No-Nonsense OPEX Planning with Power BI

Summary

In this edition, we will be covering the following items:

1. The challenges of legacy OPEX planning processes

2. How winning teams use Acterys and Power BI for OPEX planning

3. Examples of how OPEX can be configured for your use case

Spreadsheet Overwhelm and the Legacy Approach to OPEX Planning

There are countless variations of OPEX planning, both using pure “Excel-only” and on legacy systems. These processes share common challenges and hinder organizations from operating at their highest levels.

1. Spreadsheets Run the Enterprise: Excel is a powerful tool. But once an organization scales past a certain point, it can quickly become overwhelming for each department and business unit to manage their own OPEX planning template and process. It becomes doubly challenging to manage version control, approvals, and consolidate budgets and forecasts across the enterprise. Details are easily lost in the difficult work of “assembling” the organization’s OPEX budget and accurate variance analysis becomes challenging.

2. Rigid Systems Constrict Functionality: Many organizations use FP&A tools that don’t provide the flexibility to accurately reflect underlying business assumptions and drivers. One-size-fits-all solutions restrict finance teams to rigid processes and make it hard to perform in-depth analysis and modeling, which often leads teams back to the spreadsheet-based systems the FP&A tools were designed to replace.

Many organizations find themselves “trapped” between inflexible systems on one hand and an unruly web of spreadsheets on the other. Many legacy planning tools are rigid and make it difficult to create budgets and forecast that accurately comprehensively a reflect underlying business assumptions. Configuring these tools to adapt to evolving business needs is expensive, risky, and difficult. Other organizations find themselves navigating dozens of inter-dependent spreadsheets to create a cohesive picture of their OPEX plan. They have flexibility, but they lack controls, workflow, and transparency. Understanding how OPEX planning can be configured in Power BI and Acterys gives you the ability to control your own destiny as a team and across the organization.

What OPEX Planning Can Look Like Within Power BI and Acterys

Using the right tools, your team can configure a variety of OPEX planning approaches, all within one tool, and choose the right tool for the job as needed. Different teams, departments, and business units can be supported by one centralized solution, configured to their individual needs. This approach allows you to mix-and-match variations of OPEX planning depending on what is appropriate:

1. Top-Down Allocation: Top-down planning allows your team to enter forecasted expenses at a “parent” level and allocate the value to underlying “child” levels. For example, you may enter expenses at the GL Account level and configure them to be allocated across a series of sub-accounts. This gives your team the flexibility to plan at multiple “levels”, either aggregating “upward” to or distributing “downward.” Using Acterys, you can also control the allocation methodology (how the values get distributed among child accounts).

2. Bottom-Up Planning: As the name implies, planning is done at the lowest level line-items in your data and is then aggregated upwards to generate consolidated budgets, forecasts, reporting, and variance analysis.  

3. Zero-Based vs. Incremental Budgeting: Your team can use Acterys to copy data from prior planning scenarios or from actuals to start your planning from a baseline – or you can implement zero-based budgeting and rationalize each expense on a quarterly basis.

4. Driver-Based Planning: Some components of OPEX can be more complex and require driver-based business logic. A common example of this is labor planning (HCM). HCM often involves a series of calculations to factor in salaries, payroll taxes, 401K contributions, insurance, bonuses, and more. Using Acterys and Power BI, your team can “bake in” the underlying logic supporting these calculations to streamline and standardize the inputs.

Great OPEX Planning Isn’t One-Size-Fits-All, It’s Pick-and-Choose

When designing your OPEX planning process and tools, it’s important to strike the right balance of flexibility and standardization. Your team doesn’t have to choose just one of the above methodologies to build into their processes; you can mix-and-match as needed. Importantly, you can enforce standardization across the organization where appropriate, but allow for flexibility to support business needs where needed. This ability means you can streamline your planning processes without putting burdensome constraints on your team.

Your Action Items

Get started on improving your OPEX planning by taking an inventory of how your organization does this today:

1. Is OPEX planning done differently across different departments and business units?

2. How are budgets and forecasts consolidated?

3. How in-depth is your variance analysis? Can you slice the data to identify root causes?

4. What are the underlying drivers behind your current OPEX planning? Does everyone in the organization agree on these?

5. Do your teams perform top-down or bottom-up budgeting? Would they prefer to capture more detail?

6. Do you use zero-based budgeting or incremental adjustments?

7. What would be your ideal “mix” of methods if you could pick and choose anything you liked?

Having a strong understanding of your current state can help you kickstart the important conversations needed to unlock your organization’s future state. OPEX budgeting can be a great place to start because of its central position within the organization, across departments and business units.

In the Next Newsletter

We will learn about workforce (labor) planning and HCM with Power BI and Acterys.