- Is the annual business planning process critical to your EPM process?
YES – 90% / NO – 10%
- Is your company’s annual target setting process Top-Down or Bottom-Up?
Top-Down – 60% / Bottom-Up – 40%
- Is your company’s Tactical Plan (Short-term ~ 3 to 5-year) managed differently than the Strategic Plan (Long-term ~ 5 to 10-year)?
YES – 60% / NO – 40%
Risk: Potential for Misalignment between Short- and Long-term strategies, including Key Assumptions and Metrics.
The annual short- and long-term business planning processes are important tools in EPM.
Characteristics of Top-Down Annual Business Planning Process
- Centrally developed short- and long-term business plans are issued to the company’s operating and support service organizations
- Usually involves fewer decision-makers in senior management and the process may require less time and resources to complete
Characteristics of a Bottom-Up Annual Business Planning Process
- Budget planners from each operating and support service organization develop short- and long-term business plans after being provided guidance regarding the key assumptions (E.g. sales forecast, input prices) by company headquarters.
- Target setting is performed at lower levels of the organization resulting in wider ownership of the plan and greater transparency in the process
- May require several iterations of the plans to achieve alignment between plan owners and senior management.
EPM’s impact on the organization
Ultimately, EPM is not just about the numbers, but also about monitoring and managing the impacts of the performance management framework on teams of people throughout the organization who tasked with delivering on its strategies, plans, and objectives.