Beyond Spreadsheets | Predictive Analytics in Financial Planning

Client demands are getting quite funky these days. All firms that we've come across are experiencing workloads changes based on their client needs, whether increases or decreases or changes nonetheless. So we need to stand and put operational costs to accommodate these fluctuations, whether the operational is resource planning, money planning, what have you. And of course with changing regulations, they all have unexpected consequences, whether it's expenses, timing or things like that. So we need to be able to adjust accordingly. So how is AI coming into play and some of our customers having some issues with ai? We all know there's data silos around organizations. You have information here, you have information there, and it's not in one place. So we need to remove these data silos so AI can have better accuracy, can speed up the analysis, reduce manual tasks so your people can be more strategic skill gaps.

What we're finding is our clients are in different versions of where they want to be. In predictive forecasting, it may be you just want BVA reporting or anomaly tracking, or you want the system to actually say, use the past in order to forecast out in the future. Everyone's on a different journey or a different path. So we need to make sure the AI tools can help in those different journeys. We all know there are many people within the organization that is resistant to change. So we need to make the AI journey easy to use, easy to understand and be successful for all of the employees within the organization. We need to anticipate unintended consequences, whether they be social, economical, human resources, what have you. So we need to have the different scenarios out there so we can mitigate the wrist. The human in loop systems, AI is not going to take away from the personal intervention into decisions.

It can make projections based on past, but you know your organization, the employees know the organization so they can make the decisions and human involvement is involved. And then transparency and explainability, prioritize those models which are important to you. Not all the models need to be predictive forecasted, but you need to make sure which ones are the best for you as a management team or for all your stakeholders. Hopefully that makes some sense. So how can budgeting planning play a pivotal role? Well, basically you need a one-stop shop. We used to call it one version of the truth, whatever. You need all the information in your various systems to be in one spot and not only put your financial goals, but your strategic objectives so you can see how you're doing against those objectives. You need to have scenario planning, whether it's what if best case, worst case or what have you.

So you can run those scenarios, find out what the differentiators are and make better decisions. You need to do rolling forecast. More and more of our organizations are bringing in rolling forecasts instead of just doing an operating plan once a year, whether it's monthly rolling forecasts or quarterly rolling forecasts, that's up to you as an organization, but this will help you make better decisions more quickly. We need to have more departments work together. In traditional companies, the finance department does the budgeting and planning, but more and more organizations want to have the actual budget owners own the numbers, enter the numbers, so finance can be more strategic in analyzing the numbers. We need to identify all the risks much more quickly than before because we need to put contingency funds together because money is tight nowadays. We need to track the progress of how we're doing against our plans, our budgets, and our goals. So we need to track how we're doing on a regular basis so we can be more nimble. And allocating funds for research and technologies is a must. You probably hear it on all of the internet, the tv, if anybody still listens to the radio, things like that. We need to make sure technologies are being used so we can stay ahead of the trends and embrace change.

So how are we addressing change in 20, 20, 25? Well, we need a growth mindset. We need to encourage all employees, all stakeholders, all board members to encourage continuous learning. Things are changing fast, whether it's technology, the market and things like that. We need to have a better strategic vision, align the objectives and the company goals so we can track how we're doing to those company goals. We need to foster great relationships within our client's organization. So everybody wants to be a part of taking advantage of new technology, budgeting and planning and things like that. It needs to be transparent. Everyone needs to be open to change, and our challenge when we implement software and optimize software is to make sure we let our clients know what's in it for them so they can be more open. And you need to get employees engagement. No longer keep things siloed in the finance or the accounting department.

Everybody needs to be part of the process to feel good regarding the numbers. What we like to talk about here at Eisner Amper is really give you a smattering of some of our customers, and this is just an idea to show budgeting and planning isn't just for ginormous customers. It can be for small customers to very large customers, big name to no name companies, nonprofits, manufacturing and distribution, software companies, what have you. It is a organization-wide issue that people are attempting to accomplish. Some of the things that we have seen in our practice on implementing budgeting and planning software is information needs to get down to what I call the dimension level company structures, departments, projects, locations, things like that. Of course, picture paints a thousand words, so we need to have dashboards and what we'll show you a little bit later is no longer can you afford to do a dashboarding product over here or reporting product over there and a data entry product over here and people start flipping back and forth.

Everything needs to be consolidated in one area. So as you make decisions, you can see what the ramifications are. Expense planning has always been important for many, many years, but revenue planning has become the same potency. We need balance sheet and cashflow planning like we talked about before. Scenario planning is a must in this environment moving forward and as organizations embrace predictive forecasting, you need to be able to do it based on your journey. When it comes to ai, everything needs to be self-service and presentation quality. No longer do you want to say here's the information and then need to go to someone else to create the reports or the graphs or go to it to do things. Everything needs to be self-service with most of our organizations. Workforce planning, salary planning, whatever you want to call it, is very, very important. It's typically one of the top three expenses in an organization.

So our clients are doing more and more detailed workforce planning and of course everything needs to be integrated. That being said, what are we going to show today in a demonstration? And when I turn it over to Kyle, we're going to do what we call active dashboarding. That's where you put reports and graphs and data entry screens on one spot. So as you are budgeting and planning, if you make a change or try to make a decision, you'll see the ramifications immediately upon when that's done, we can tackle uncertainty with scenario planning. We'll show how easy it is to create a scenario. Those of us who have done budgeting and planning and spreadsheets know how cumbersome it is and how manual it is. Copying an old spreadsheet to a new spreadsheet, transitioning the columns over and making sure we haven't broken the spreadsheet, you'll be able to create these what if scenarios very, very quickly.

We'll streamline the process because everything is done automatically, so all the manual process will be automatic so you can spend more time analyzing the data. If you choose to do so, you can collaborate across teams, making sure the budget owners or the owners of the numbers are actually entering the information, reviewing the information so they can make their decisions, makes the finance department more strategic. And of course you want to improve the forecast accuracy. You want to say, okay, I forecasted this. What's my variance and how good am I doing on my forecast? And the predictive will help do that because it will go into the details of the past and forecast out into the future. What we want to show today is three words. We want to show you how the systems can be easy to use, easy to use for an administrator, easy to use for actual end users. We want to show that it's powerful, powerful in that the forecasts that can give you powerful and that the amount of data that you can use is powerful. And then of course, fast, right? Long gone are the days where you put information into the system and you get the answers back tomorrow. So we want to show how fast it is and you can get the information out when you need it. That being said, I'm going to turn it over to Kyle and he's actually going to show you the actual application.

Kyle Nesslar:Thanks Rhea. I'm going to pull up my screen share here and just make sure everybody can see once I flip it over. Yeah, can you confirm if people can see my screen or not?

Rhea Wade:I can see your screen.

Kyle Nesslar:Okay. Just making sure. Okay. So the first thing that I want to call out here is that everything you see in here is controlled by a complex security matrix that can lock people down by not only dimensional securities but account securities so that fp and a can control the way the end users interact with the tool and the way they want them to interact with the tool to create the most collaborative experience possible. The other thing I always call out at the beginning of these is any information at whatever dimensional or aggregation or granularity you need in order to plan more effectively can be pulled in that tool from any set of source systems, whether it be an ERP on H-C-M-A-C-R-M, some type of data warehouse. If you can pull the data out of the system, you can automate it into the system. For instance, just something high level to show up to start to make it easy for people.

If I'm looking at this and it's telling me that I have eight and a half million dollars and I have a $740,000 variance for the period, and I could see my trend line, well that's nice, but I want to see a little bit more information about that. What I can do is simply by the click of a button, I want to see how does that eight and a half million break down by product line, I can see that or I could get down to location or I could get down all the way to the individual product. If that's the way you want to plan and report. This tool allows you to do that very quickly, very easily and very efficiently and simply with the click of a button, I can get right back to where I started from. So what I really want to focus on today are the two core topics that RIA had mentioned during her presentation.

And the first is this concept of active dashboarding with scenario planning. So I'm going to jump over to this workforce planning sheet and what you can see is this is an example of a workforce planning driver-based model that pulls in the employee rosters that make up what you're going to plan for salaries, payroll, taxes, benefits, et cetera, et cetera, et cetera, all based on high level assumptions or the employee rosters that might be brought over from an HCM system or your A DP, whatever your payroll system might be. But the really powerful component of this is if I want to be able to spin off a scenario and make some changes to see how that might impact my budget or forecast, I could do that with a couple clicks, easy clicks of a button by simply hitting new scenario here. And I'm just going to change this to the word alternate.

I'm going to switch it over to it. Now I've created a completely new version here that you can see and versions are like spreadsheets, so you can think of them as different spreadsheets where you're changing and making copies. Only this one is directly connected to the original working budget or forecast that people would be using. The difference being I can make any changes on this version without impacting the original forecast while other users change their forecast and do what they're doing. And it will push that down to my alternate version without pushing my alternate version back up until I'm ready for the point to do that. And once I'm ready, if I decide those are the things that I want to do, I can simply with the push of a button, sync it back in and all my changes are there. So you don't have to remember different spreadsheets, different changes you make all those complicated things that are going to going to be able to track and have to move it from one copy to another.

I can do all those things with the click of a button. So for instance, now what I'll show you is just by simply making a small change here, I'm going to just change this to person salary to 13 point a half million. You'll see all of these things update in real time by simply hitting the save button here. My budget to actual has jumped from the 35 ish million to 46 million. Now I could see all of those bars rose with the exception of March because this person didn't start until 3 31. And the really cool piece about this is it highlights those changes in yellow so I can visually see anything that I've changed in this version that is different than what I had on my original working budget. So just to quickly show you that this person still is at $135,000, so nothing has changed there and until I'm ready to make those changes, and as I said, it will track everything for you and with the simple click of a button, you can push those and sync those changes right in.

So another thing I'm going to do here is quickly just change this person to start in November. So you can see again, my head count will drop, these bars will drop, everything happens in real time so I can do my forecast, my budgets, my plans a lot more quickly, a lot more efficiently because I'm seeing those changes in real time. I can track them and I can go back to people to account for those things. So you don't have to do as many iterations of budgets or as many plans. Everything is working in a collaborative process in real time to make things as efficient, easy for the fp and a and accounting teams as possible. And you can see here it's continuing to track all those changes. So everything's highlighted in yellow. And if I was to jump over to the scenario screen here very quickly, you can see I have my change here and I could either merge those changes into it, I can download the changes so I could review them all, I could edit things, I could duplicate it and I can even share it with other users to make again as a collaborative experience as possible so that we can make these budget processes much more efficient and easy to understand and utilize.

The second piece I'm going to touch on here is what Rhea had talked about, which is the predictive forecaster environment. And so a little bit about this here is what you're going to see is a couple of different things. Obviously a line chart, you're going to see the product units revenue model down here with A CPI table over here and I'm going to explain a little bit about how this looks and works. You can see in orange this is tracking the units sold here. So in orange this is what actually happened over the periods of time. And then once the green and shaded color changes, that's when we get into the planning process. And the first one here is what people are building out from their granular operating plans and planning the units sold. You can see in this model, not only is it at maybe a given department, it also is planning it by customer and by product.

So if I was to look at say March where it says 110 and I was go to March here, it's that same number. But the other thing that you're seeing here is these two other lines in green and blue, and these are two different algorithms that you can use to run, and I'll show you a little bit more about that in a second here that actually look at the historical data points and can actually predict out where you would ultimately end up estimating based on your historical growth rates and other changes that you might factor in because not only can factor in things like seasonality, which is why you might see these dips here in blue versus green, which might be a little more stable. You can also use various levers and triggers and models to actually have that altered the way the algorithms would ultimately run in order to make a more complete or more direct process to know that changes that are happening in your environment.

And that's why this is a great example of this because obviously with economic factors that go on and tariffs causing uncertainty, you can actually increase the CPI factors here that will actually impact how those units are sold so that if you're running things based on specific pricing for different products and your units sold go down, but if you increase your pricing, can you keep your revenue stable? It can really help you understand that information a lot better and this is a very easy tool to utilize. And what I'll do here is just kind of jump over and I have this screen set up now to show you how simple it can be and I'm not going to run the whole thing, but by simply coming over here and I can change my name to whatever I want this forecast to run, which you'll see here, all I have to do is choose the sheet.

So whatever your planning sheet or model that you're going to want to run is, and similarly like this is my product revenue model, so I'm going to choose the same sheet to show you how quickly and simple it is to run. I can choose whatever version I want to run it on and you have unlimited versions so you can run it on as many versions as you might possibly need. You just choose that version. So you can run a bunch of different scenarios if you want to, and I'll touch a little bit on this at the end, but essentially this kind of creates some accuracy metrics and things like that that you can do, but then you can choose what periods do I want to run this forecast for? And it could be any in the planning period forecast process. So you could do it for six months, you could do it for a year, you could do it for five years out depending on what you're wanting to do and how you're looking at drug potentially running this.

But now once I've chosen my sheet and what I want to do, I can choose which accounts I want to run it on. So for instance, what this was run on here was units. So you're predicting out your units, which maybe if you're doing it by product, they have an average selling price that as it generates new units, it'll actually generate out what your revenue is, your cost of goods sold, are all those different things that you can base on assumptions or other information that you might pull from a data warehouse or an operating system. You can do it for any level or sets of levels. And not only can you do it at that level of granularity, you can do it by individual customer product or whatever. Dimensionality is going to be important for you to better understand your forecasting process to make it more accurate, more effective and efficient in the future.

The next piece here is I'm just going to choose what actual periods I want to run it for. So this is what actual periods it's looking at to generate that algorithm or what it's predicting. And then the last piece here is the advanced settings. And so you can see here's all the various algorithms that they run and there's about eight of 'em within an autofit, which kind will kind of use all of 'em and kind of figure out what runs best. And if you want to learn more about these algorithms, they have this help section here which can explain all of the detail of what uses seasonality, what might use levers, how the algorithms ultimately run. So you can see, review each one to kind of better understand what it's doing and ultimately pick the right ones or sets of algorithms that you want to choose to run on your forecasting process to make it so that it's going to fit for your organization as effectively as possible.

And so it'll explain every one of these so that you can get down to the most level of detail and better understand what it's ultimately predicting. And so you can see as we talked about here, it'll let you detect seasonality. If you have weekly calendars and you want to do things by week, you can actually do weekly patterns and get all the way down to ultimately the individual day if you're wanting 'em to do that. You have the round values here, which just sets like, hey, if you have a product in case of units, if I have a product that's discontinued once it gets to zero, cut it off because you don't want it to do negative values and start impacting your forecast that way. And as I said before, you could do up to three different leverage sheets like I showed with that CPI table that can impact the algorithm's results so that you can play with those and make them kind of get where you need 'em to be so that ultimately a large portion of your forecasting process can be as automated as possible.

Not only can you do that, but the last piece here that I want to show is this forecast range component. So you can actually do probability levers and metrics, so you can actually run it for three different versions that actually do it based on the accuracy table here that can kind of give you upper and lower bands to what that actually runs. So you can kind of get a range that will allow you to be able to understand the data better and give you a better forecast or a better predictive set of information that ultimately you can even get a forecast explanation. And so it can start kind of helping you better understand your budgeting process and your flow. So with that I'm going to stop my share and I'm going to turn it back to Rio.

Rhea Wade:Thank you, Kyle. As you guys probably guess we can demo this stuff per days and not hit on your particular needs and wants. So what we'd like to do right now is open it up to any questions and I have a few for you Kyle already.

Rhea Wade:The first question is a three part question. Do the formulas and planning work the same as Excel? Can you upload an Excel file and will planning keep formulas?

Kyle Nesslar:So the formulas are designed to work as closely to Excel as possible, and you'll notice most of them are basically the same as the formula functions that you have in Excel. There is any model that you build out in the system will have an import template that you can upload all of that information from Excel and you can have your formulas referenced in there to understand kind of what it's calculating and how that's working.

Rhea Wade:Okay, hopefully that answered your question. Number two, what is the length of implementation for a system like this?

Kyle Nesslar:So the length of an implementation for something like this is usually in that eight to 12 to 16 week range, but mostly generally it's about eight to 12 weeks where you get your actuals up and running, you get your foundation built out, you start pulling in the data, you set up your modeling for your p and l and you start building your reporting. Most of my clients are live within 10 to 12 weeks of starting their kickoff of the implementation and then what they do from there is they continue to build and scale out more complexity over time as they improve their processes and improve their data sets.

Rhea Wade:Perfect. And the last question we'll be able to address today, is there a limit to the number of scenarios that you can have within planning?

Kyle Nesslar:No. I mean have three to four scenarios at a time, but there's no limit to the number of scenarios that can exist in the system. Most people might only create a couple of spinoffs and they like to have their better worst or mid base case, but there's no actual true limit to any of that.

Rhea Wade:Perfect. Is there a monthly cost like subscription based or is it a one-time payment? How about if I take that one You guys Adaptive planning is a subscription based application and there is usually a one-time fee for implementation. And then, okay, one more question, sorry, they're coming fast and furious guys. The last question I'll be able to take is this tool also a financial reporting tool for actual data? Kyle, do you want to answer that or do you want me to?

Kyle Nesslar:I can do that. Yeah, and it absolutely is a reporting. So what adaptive really is at its core is a actual planning and reporting tool. So it's designed to report and create all of your financial board packages and those types of things to allow the end users to self-service their month-end p and ls and understand that information from the actual perspective and ultimately align it with planning to create a collaborative environment that everybody's working together to achieve one goal.

Rhea Wade:And one thing we failed to mention just because of timing, there's full integration into the office products. So a lot of our clients have the report books in Excel and we can integrate adaptive with Excel, PowerPoint or Word. So the last screen I'm showing is our contact information. If anybody has any further questions or would like to get ahold of us, please do not hesitate. We're here to answer any questions and I'm going to turn it over.

^{Transcribed by Rev.com AI}