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March 2013

How Last Year's Benchmarks Compare to the Latest Research


In part one, of this two-part blog series, I isolated the five characteristics of best-in-class financial planning organizations described in The State of Capital Planning Study, published in 2012. With new data from the 2013 Long-Range Planning Benchmark Study, it's time to revisit and ask, "How does the data compare to my current situation?"

Designed to isolate definitive characteristics, the new research reveals organizations should strive to improve the corporate long-range planning process. The results not only confirm what was described in 2012, but also provide insight and differences between successful organizations and those that struggle with the long-range plan. Here are some key findings from the research:

  1. Nine out of 10 companies with a highly integrated process create long-range plans that are well aligned to the corporate strategy.
    Take a tip from those organizations that are successful with their long-range planning. Integrating strategic and long-range planning with individual capital projects and initiatives is more likely to produce better long-range plans, enabling a company to make better long-term decisions on its capital projects and major initiatives. Furthermore, the data shows that 85% of companies with integrated long-range planning and annual budgets are more likely to have a more effective capital planning process.
  2. Sixty-seven percent of respondents rely on technology that is fundamentally incapable of supporting and ensuring accurate and timely data.
    More than half of the 200-plus organizations that responded to the survey are using spreadsheets. We know that while spreadsheets are indispensable for many finance-related tasks, they do not work well for long-range planning as they have inherent technological inadequacies.
    Perhaps more important, are the study responses that address the impact of access to accurate data during the long-range planning process. Companies plan and set a baseline of expectations can measure objectively against reality. The variances ‒‒ enable executives and managers to spot issues or opportunities that must be addressed. How quickly companies can react when variances appear has an impact on their ability to execute. The data provides a clear correlation between the time it takes to get answers and the quality of these decisions. It's common sense that corporations with shorter decision loops are better able to adjust and succeed.
  3. There is a direct correlation between the software a company uses and its ability to implement long-range plans effectively.
    The effectiveness of the software a company uses has a direct impact on its ability to do many of the important tasks related to the long-range plan. For example, contingency or what-if scenarios are critical to assessing alternatives and understanding the implications of specific choices. The ability to translate a set of assumptions into a detailed set of outcomes quickly goes a long way and provides executives with a clear understanding of the attractiveness of a various course of action.

Executive Communication

Long-range and strategic planning is, by its nature, an executive function. Communicating vision and tying it to specific actions and initiatives are important. Yet the research in 2012 and current findings show that too few executives are communicating effectively. According to the 2013 data, executives may think they are leading by communicating vision and goals but in reality, 73% are not.

It is also interesting to note that people in charge of running the long-range planning process are much more likely to say that their executives communicate strategy well. The analysts concluded that this is probably because those individuals are closer to the informal channels of communication among senior executives.

To quote Robert Kugel, SVP of Ventana Research and chief researcher of the study:

"The point here is: don't kid yourself and don't judge the effectiveness of commutations by how well the inner circles understand the strategy. It's only working when everyone is on the same page. Good communication of strategy promotes success. Almost all companies with good executive communications have a long-range planning process that is well aligned to their strategy compared to just 30% of those that do not communicate well or at all."

Beyond an ability to communicate, executives ultimately own how an organization will operationalize corporate strategies into specific investments. The effectiveness of technology systems that directly contribute to corporate success should be of paramount concern. With the, State of Capital Planning Study and the new Long-Range Planning Benchmark Study, we have two years of hard data to back up why change and investment is warranted.

To learn more about the new benchmarks download your complimentary copy of the executive summary.

Related posts: Getting Your Executives Involved in Long-Range Planning -- Part 1

Are Your Limited Resources Focused on the Right Opportunities? [Infographic]


Revealing the Global State of Resource Management and Capacity Planning in a New Benchmark Study

Unfortunately, many organizations can't answer the question in the title of my blog post. Can you?

This is an ideal time and opportunity to benchmark your organization's capabilities and maturity level in terms of resource management and capacity planning. I've had the pleasure to be the chief researcher on the most comprehensive study ever on resource management and capacity planning at complex, global organizations. With more than 600 participants from more than 17 countries, we've identified the state of their organization through the lens of a maturity model, designed for specifically for this research (2013).

2013 Resource Management and Capacity Planning Benchmark Study InfographicAnd what did we find?

Many organizations are continuing to operate in a state of chaos or limited visibility into what their resources are working on today and what they are available to do tomorrow. A third of organizations have achieved some level of visibility but have to continue to significantly improve productivity; and a third of organizations have made good, steady progress to truly gaining control and optimizing their resources. It is this top third, or even the top 5% of truly optimized organizations, that have some very interesting characteristics and best practices that all organizations could follow to intentionally move up the maturity spectrum (2013).

Here is a brief look at some of the findings of the study (2013). Get your copy of the Resource Management and Capacity Benchmark Study today.

  • 80% of organizations are using shared resources and often in multi-country, dispersed locations to deliver projects, products, and services.
  • The top business risks are "lost productivity" and "remaining in crisis mode." The risk of remaining in crisis mode reduces by half or more as organizations move up the maturity spectrum. "Delayed time to market" is also a key risk of not addressing these areas.
  • The top pain point is "constant change," followed by "not enough visibility into capacity," and "ineffective demand prioritization." Lower maturity organizations have less insight into demand making project prioritization challenging.
  • Two-thirds of organizations are in low to mid-tier maturity brackets.

Software is used by mature organizations; lower maturity organizations tend to rely upon spreadsheets and basic project.

The study warns if organizations do not get control of their resource management and capacity planning challenges they risk lost productivity, not leveraging resources for high-value projects, losing time to market and basing decisions on bad data (2013).

This is just a glimpse into the findings of the study. The report provides a deeper look into the characteristics and best practices of higher maturity organizations. There are a host of tangible recommendations to intentionally address these areas more proactively. In the words of one of the participants, the best way to improve is to "just do it", start small, and find pockets of success and then continue to address these critical areas of resource management and capacity planning. The research shows that organizations that have graduated from chaos into control are addressing much more strategic, competitive business decisions versus wondering (or hoping) that their precious resources are working on the highest priority opportunities.

I'd like to hear from you. How do you ensure your resources are working on the right work? Post a comment or ask me a question pertaining to the research by leaving a comment below.

Carlson, M. (2013). Resource Management Capacity Planning Benchmark Study. Planview.