Deloitte Thailand: Strategic Planning and Business Forecasting in Uncertain Times

Businesses nowadays not only tackle economic slowdown but have to create value for stakeholders, from employees to customers to social and environmental advocates. The capability to accelerate value creation is critical. However, we often notice missed opportunities that result from a focus on risk aversion and stabilization rather than creating value. Strategic planning and business forecasting can help the management execute such value creation goals.

Even though the Bank of Thailand predicted that Thai economy would grow at 2.4% in 2023 and in the range of 3.2% – 3.8% in 2024, the recovery seems poisoned with uncertainty environments including tightening monetary policy, unsustainable government policies (high public deficits), global economic slowdown, geopolitical conflicts, and rising bubbles in bonds & loans & real estate prices. These uncertainties of the business environment complicate efforts to build accurate forecasts and develop effective strategies. 

Traditional planning and forecasting methods don’t seem able to grasp the blurred outlook. These old methods are too narrow and linear to deal with such uncertainties. Many of them rely on outdated assumptions, hampered by inflexible processes that make it difficult to respond with the necessary speed. This is not very reassuring when we are facing such fundamental uncertainty. And as a business, how do you swiftly adapt your operations and strategy to this constantly shifting context of very different, yet equally possible future scenarios? Planning and forecasting processes need to adapt and must be embedded within any strategic changes implemented across organizations. Although most business leaders understand that effective planning and forecasting involves integration processes for connected functions, major roadblocks remain including disconnected systems, lack of standardized process, organizational structure, and management commitment as well as lack of collaborative culture. 

Connected planning is the process of integrating the plans across functions to enable improved insights, and reduce information silos. It can benefit an organization in improving accuracy of their forecast and providing efficiency gains.  Our survey results indicate that there is a strong positive correlation between the number of functions connected and the accuracy of the forecast. Additionally, an increased number of connected business functions will ultimately result in a more accurate forecast. To enable connected planning, businesses should have a single set of the truth data that allows organizations to link operation and financial data, collaborative ways of working across different planning functions, and alignment of processes across the organization, including planning calendars, business drivers and business hierarchies, as well as where appropriate, leveraging cloud-based tools and technologies to help connecting. 

Scenario forecasting accounts for different plausible futures to help anticipate a wide range of possible outcomes. Based upon discussion with business leaders, we are seeing increasing focus on building scenarios and thinking through their implications on the business. We suggest businesses think about multiple futures. It is crucial to understand that such a broad scope of projections is not a traditional linear forecast between worst-case and best-case. Several scenarios have a reasonably high probability of materializing. Forecasting is not about getting rid of uncertainties but about dealing with them. Precisely define these scenarios, characterize the threats and the opportunities they represent for your business and quantify their potential impacts. 

Once we have detailed the scenarios and financial impacts, we can develop appropriate action portfolios for value creation: operational and financial impacts, investment and timeline will be identified and prioritized. To make the action portfolio more responsive, specific triggers or thresholds can be assigned to individual actions. We experience that recently identified action portfolios for unlocking value involve cost management to improve margin and data-driven to grow revenue. 

Cost management isn’t about squeezing out greater cash flow or drastic cuts that damage a business. We have witnessed recent instances in which aggressive traditional cost management programs affected market share, product development, and competitive positioning, which often run counter to the intent of value creation. The goal of value creating cost management is to find a better way to seek out the cost advantages that come from more fundamental changes in how a business operates. Once you have a clear view of potential threats and the opportunities, it’s time to determine the path you will take from the starting point of making a business model assessment – where you stand in terms cost competitiveness, what should be changed and what should be preserved – up to the point of reaching that final state that imagine. Prioritized actions depend on a company’s size, maturity of cost modernization, and appetite for longer-term investment. 

Data-driven growth is about driving sustainable revenue growth by leveraging data-rich environments. While it commonly seems fundamental that data is virtually important, it is still questionable whether we treat it that way. Not all data is equal in importance, but it should be equal in usability. Data should address strategically identified needs—such as financial, operational, sustainability or whatever we value—based on industry and operations. Newly accessible data sets and analytic capabilities are now important for their ability to inform strategic decision-making and for providing new channels for customer engagement and acquisition. The ability to fully leverage big data gives organizations the agility and efficiency to uncover and monetize new market opportunities, especially across digital channels. Clustering of customer data provides better understanding of what customers want. This infusion of data into sales, marketing, and even product development can lead to increased opportunities to penetrate new markets, cross-selling and improve customer experiences.