Scenario Planning - Better Control During Uncertain Times 

Uncertain times creates the need for more frequent forecasts and time for analyzing and comparing different future scenarios. We give you 5 tips on how to simulate future scenarios using scenario planning. 

What is the current situation and are you ready to make a decision? 

What happens to the results of an organization if it is affected by something it can´t control and what are the consequences of the management's decisions? These are frequently asked questions by business leaders in uncertain times. However, they're expected to answer questions such as: 

  • What happens if a certain group of customers change their ordering patterns?

  • How will our revenue and results be affected by not having sufficient raw materials in production? 

  • What are the effects of a change in market prices or unexpected exchange rate fluctuations? 

  • Are we prepared for the worst with the help of cash reserves and short time working patterns ?

What prevents us from being better informed and seeing solutions? 

Working to analyze these types of questions can be known as “Scenario Planning” or “What if- analysis”. Many organizations see the benefits of using scenario planning but fear the amount of work that´s required, leading them to work with more simplistic models or making less frequent updates.

5 tips on how to simulate future scenarios

At Mercur w've observed different challenges that can appear when you simulate future scenarios and of course, we've listed solutions and tips on how to handle them more efficiently. 

Our 5 tips:

1. Ensure the accuracy of your calculations 

By ensuring the value and validation in your calculations in a structured solution for performance management & business intelligence you will remove uncertainty which could be created in, for example, spontaneous ‘on the fly’ calculations. A model built on validated tested components that´s reused is much easier to maintain, develop and troubleshoot. 

2. Automate dependencies between different parts of the model

Use standard functions for defining the requirements in your plan and it's component parts. For example, planning within the sales model should be integrated with the headcount model and in turn integrated with the expense model. By defining rules within the system, you can automate the workflow process and avoid human errors. 

3. Work with a driver based model, this way you can create a faster and more robust plan or scenario

It's very common to create a forecast by using all types of data, financial & non-financial and from different departments in the organization. Very often the forecast is created by a model that lacks logical departmental connections on how it will benefit the organization. 

Instead, work with drivers, it will create a clear and obvious business connection and allow the organization to create simulations and sensitivity analysis to allow you to act faster as any changes appears.  

In an application for performance management with functionality that allows easy changes through variables within a model, this type of driver-based analysis is easy to automate. Common variables that are the basis for recalculation of forecasts can for example be, pricelists, volumes, currencies, costs for employees etc. 

With a data driven solution which can handle large amounts of data and an unlimited quantity of variables it's possible to do comprehensive calculations without any manual intervention. This is impossible to do with a solution based on calculations or with ‘tools’ that only offer reporting and analysis.

 

4. Use analysis functions for a quick reference on discrepancies and trends

When it's time to compare different scenarios and how they differ you can benefit from using a solution that contains standard functions for analysis. The system’s functions are an enormous help when you need to present anomalies and trends, supported by diagrams, indicators or conditional formatting. When users have access to powerful analysis and the functionality to convert straight to reports you don’t need to export or create special individual reports for different needs. A critical time saving benefit.

5. Structure your work with scenario planning 

When a system user has the ability to save multiple versions of their analysis, to ensure  they select the correct version to be saved to the database they can engage peers and management within workflow to ensure they have approvals and agreement in place.

With central recalculation functions you can analyze your plan to see if any changes have surfaced within new parameters or to mathematically simulate the impact on different parts in the plan to complete the local perspective or central view. This solution makes it easy to combine the different approaches “bottom up” and “top down”. 

Scenario planning in Mercur Buiness Control

We have produced the market leading solution for performance management and business intelligence, Mercur Business Control, a solution that can easily be integrated and implemented in your organization. 

With Mercur Business Control you will get the benefit of a fast, easy, flexible and cost-efficient solution for budgeting, forecasting, reporting, analysis and strategic target management.

We have helped hundreds of leading organizations with different challenges for over 40 years.  

Contact us for more information: 

Mercur Solutions (UK) Limited - UK office

Mercur Solutions Limited
Ocean House, The Ring, Bracknell RG12 1AX, United Kingdom
+44 (0) 1344 388 025

Mercur Solutions AB - head office in Sweden

Mercur Solutions AB
Vretenvägen 13, SE-171 54 Solna
+46 (0)-459 69 00

 

Malmo Office

Stortorget 3, SE-211 22 Malmö
 

Gothenburg

Östra Hamngatan 17, SE-411 10 Göteborg

Mercur Solutions

A Swedish company with over 40 years of experience, delivering solutions for performance management and business intelligence.

  

Read Mercur Business Control Reviews on GetApp.com