Abstract
Corporate executives at this large telecom company wanted more detailed visibility into the drivers of each business unit’s financial performance. But a slow, spreadsheet-based budgeting, planning and forecasting process was clouding the line of sight. How could the company improve the transparency and timeliness of financial planning information – and use it to make better business decisions?

The Challenge
Before undergoing finance transformation, each business unit submitted its planning information on a spreadsheet to the company’s central financial planning and analysis (FP&A) department at the end of each planning cycle. FP&A then consolidated the spreadsheets from all the business units to view the financial status of the company as a whole. Each business unit used unique formats and approaches to develop budgets and forecasts, limiting the comparability of the data. Issues arising from this process included:

• Lack of corporate visibility into business-unit financials. Because the business units worked offline on spreadsheets, FP&A had no way to monitor the business units’ budget-to-forecast and budget-to-actuals until the spreadsheets came in for each cycle – and even then, the information arrived at a summarized level without supporting details.
• Limited analytical capabilities. Because the company lacked a central data repository containing all consolidated levels of budget/plan/forecast data, FP&A had difficulty identifying budget deviations and planning for future business needs.
• Ineffective push-down of plan to business units. When FP&A sent plan targets to the business units, it had to wait for revised spreadsheets and then ask for further adjustments as necessary – a resource-intensive, time-consuming process.
• Lack of controls around errors. The business units’ manual, spreadsheet-based processes increased the risk of errors and made it difficult to detect and correct errors when they occurred.
• Inefficient use of resources. In both the business units and FP&A, finance personnel were spending a great deal of time and effort managing spreadsheets rather than thinking strategically about the business.

How We Helped
The company set out to transform budgeting, planning and forecasting from fragmented, manually intensive processes to consistent, transparent processes that utilized available driver-based information. At the same time, the company explored ways to improve the finance function’s ability to add strategic value. With Deloitte’s assistance, the company:

• Developed a driver-based method of budgeting, planning and forecasting that allowed finance to automatically calculate the total for most budget lines (e.g., cost of salaries and benefits) from known or anticipated business drivers (e.g., number of full-time equivalents)
• Selected a software tool to support budgeting, planning and forecasting across all business units
• Revised the organizational structure so that the business units’ finance organizations now report directly to the chief financial officer
• Defined five strategic roles for the finance function within the enterprise – as operator, coach, steward, enabler and strategist – and identified the steps necessary to allow finance to be effective in each role

Lessons Learned
With driver-based budgeting, planning and forecasting, the company is now able to develop budgets and forecasts that predict actual expenses with 99 percent accuracy. Also, the budgeting, planning and forecasting tool has replaced the use of spreadsheets, greatly reducing the risk of errors, enabling sophisticated analyses (including scenario analysis) and giving FP&A the enterprisewide visibility it needs for effective leadership. The result: much shorter and easier budgeting and forecasting cycles, greater consistency across business units’ planning logic, better insight into the major drivers of cost and an improved ability for finance to add strategic business value.

As used in this document, the term “Deloitte” means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax LLP and Deloitte Financial Advisory Services LL, all subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

Related Content:
Resource Library: Finance Transformation Case Studies  
Overview: Financial Management