Introduction: The Death of Traditional Financial Planning

For decades, financial planning and analysis (FP&A) followed a predictable cycle: annual budgets, rigid forecasts, and endless debates over why reality never matched the plan; not agile financial planning. But in today’s volatile business landscape—marked by pandemics, supply chain disruptions, inflation, and geopolitical shifts—traditional financial planning is dead.

The Business Partnering Institute’s groundbreaking eBook, Planning (As We Know It) Is Dead, reveals why old-school budgeting fails and how forward-thinking finance teams are embracing agility, real-time data, and AI-driven forecasting.

In this post, we’ll explore:

• Why traditional budgeting no longer works
• The rise of agile, driver-based financial planning
• How AI and predictive analytics are transforming FP&A
• Practical steps to modernize your planning process

Why Traditional Financial Planning is Obsolete

The Problem with Static Budgets

Traditional budgeting is slow, inflexible, and often irrelevant by the time it’s finalized. Consider:

• Months of effort wasted: Companies spend 3-5 months crafting annual budgets—only for external shocks (like COVID-19 or inflation) to render them useless.
• “Accurately wrong” forecasts: Finance teams obsess over precision, but as one FP&A leader noted, “Better to be roughly right than accurately wrong.”
• No room for agility: A rigid annual plan can’t adapt to rapid market changes, leaving businesses scrambling.

The “Next Normal” Demands a New Approach

The past few years have proven that volatility is here to stay. The eBook highlights:

“The only constant now is change, but from that challenge comes opportunity.”

Finance teams must shift from static budgeting to dynamic, real-time planning—or risk falling behind.

The Contenders: New Approaches to Financial Planning

The eBook examines three modern alternatives to traditional budgeting:

1. Rolling Forecasts

• Pros: Continuously updated (e.g., quarterly or monthly), allowing faster adjustments.
• Cons: Can become a never-ending cycle, overwhelming finance teams.

2. Driver-Based Planning

• Pros: Focuses on key business drivers (e.g., customer acquisition cost, production volume) for granular, actionable insights.
• Cons: Requires deep operational understanding and clean data.

3. AI-Powered Predictive Analytics

• Pros: Machines eliminate human bias, deliver faster, more accurate forecasts, and free up FP&A teams for strategic work.
• Cons: Adoption hurdles (trust, change management).

Verdict: The best approach combines elements of all three—agile, driver-based planning enhanced by AI.

The Future of FP&A: 3 Pillars of Agile Planning

The eBook introduces a new paradigm built on three pillars:

1. Historic Records

• Use past data to identify trends and capabilities—but ensure data is granular and unbiased.

2. Real-Time Strategic Tracking

• Monitor key assumptions in real-time. If reality deviates, trigger immediate action.

3. Predictive Analytics

• Leverage AI to forecast trends, simulate scenarios, and close performance gaps.

“If you’ve been diligent in collecting structured, granular data, machine learning can support you with the best possible predictions.”

Insights from FP&A Leaders

The eBook shares frontline perspectives from companies navigating the “Next Normal”:

Key Takeaways:

• Speed and frequency win: Companies shifted from quarterly to monthly (or even weekly) planning cycles.
• Top-down beats bottom-up: High-level, driver-based forecasts outperform overly detailed budgets.
• Trust the machine: AI-driven forecasts are often more accurate than human-made ones—but cultural resistance remains.

Quote from Tom Seegmiller (VP of FP&A, Vena):

“When the only constant is change, do you want to be tied down to a budget set once per year? Agile, driver-based planning lets you adapt in real-time.”

How to Modernize Your Financial Planning Process

1. Ditch the Annual Budget Mentality

• Start with rolling forecasts updated quarterly.

2. Adopt Driver-Based Planning

• Identify 3-5 key business drivers (e.g., sales volume, pricing, churn rate) and model scenarios around them.

3. Leverage AI and Automation

• Use tools like Vena or Power BI to automate data collection and forecasting.

4. Focus on Real-Time Decision-Making

• Shift FP&A’s role from “reporting the past” to “shaping the future.”

5. Build a Culture of Agility

• Train teams to embrace change and data-driven decisions.

The Next Big Thing in FP&A

According to the eBook, the future of planning includes:

• AI and predictive analytics: Automating forecasts and uncovering hidden insights.
• Self-service analytics: Empowering non-finance teams with tools like Power BI.
• Integrated planning: Breaking silos between finance, operations, and strategy.

Conclusion: Embrace Agile Financial Planning

The message is clear: Financial planning as we knew it is over. Companies that thrive will be those that adopt agile, data-driven approaches—combining the best of human expertise with AI-powered insights.

“Planning is nothing without an effective feedback loop to analyze, refine, and recast where necessary.”

At NeoForm, we help businesses transform their FP&A functions with cutting-edge tools and strategies. Ready to future-proof your financial planning? Contact us today.

Download the full report here or from NeoForm LinkedIn page.