EPM Benefit: Dynamic Scenario Planning
Traditional strategy tools have become unreliable, often unable to capture and incorporate industry and organizational complexities or market volatility. By the same token, traditional planning cycles are no longer relevant or appropriate for the current business world.
For these reasons, companies often fail in predicting crises—or they simply make bad decisions because they lack the technological solutions that can interpret their vast amounts of data. Without a system in place that can analyze and synthesize information, models, and complexities from across an organization, the generation of accurate forecasts is nearly impossible.
Enterprise Performance Management solutions allow for dynamic scenario planning, which means that companies can quickly build scenarios, adjust plans, and make better strategic decisions for both the present and future. This is particularly critical for companies in volatile markets like energy, where companies face distinct short-term and long-term risks associated with fluctuating oil prices.
Jorge Leis and Mark Gottfredson wrote in a brief by Bain, ”Imagine if you could have seen North America’s shale gas phenomenon coming years ahead of the competition. What might you have done differently?" They go on to say, “Executive teams can extract insights by comparing multiple, plausible futures and defining signposts to support better, real-time decision making, with the benefit of clearer, longer-range visibility.”
Through EPM tools, you can easily overcome the shortcomings associated with traditional strategic planning. You can model and analyze plans based on multiple possible futures, as well as test a plan against both short- and long-term scenarios. In these ways, you’ll identify key risks and gain enhanced capacities to interpret and respond to change. Your overall strategy will gain robustness and optionality, and you’ll have a ready and well-informed contingency plan in place.
Managing the unprecedented uncertainty in global energy markets requires a flexible approach and the ability to alter tactics as market conditions change. By using EPM software for dynamic scenario planning, you can maximize long-term value creation while avoiding expensive mistakes in the short term.
Contact Altius to learn more about how you can leverage EPM software and start dynamic scenario planning today!