Prime your planning process.

• Author: Hackett, Greg

If you want to cut the time you spend on your planning by 75 percent and emerge from the process with better data for decision-ranking rend what the top companies do.

Ask any company to name its most loathsome management process and the answer is likely to be strategic, tactical and financial planning. It's no wonder, with this most-detested process consuming an astonishing 25,000 person-days in the typical billion-dollar company. Five months are spent revisiting the strategic plan each year, and financial planning consumes more than four additional months. Companies have fewer than 10 weeks a year when they're not planning. And the results and value of this lengthy process are often considered suspect.

On the other hand, companies that have streamlined their planning cycle with best practices devote fewer than 6,000 person-days per billion dollars of revenue. So what do the best do that the others don't? They emphasize the four key characteristics of world-class planning and performance measurement processes: fast, focused, integrated and technology-enabled.

Bucking the Norm

Fast - While the typical company spends nine months of the year planning, top-performing companies reject this onerous time drain and condense planning to less than four months. One way they achieve this is to resist changing the actual strategic plan. Revising the strategy isn't an annual exercise, as it is in 56 percent of companies. While the best firms update the tactical plan annually, they make developing a strategic plan an event-driven activity, contingent upon major shifts in the business operating environment and not just because the calendar says it's June.

Top performers also keep financial plans down to 40 line items - or don't do budgeting at all and they're speedy in their management reporting, performing the financial close and issuing reports in under six days. This takes unified and streamlined transaction processing and general accounting systems that deliver information quickly. The best also respond to an ad hoc forecast need in only three to five days, compared to 21 days at the average company.

Focused - Top-performing companies analyze leading indicators and predictive measures, as well as lagging indicators and traditional metrics, to understand the financial results of their operational actions. They focus on what drives revenue, profit and expense and what's material and volatile. They report only material variances, perform rigorous...