Traditionally planning activities have been confined to preparing budgets that act as a control mechanism over employee decisions. A fixed budget not only inflexible and constrains decision making to opinions made in the past, but it also fails to provide employees with incentives to look for new growth opportunities. In addition, planning is an expensive activity: a benchmark study from The Hackett Group, a consulting firm shows that the average company invests more than 25,000 days per year per with $1 billion of revenue on planning and performance measurement process. Further, inefficient planning and performance measurement processes can consume at least 20-30 percent of senior executive and management time. The cost of this tied-up human capital is straightforward to calculate, but the strategic costs, or rather the opportunity costs for these companies, is much more difficult to determine and could possibly be much larger.

This is why the trend today for many companies is to engage in strategic planning activities involving not only finance but also operational, sales and human resource departments. The abililty of decision makers to realign capital and resources in response to competitive threats or macroeconomic shocks or in order to exploit competitive advantages in a market (rather than being constrained by a fixed budget) greatly improves overall performance of the firm and satisfies the objective of increasing shareholder value.

Talk to Avartis today about how we help refine, optimize and align strategic, financial and operational planning activities to maximize value creation within your organization.