Strategic planning model is an essential tool for business management, enabling the creation of various scenarios to assess the potential impact of strategic decisions on the company’s future. Intito’s customers like Veho have used it as a management tool to evaluate multiple strategic decisions using the IBM Planning Analytics platform.

The challenges of traditional strategic planning

Often, strategic planning is done using the planning model used for budgeting, except that the time horizon is extended. Budgeting looks at numbers at a very granular level, so it is not an ideal model for strategic planning, where a much coarser level is sufficient and changes are made with a “bigger brush”. Too much detail makes strategic planning with a budget model tedious and slow.

“Previously, Veho’s strategy model was essentially a lighter version of the budget, but it was still perceived as too heavy and cumbersome. Veho’s planning models were traditionally very driver-based. The Strategy model was streamlined to feed a few key metrics without drivers. We invested in the presentation of the strategic elements,” Markus Sahlsten, Head of Data at Veho, explains how the strategic planning works at Veho.

Read a customer story about how Veho streamlined their planning and gained better visibility into the future.

Enabling data-driven strategic decisions

A purpose-built strategic planning model makes the planning process more efficient and flexible. Instead of focusing on every detail, it is sufficient to monitor selected key indicators. Strategic decisions, which typically span 3-5 years, can be viewed from multiple perspectives through these metrics.

Usually, the first step is to create a scenario of what will happen if the company continues with the current business model. This is then compared with alternative scenarios, such as expanding to a new country or launching a new product line. Questions like, “What will our numbers look like if we expand to a new country?” and “What is the expected return in the first year?” can be easily analyzed.

The strategic planning model acts as a simplified miniature representation of the company’s business. In a strategic planning model, key performance indicators (KPIs) such as changes in revenue, sales, margins, and operating profit are typically monitored on an annual basis. The model enables management to make data-driven strategic decisions and steer the company’s business in the desired direction through easy-to-create scenarios.

The importance of flexibility in strategic planning models

Flexibility is crucial in a strategic planning model. It should easily accommodate new elements such as countries, products, or other strategic initiatives. This adaptability allows management to evaluate the impact of these changes on various KPIs from different perspectives. A robust strategic planning model also supports planning of strategic projects and adding and removing them in different scenarios as needed.

We have implemented strategic planning models for our clients using IBM Planning Analytics. In implementing the models, we aim to leverage existing short-term planning models and the calculations they contain. The goal is to help business leaders make strategic decisions by enabling them to easily build scenarios and make data-driven decisions.