Understanding the Annual Planning Process

Summary

This best practice explores the annual planning process, including strategic, investment, capacity, and corporate financial planning, as well as its use within Planview Enterprise. It also makes the case that annual planning isn't enough, and that continuous ongoing re-planning, at least monthly, is vital to success.

The typical annual planning process involves long- and medium-range planning from the standpoint of strategy, investments, resource capacity/requirements, and finance. Long-range strategic planning tends to be done annually; however, more mature organizations also plan quarterly, or even monthly in order to perform re-prioritization activities to reallocate funding and resources to new demand or update new information on already accepted investments.

Long-range strategic planning is often beyond the annual planning cycle, establishing a high-level strategic outlook of 3-5 years.

The purpose of annual planning is to plan for the following fiscal year. It often begins as early as the current mid-year and is iterative in nature until final approval.

Monthly forecasting is meant to track/measure against the annual plan created for the current fiscal year. Frequent updates to actuals and forecasts keep planning relevant and adaptive. As mentioned, the annual plan should be likewise revisited frequently to ensure continued relevance.

The key with ongoing planning is that frequency drives accuracy. Paradoxically, frequent updating of estimates, forecasts, and strategies is also easier. It gets much more complex and difficult to update the more outdated the plans are.