drivers and creates a series of business plans that mathematically model how those things most necessary for the organizations success would be affected by different variables.

The table below summarizes the definition of each component of the drivers model. Strategic planning serves as a road map to help an organization or business discover how to get where it wants to go. Orderbased planning with sap ibp howto guide by sap press. Rather than focusing on budgeting or forecasting the end dollar amounts, consider how they are calculated.

How might driverbased forecastingan approach that bases financial. It contrasts with the laissezfaire approach that, in its purest form, eschews any attempt to guide the economy, relying instead on market forces to determine the speed, direction, and nature of economic evolution. It is in large part an adaptation and generalization of classic methods used by military intelligence. The driverbased planning model is the best practice methodology where financial plans incorporate. Driverbased planning uses key business and value drivers to create business plans and budgets, and to model different business scenarios. How to model business performance with driverbased planning. This is because creating a driver involves a number of steps that the system carries out, like creating a new entry for the master data type, creating planning objects, creating time series entries, disaggregation of key figure values. Making driverbased budgeting and planning work anaplan. Driver based forecasting is the linking of operational activities to the calculation of key variable revenues and expenses. Driverbased planning is a hot topic in the world of forecasting, planning and budgeting. Effective demand planning doesnt just happen, it requires work. During the course of working with various organizations that have deployed performance dashboards we have discovered 4 major success factors to implementing them successfully. In comparison with the traditional supply chain, ddsc uses the pull demand pull technique.

If you want integrated driverbased planning, were here to help. When i talk to finance people, i tend to see two different definitions of driverbased planning. Once drivers are created in the driverbased planning app, they can be viewed, and its key figure values changed in the excel addin or webbased planning. The benefits of driverbased budgeting and planning centage. Set up the obp data model, define demand prioritization rules, and plan deployments in sap ibp for response and supply. Oct 28, 2015 the strategic planning process in a company is the development of a direction, the taking of decisions and allocating resources necessary to achieve the final goal. A demanddriven supply chain ddsc is defined as a supply chain management method focused on building supply chains in response to demand signals. The platform based approach may make sense for ongoing businesses, but it is sheer folly when. Nov 16, 2016 scenario based learning is a way of teaching or practicing a skill using virtual, interactive, problem based contexts. Ethical values and social responsibility serve an important role in the strategic planning process. Every journey to an integrated driverbased plan is a continuous process. This is a longterm strategic planning tool, so goal time frames are typically about three to five years.

Value driver analysis is an important foundation for strategic planning, helping management sort through their operations to define critical strategic levers. For many organizations this approach has been a welcome change from traditional budgeting and forecasting. Revenue planning and forecasting totally separated from expense plan. A practical look at driverbased planning ventana research. It is used to identify the most important assumptions in a companys business plans, to test these assumptions, and to accommodate unexpected outcomes. The strengthbased approach is a work practice theory which focuses on an individuals selfdetermination and strength strengthsbased models in social work. With adaptive insights, you can extend a powerful yet intuitive retail planning solution to store managers so they can analyze key trends affecting customer growth and spend, such as revenue by product sku, gross margin, promotions, and new store roi. Why integrated, driverbased planning is key to your business. The main force of ddsc is that it is driven by customer demand. The strengthbased approach has its foundation in social work.

How driverbased planning can help reduce your planning. One of the most important challenges faced by managers is to deliver more with less. But only if you can elevate it from its typical piecemeal, spreadsheet involved exercise. A practitioners guide to demand planning supply chain 247. As an exinvestment banker having joined a finance team the concept of drivers when talking about a forecast or plan was simply assumptions. About driverbased planning, trendbased planning, and. Implementing driverbased forecasting is something you can set up in a spreadsheet environment for the purposes of scenario analysis with a very small, limiteduse footprint.

Goalbased planning tackles that challenge by setting measurable goals that align with your vision and strategic plan. We launched the new demand driven replenishment ddmrp module, and further strengthened our planning capabilities with driver based planning and the web based planning app incl business collaboration with external partners. When youre implementing driverbased planning, you want to analyze and adjust your major drivers. It would also be accurate enough to provide the performance of an employee throughout the year.

The process of zero based budgeting starts from a zero base, and every function. Driverbased planning is an approach to management that identifies an organizations key business drivers and creates a series of business plans that. Prepare for the unexpected with this ebite on orderbased planning. Retail sales forecasting retail financial planning. Zero based budgeting zbb is a method of budgeting in which all expenses must be justified for each new period. Benefits of defining drivers and how to define them. With jiravs driverbased financial planning and modeling, youll always know your next move.