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It wasn’t long ago that scenario planning was low on the crowded priority list for finance teams. Getting by with one baseline scenario and mapping out a couple of different cases during annual planning wasn’t just acceptable — it was the norm.

But that changed during the 2020 pandemic.

Suddenly, businesses faced a heightened degree of uncertainty on a daily basis and scenario planning became one of the highest priorities for finance. And now, your stakeholders and business partners are left wondering — why haven’t we always been using scenario analysis to see around corners for our company?

Making scenario planning an agile process in your org is a great way to elevate your strategic role. But outdated systems and processes can halt your scenario analysis exercises and limit your ability to bring strategic insights to the business. If you want to be a true strategic partner to your executives and department leaders, it’s time to upgrade your scenario planning and analysis tools.

Table of Contents

What Are Scenario Planning Tools?

Scenario planning tools are software solutions and systems that enable finance teams and their partners to project the possible futures of given scenarios and understand different growth paths.

Scenario planning tools typically fall under the umbrella of financial planning and analysis software. Compared to spreadsheets (the most traditional scenario planning tool), these tools give you more flexibility to tweak models to reflect future scenarios that the business cares about.

But when you’re talking about a broader scenario planning toolkit, you shouldn’t limit the list to just an FP&A tool that enables scenario analysis. You should also factor in the adjacent source systems that impact the process.

The Benefits of Using Scenario Planning Software

The most fundamental question about scenario planning tools is whether you should stick to spreadsheets or implement some sort of scenario planning software.

While spreadsheets are the tried-and-true solution for any financial analysis use case, they’re far from perfect. And if you’ve spent enough time building and duplicating models and aggregating data for analysis, you already know the shortcomings. Version control, manual processes, collaboration, data integration, and the likelihood of human error are all common weak points for spreadsheets — no matter what process you’re talking about.

Scenario planning software tries to solve for these spreadsheet shortcomings without sacrificing the modeling and analytical capabilities you expect. Here are a few of the benefits you can expect from implementing scenario planning software.

Automated Data Aggregation

One reason scenario planning processes haven’t traditionally expanded beyond annual business planning is the sheer amount of time it takes to aggregate and clean data from your source systems. When you’re doing everything in spreadsheets, each new scenario calls for a new round of data pulls and extensive effort to update your model.

Scenario planning software integrates directly with your source systems so you’re always working with the latest actuals. If 80% of your time used to be spent on manual data manipulation with 20% left to actually analyze the data, scenario planning software can flip that script and help you focus your time and energy on gathering insights that matter.

Simplified Scenario Building for Strategic Planning

Scenario planning software makes it easier to actually build scenarios by providing granular controls for duplicating models. Instead of copying an entire spreadsheet or tab and tweaking every individual variable, scenario planning software allows you to duplicate a model with just a few clicks and automatically lock any necessary assumptions.

Then, because the data and model components are all connected by the underlying architecture, you can make changes in one model and apply them across different scenarios or pieces of the model. For example, you can make changes in a headcount planning component and automatically push them to relevant scenarios to quickly see the potential impact.

Intuitive Output Visualizations

Finance’s role in scenario development and planning doesn’t stop short at building, rebuilding, and tweaking financial models. Perhaps more important is the process of translating what you see as outcomes from your models into terms the business can understand. But when your processes are based in spreadsheets, it takes long enough to finalize the models, let alone find time to build intuitive visualizations.

Scenario planning software can automatically generate visualizations for model outputs and help you compare different scenarios side by side. Automating visualizations means you spend less time manipulating data and more time crafting the narrative of your insights to present to business partners.

Easily Track Progress to Goals

Budget variance analysis can be time-consuming enough when you have just one scenario to work with. It gets even more complicated when you’re trying to track your progress toward goals across multiple scenarios in multiple spreadsheets.

FP&A software with scenario planning capabilities can help you run budget vs. actuals reports in real time, so you can keep stakeholders aligned even as business conditions change. And because it only takes a few clicks to generate a BvA report, you can track progress for as many scenarios as necessary to keep your business on track.

This software also enables you to align your entire business around a set of FP&A best practices — and ensure that they’re implemented effectively.

Top 4 Types of Scenario Planning Tools for More Effective Analysis

Effective scenario planning and analysis doesn’t necessarily come down to whether or not you’ve implemented one perfect software solution.

Rather, success is more about your ability to build a complete scenario planning toolkit. Beyond choosing the right scenario planning tool, you’ll want to make sure you also have your source systems set up properly to support agile scenario analysis.

As you build out your ecosystem of scenario planning tools, here’s what you should consider.

1. Scenario Analysis & Planning Software

While Excel has been the de facto standard for this slot for decades, you already know its weaknesses and the benefits of embracing modern scenario analysis software. But what should you look for in scenario analysis software?

Instead of trying to find a niche solution just for scenario analysis, focus instead on finding financial modeling software that has strong scenario planning capabilities. If that’s your approach, there are two sides of the market you should look at — the small and midmarket players and the traditional enterprise players. Here’s a rough breakdown of tool comparisons.

financial modeling software comparison chart
Comparison chart of small, midmarket, and enterprise financial modeling software

The Mosaic Strategic Finance Platform blends enterprise-level power with the simplicity and ease of use of small and midmarket solutions. And with it, you can build new scenarios in less than three minutes.

2. Enterprise Resource Management Platform (ERP)

It may seem strange to list an ERP system as one of your scenario planning tools, but it’s a critical source system for the process. Your ERP is the source of truth for all expense data. It feeds scenario analysis software like Mosaic with the latest actuals from your business so you can automatically roll models forward.

But if your ERP data is messy or you haven’t correctly set up department tagging, you’ll be limited in the granularity you can achieve with your financial models. Get the granularity right and you’ll be able to lean on the ERP to help you see:

  • Trends in historical spend by department and account category to sense check model assumptions
  • Recognized revenue to better understand cash flow at different points in time
  • Burn rate data from cash inflows and outflows to build a foundation for understanding cash impact of plans

The key to clean ERP data is having a solid chart of accounts structure. Follow our guide to set yours up and make sure your scenario planning gets the foundation it needs to succeed.

3. Customer Relationship Management (CRM) System

Much like the ERP, your CRM is a critical source system that could make or break the effectiveness of any scenario planning process. It’s the source of truth for all sales and customer metrics, which means it will be a key driver in any aspect of your model’s top-line component. Revenue forecasting is the most critical use case for scenario planning, so the CRM has to be considered as a scenario planning tool.

Clean CRM data will help you build scenarios around revenue planning questions like:

  • What if we hired 10 new AEs next year instead of 5? What would our revenue look like?
  • What’s our average annual contract value (ACV), and how would an increase impact revenue goals?
  • What’s our historical attainment percentage and how long does it take new reps to hit it?

But CRM data is notoriously messy, making it difficult to get reliable answers to these critical scenario planning questions. Make sure you nail down your CRM setup and go through any necessary historical clean up so you’re feeding your scenario analysis software with the right information.

4. Human Resources Information System (HRIS)

Aside from revenue forecasting, headcount planning is the most common area to focus on in scenario planning because it accounts for as much as 70% of SaaS expenses. You know headcount is a major lever for your business, and even small tweaks can have a significant impact on cash runway. That’s why your HRIS plays such an important role in scenario planning.

As a company grows and evolves, the HRIS has to be the source of truth for all employee-related data. From employee salary data to insights regarding internal job mobility, the HRIS holds key information that will fuel assumptions in your headcount plans. Minor errors or miscalculations here could have major negative implications for your scenario models.

Want to learn more about getting your headcount data set up properly? Check out our episode of The Role Forward with Enrique Esclusa, Co-Founder of Assemble.

What Sets Mosaic Apart as the Best Scenario Planning Tool?

Mosaic covers all the bases of a scenario planning tool and financial modeling software that we discussed above. But there are two features/benefits in particular that make Mosaic stand out from the crowded market of FP&A software specifically for the scenario planning use case.

  • Direct integrations. Mosaic offers 30+ direct integrations with the most popular CRM, HRIS, ERP, and billing systems on the market. Unlike other tools which require CSV uploads for these systems, Mosaic’s direct integrations ensure you’re always working with the latest actuals when it comes time to build new scenarios. This real-time visibility saves countless hours that you’d otherwise spend pulling data from these systems and organizing it for your models.
  • Output analysis. Unlike other tools, Mosaic helps you see the impact of changing assumptions in real time by automating data visualizations. After you build your scenarios, you can easily put the outputs side-by-side to see how the changes you made impacted operational and financial performance. Bridging the gap between modeling and analysis is a critical feature for scenario planning processes because collaboration with business partners is so critical to success.

These are just two of the ways Mosaic can save you time and increase your strategic value to the business. But by unlocking them, you’ll be able to turn scenario planning from a tedious once-per-year exercise into an agile initiative that empowers more informed decision-making and strategic planning across your organization.

Want to dive deeper into how Mosaic works as a scenario planning tool? Reach out for a personalized demo.

Scenario Planning Tools FAQs

What is scenario planning software?

Scenario planning software is a subset of the broader financial planning and analysis software market. These tools enable finance teams to duplicate financial models to tweak assumptions and inputs so they can forecast different possible outcomes for the business.

Is Excel scenario planning software?

What is scenario management?

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