Corporate finance has maintained a relatively steady trajectory over the past few decades. Processes have remained reasonably standardized. Established technologies and solutions have continued to support financial ecosystems. And finance leaders have focused on operating in profit and within regulatory boundaries.
However, the dramatic digital transformations that define the most innovative companies today haven’t bypassed the corporate finance world. Competition is up, and customer demands are growing. Consequently, budgets are strained as financial organizations attempt to keep up with a rapidly changing, fluid business environment.
That’s why solutions such as Workday Adaptive Planning are so important. Workday Vice President of Strategic Planning Finance Kae Arima joined Cloud Wars Founder and Acceleration Economy Co-Founder Bob Evans to discuss how corporate finance leaders use the company’s strategic planning tools to streamline, simplify, and maximize the output of a financial planning initiative.
Where to Start With Strategic Financial Planning?
Bob began the conversation by asking Kae how companies can transition away from archaic financial planning methodologies. “I think all finance teams are trying to do more with less right now. And, at the same time, it’s a highly volatile business environment,” said Kae.
The first thing to think about is aligning your company with the data model. “Really, make that investment. Think about how your data model is structured across your company,” he said. “Do you have alignment on things like data definitions, your hierarchy structure, your business drivers?”
Kae explained how Workday used Adaptive Planning for cross-functional collaboration to find and operationalize this critical data. A second example is something that we internally refer to as the ‘common model.’ It’s an Adaptive Planning model that helps us forecast long-term ARR (annual recurring revenue).”
As a result of Adaptive Planning, ARR meetings focus on strategic levers to drive desired outcomes rather than data accuracy. While in the past, various departments had their own definitions of data, customers, and products; the Workday solutions ensure alignment.
“I think another piece of getting to that alignment is taking the time to understand the processes outside of finance and what is happening upstream and downstream of your financial planning process,” said Kae. “To design a good financial planning process, you need to understand how it will fit into these upstream and downstream processes.
“The better understanding you have, and the more you work with these different teams, the more they’re going to buy into the financial planning process.”
The Benefits of Continuous Planning
“We talk about continuous planning a lot at Workday, but the intent is not to always plan and adjust your models; the idea is to be agile and to be able to have a plan that can adjust as your business adjusts,” Kae said. “It certainly helps to have tools in place like our Adaptive Planning and the data model that’s aligned to that solid foundation. All of these things really help to build that agility and your planning muscle.”
Ultimately, continuous planning enables:
- A reduction in manual work
- Faster planning
- Lighter, incremental processes
- More lead time
Kae explained how companies should avoid thinking about continuous planning from a linear perspective and instead consider it a spider web and spin it in different ways based on different scenarios and economic situations.
Bob continued the discussion by focusing on how Workday Adaptive Planning helps businesses to establish critical end-to-end processes. Kae talked about how Adaptive and the broader Workday suite are fast and user-friendly. “I’m not a technical person, but when I have a question, I can go in and configure my own report,” she said.
How Will AI and ML Impact Financial Planning?
“Overall, there’s just so much potential for incorporating more data into our plans to get better plans and to create leverage for our finance teams,” said Kae. “It’s really about creating that leverage, automating more and more of what we’re doing, but not replacing what finance is doing completely. [Workday’s approach] is really about using the most cutting-edge technology to automate and create leverage for the finance teams.”
The Workday approach also targets business outcomes in a way that respects data privacy. The platform already supports anomaly detection and outlier reporting. And moving forward, it’s looking deep into data and recommendations to inform the next steps in planning improvement.
“Over time, what I expect is AI/ML starting to do more complex tasks, more interesting use cases around things like answering questions, generating version one of a variance analysis for example,” Kae said. “AI could do the first draft for me, and then I can take it from there.”