A large media company’s new CFO together with the finance, planning and accounting team leveraged SAP Analytics Cloud to complete new interactive scenario-based discussion of the long-term plan with the board of directors.
The base case plan and key planning organic and inorganic mergers and acquisition growth scenarios were set up so that input variables (such as macro-economic indicators, cash flow and allocations) could be adjusted in real time, based on feedback from the board. This allowed the board to immediately visualize impact upon a set of output KPIs including revenue and expense growth rates, EBITDA and margins, adjusted earnings per share, share price, market capitalization, price/earnings ratio and leverage ratios.
This new scenario-based process accelerated the alignment among the board, the C-Suite and the business unit leaders on the long-term strategic plan and prioritized investment decisions.
Dealing with certain uncertainty
While economic conditions may improve over time, some things are likely to change permanently. Many aspects of doing business – from managing customer and supplier relationships to maintaining adequate levels of liquidity to predicting levels of demand – may be very different from the way they were pre-crisis. Old ways of financial planning, forecasting and analysis may disappear as well. The scenario planning process can help companies identify opportunities and can serve as a guide to outmaneuvering this certain uncertainty.