The long-range planning process needs significant improvement as data quality, project selection and technology remain obstacles to developing successful planning practices. Findings of a new study expose challenges in current long-range planning practices. The study also indicates the benefits from improving existing processes.
According to 289 finance and operational executives surveyed for the Long-Range Planning Benchmark Study--conducted by Ventana Research with sponsorship from Financial Executives Research Foundation (FERF) and Plan-view Inc. and published in February 2013--the main objectives of long-range planning are to support annual budgeting, influence corporate strategy and optimally align capital. The study describes many attributes of the long-range planning processes, but focuses on six drivers of the process that provide a chief financial officer (CFO) with a clear action plan.
The six drivers are: participation of executive leadership, process training, streamlining the amount of time the process takes, integrating the long-range plan to the annual plan or budget, ensuring data quality and investing in purpose-built software.
Engaged Leadership Has Become A Competitive Advantage
The data in the study indicate senior executive leaders are not engaged in the long-range planning process. For example, only 25 percent of participants stated their senior executives communicate a clear and consistent organizational strategy as part of the process.
Active participation of senior executives is critical to a successful long-range plan; and now there is data to support this expectation. If senior executives do not contribute or communicate objectives to the long-range plan within an organization, it is sound advice to stop the process and schedule meetings with executive peers.
A paradigm shift may be necessary for financial planning and analysis (FP&A) managers to regularly approach the CFO to encourage individual or any C-level participation. However, the only person to foster that change in communication is the CFO. The reasoning is clear: Failure to get executives involved in the process will likely result in misaligned priorities and projects, wasted corporate resources and financial loss.
Hard data now also points toward how organizations conceptualize the investment of the long-range process in terms of formal training. Only 29 percent of organizations surveyed in the research provide formal training to ensure participants...