Strategic Planning Software - Business Budget Software

Strategic planning software is a category of software that covers a wide range of strategic topics, methodologies, modeling and reporting. Loosely speaking, the software can be categorized into the following types:

1. Small business oriented strategic and business planning. Here, the focus is primarily upon developing goals, a business plan and a financial projection.

2. Execution oriented software, e.g. Kapta and Achieveit that is focused more upon cascading the implementation of strategic plans and is often similar in functionality to project portfolio management, agile and project management software.

3. Large business oriented strategic planning software. This particular category is often customized by a company and may consist of multiple elements that can cover a wide range of requirements. Word processing and spreadsheet templates are common in this area. Consolidation is often a critical aspect of this domain with a variety of enterprise software, OLAP (On Line Analytical Processing or multi-dimensional spreadsheets) and databases used. ROLAP combines relational and multi-dimensional capabilities. In recent years, reporting software has gained the label, Business Intelligence or BI software. Dashboards, first made popular by the idea of the Balanced Scorecard are common means of reporting on multiple dimensions of ongoing performance.

4. Scenario planning software. While a small category, software for supporting scenario analysis does exist. It tends to be relatively simple in nature due to the belief of many scenario facilitators that scenarios should be more stories than numerical models. Currently (2013 on), there is an emerging trend of using modeling to support and analyse the consequences of particular scenarios.

5. Simulations and war-games. It may seem strange to include computer simulation and war-games as strategic planning software. The rationale however, comes out of both military strategic planning and also the emergence of strategic management as a concept in the 1980s. The assumption behind strategic management was that separation of planning from execution was ineffective, so strategic planning should be devolved in the organization to those who would executive. Simulations and wargames became a way of sharing knowledge about markets and provide a cognitive frame for decision making.

6. Predictive software and models. There is a long history in strategic planning of the use of predictive models. In the 1970s, the Strategic Planning Institute collected data on the performance of business units at its subscribers. The resulting Profit Impact of Market Strategy (PIMS) model was very influential with its key insights about the value of having highest or second highest market share in improving profitability and return on equity. Harvard Business School professor, Michael Porter's influential book, Competitive Strategy was based upon this data. NewProd and DanProd, based upon the research of Robert Cooper, a new product researcher at McMaster University developed and commercialized a regression model that correlates .8 with new product success based upon over 3,000 new product launches. Advia New Product, developed by the now defunct, Alacrity Inc. and its co-founder, Mary Chung, provided a phased a set of new product development templates with expert system for evaluating whether a new product should proceed to the next stage.

7. Expert system based strategy evaluation systems. The first, managerial expert system, Alacrity was developed by Allstar Advice Inc. in 1985 and 1986 and launched in 1987 by associated company, Alacritous Inc. which later changed its name to Alacrity Inc. It contained what was probably the most comprehensive strategic planning functionality ever developed for an off-the-shelf packaged software product. It contained a 3,000 rule expert system that used concepts of market life cycle, Porter 5-Forces model, Utterback and Abernathy innovation models, generic strategy, and learning curves to make predictions about market evolution. Additional functionality included business and strategic planning templates, product/business unit portfolio analysis, financial modeling of income statements, balance sheets and cash flow with an attached financial expert system. The same company also launched a small business planning system, Advia Decide and Manage which is no longer available.

8. Packaging of major consulting firms' methodologies for strategic analysis as a component of the strategic planning process. The examples are typically narrow in focus and don't encompass a full set of planning, execution and monitoring processes. Examples include Stella and iThink based upon Peter Senge's book, The Fifth Discipline, BCG Matrix for Brand Portfolio Analysis Net Promoter Score software, Management Software Associates' Competitive Strategy (which modeled strategic cost drivers such as learning curves, impact of scale, impact of complexity, economies of scope and value), Portfolio Analysis and New Product Modeling using viral models.

The Initial Vision of Strategic Planning Software

The initial concept behind strategic planning software was the product of two different trends.

First, in the 1980s, the increasing availability of personal computers lowered the barriers to software development and made computers increasingly available to more managers. But it's worth remembering that even in 1987, selling strategic planning software often required selling a manager a computer and training them how to use productivity software (i.e. word processing, spreadsheets, graphics, outlining, etc.) Laptops were initially nonexistent and the state of art in portability was a sewing machine sized luggable computer. Previously, report creation often required hand writing or dictation which was then typed up by a secretary or word processing pool.

Second, in the early days of strategic planning concepts were few. Concepts typically included decentralization (e.g. formation of strategic business units or SBUs), relatively simplistic portfolio analysis (e.g. BCG dogs/stars/cash cow/"?" categorization), and were frequently capital and operating budgeting oriented. As a result, strategic planning software was relatively simple to create via word processing templates, graphical outputs and budgeting models.

In this approach the vision was to create a computer application that aids in a strategic planning process. The user was to be guided through the steps of the planning process. The process of guidance existed at several potential levels: (1) the furnishing of templates with categories of information that ought to be created, which implicitly suggests analysis, (2) help systems that educate users about definitions, processes, concepts, managerial models, (3) more workflow oriented interactions where inputs are manipulated, summarized or aggregated by the software. Software of this type may use questionnaires, categorical judgments, financial or market modeling and in rare cases rule based expert systems.

As a general rule, off the shelf applications are rarely successful except for relatively unskilled entrepreneurs lacking a formal business education, which perhaps accounts for the software's lack of commercial success. The most commonly used strategic planning tools and techniques tend to be relatively simple and the models used have a high level of abstraction requiring diligent interpretation and modification by participants. Systems that promise answers, e.g. rule based systems often create more value from the questioning process than from the actual answer produced in the same way that planning as an activity educates users and this education is often more important than the actual plan itself.

SWOT analysis (strengths, weaknesses, opportunities, threats) is a good example of a heuristic that is useful but also easy to misapply. Cascading of action plans makes intuitive sense but is frequently done in such a way as to demotivate employees. Because of the difficulty of combining strategic planning, strategic management, portfolio management, information technology strategy's congruence with business strategy, implementation monitoring, scenarios and contingency planning, risk analysis, Balanced Scorecard specifically and dashboards generally, the strategy process tends to be difficult to deal with comprehensively in a single software package. In large companies, the constant tends to be that the financial function ends up with significant influence over the process because of the requirement to report to the Board of Directors and manage capital and operating budgets.

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Agile Planning and Strategic Management

One of the current trends in strategic planning is the adoption of agile or lean methodologies. By their very nature, agile methodologies tend to be strong on emphasizing employee accountability and less interested in documentation. The emergence of agile in technology areas parallels the transformation of strategic planning to strategic management. Excessive documentation becomes an obstacle to revision as new information is gained about competitors, customers, distributors and suppliers. Agile's importance is driven by the faster rate of technology innovation, the lower cost of developing applications, the increase in the number of companies and individuals with similar capabilities, and faster learning from markets.

An excellent example of an extremely well specified agile methodology is Scrum. Scrum falls into the category of a methodology for autonomous work teams. Scrum approaches are now expanding outside of its initial application area in software development to other areas of business. However, Scrum tends to limit itself to prioritization rather than more traditional strategic planning processes. Unlike traditional strategic planning which was frequently tied to the annual budgeting process, Scrum is more iterative. Scrum projects have daily, iterative phase or "sprint" planning, and release planning which represents something akin to multi-generational product or strategy plan.

Traditionally, strategic planning was done 3â€"6 months prior to the beginning of the budget year, which ensured that decision making lagged market trends. Strategic management where the strategic planning process was pushed down in the organization has tended to follow this approach, the new variable being the accountability for both plan development and execution. Agile and more project oriented approaches work well in start-ups that lack the bureaucracy of larger companies, but they too always run into the issue of updating operating and capital budgets, along with risk profiles.

Supporting software for Scrum is available from multiple vendors, e.g. Rally Software. As of 2014, these pieces of software tend to be oriented on prioritizing product features (i.e. use-cases, user stories), prioritizing (grooming user stories) and iterating development in phases. They tend to be weaker when handling architectural issues, portfolio analysis and large numbers of autonomous teams.