The Impact of Business Intelligence on

Financial Planning, Budgeting, and

Forecasting
Aiding Insight and Confidence

October 2013
Nick Castellina
 October 2013
The Impact of Business Intelligence on Analyst Insight
Financial Planning, Budgeting, and Aberdeen’s Insights provide the
Forecasting: Aiding Insight and Confidence analyst’s perspective on the
research as drawn from an
In Aberdeen’s Financial Planning, Budgeting, and Forecasting: Removing the aggregated view of research
surveys, interviews, and
Hurdles, 43% of respondents noted that the top pressure facing
data analysis.
organizations in their quest for forecast accuracy is market volatility. In a
constantly changing environment, organizations need to be armed with
immediate access to all pertinent information to alter plans and forecasts to
ensure that they reflect current business conditions. Additionally, 21% cited
an inability to trace business success to its key components. Maybe most
damning, 30% of survey respondents noted that too many of their business
decisions are based on inaccurate or incomplete data. They saw this fact as Aberdeen Methodology
a top pressure influencing them to factor analytics into planning, budgeting, The Aberdeen maturity class is
and forecasting. Business Intelligence (BI) and predictive analytics are tools comprised of three groups of
that can have a significant impact on the planning, budgeting, and forecasting survey respondents. Classified
processes due to their ability to access more robust data to decision- by their self-reported
makers in the face of the challenges referenced above. This Analyst Insight performance across several key
will examine the adoption rates of BI and predictive analytics as well as metrics, each respondent falls
illustrate the capabilities that these technologies enable organizations with into one of three categories:
and their impact to the bottom line. √ Best-in-Class: Top 20% of
respondents based on
performance
The Keys to Data-Driven Forecasts √ Industry Average: Middle
Accuracy and agility are essential in planning, budgeting, and forecasting. 50% of respondents based
When forecasts are consistently accurate, business leaders can have more on performance
confidence when making decisions and investments to guide the √ Laggard: Bottom 30% of
respondents based on
organization, as they have a good idea of how the organization will perform
performance
in the coming months. Agility is essential because volatile markets make it
difficult for forecasts to reflect current business conditions. Therefore, Best-
in-Class organizations are more likely than All Others to implement Sometimes we refer to a fourth
category, All Others, which is
technology to enable both data access and the ability to utilize data to make
Industry Average and Laggard
predictive decisions (Figure 1). Fifty percent (50%) of Best-in-Class
combined.
organizations have implemented an enterprise-level BI solution in
comparison to 28% of All Others. These tools provide data in an easily
consumable format so that employees can find and utilize the data they need
to make decisions. The Best-in-Class are also over twice as likely as All
Others to have implemented predictive analytics. This technology helps to
convert BI data into forward-looking forecasts.

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group’s methodologies provide for objective fact-based research and
represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc.
and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.
The Impact of Business Intelligence on Financial Planning, Budgeting, and
Forecasting: Aiding Insight and Confidence
Page 2

Figure 1: Best-in-Class Technology Adoption

How Do You Rate?
Percentage of Respondents, n = 214

Best-in-Class Industry Average Laggard

60% In the report, Financial Planning,
50% Budgeting, and Forecasting:
50% Removing the Hurdles,
40% respondents were ranked on
29% the following criteria:
30% 25% 26%
√ Percentage of financial
20% 14% reports delivered in the
9% time needed for
10%
decision-making:
0% Best-in-Class – 94%,
Enterprise BI Predictive analytics Industry Average – 76%,
platform Laggard – 58%

Source: Aberdeen Group, January 2013 √ Percentage that actual

costs are within
Implementing these technologies enables organizations to better utilize data budgeted costs (above or
in planning, budgeting, and forecasting. Compare organizations with BI to below):
organizations without BI. Those with BI are more likely to be able to Best-in-Class – 3%,
incorporate business drivers in the ongoing forecasting process (Figure 2). Industry Average – 9%,
Laggard – 20%
Therefore, they are better able to understand the performance metrics that
affect the organization, as well as their potential impact. Rather than simply √ Percentage that actual
projecting a standard percentage increase for sales, business leaders can revenue is within
instead integrate some real knowledge into the process. As an example of forecasted revenue
how BI helps to impact an organization’s ability to integrate business drivers, (above or below):
note that 68% of organizations with BI have the ability to identify Best-in-Class – 2%,
performance by product line, sales person, or business unit. Industry Average – 10%,
Laggard – 22%
Figure 2: Best-in-Class Can Better Utilize Data
Business Intelligence No BI
Percentage of Respondents, n = 214

78%
80%
68% Fast Facts
60% 54%
45%
51% 53%
√ Organizations with BI are
40%
40%
35% 49% more likely than those
without to have alerts based
20% on internal events that can
be used to trigger changes in
0% the forecast
Ability to incorporate Ability to identify Ability to perform Ability to perform
business drivers into
the on-going
performance by “what if” scenarios profitability analysis
product line, sales and change analysis
√ Organizations with BI are 2.5
forecasting process person, or business times as likely as those
unit without to have alerts based
Source: Aberdeen Group, January 2013
on external events that can
be used to trigger changes in
When it comes to thinking ahead, organizations with BI are 51% more likely the forecast
than those without to have the ability to perform “what if” scenarios. These
organizations can mix and match different potentialities and include them
within forecasts. For example, are certain products more profitable than

© 2013 Aberdeen Group. Telephone: 617 854 5200

www.aberdeen.com Fax: 617 723 7897
The Impact of Business Intelligence on Financial Planning, Budgeting, and
Forecasting: Aiding Insight and Confidence
Page 3

others? Organizations that have implemented BI may be more likely to

know the answer to this question because 78% of them have the ability to
perform a profitability analysis. Additionally, this impacts agility since
decision-makers can build contingency plans and aid themselves with the
ability to immediately trigger changes in the forecast.
Accuracy is the most important goal in planning, budgeting, and forecasting,
but accuracy is dependent on agility. BI aids agility in the planning, budgeting,
and forecasting process (Figure 3). First, organizations that have
implemented BI are twice as likely as those that have not to have real-time
updates to financial metrics. After all, what use is data if it is old and
inaccurate? In situations where data is not up to date, using it could hurt the
organization. In order to be current, organizations must understand where
they currently stand. Therefore, 84% of organizations that have
implemented BI have the ability to create variance reports. Ultimately, this
facilitates an organization’s ability to reforecast. The ability to perform
rolling forecasts ensures that organizations are utilizing forecasts based on
current business conditions.

Figure 3: Best-in-Class Data Access Impacts Agility

Business Intelligence No BI
Percentage of Respondents, n = 214

90% 84%
71%
64%
60% 54%
48%

30% 24%

0%
Real-time updates to Ability to create Ability to re-forecast
financial metrics variance reports as market conditions
change
Source: Aberdeen Group, January 2013

The Results
Comparing performance between organizations with BI and those without
illustrates how this technology enables organizations to better supply
employees with the information they need to create plans, budgets, and
forecasts. For example, in organizations with BI 72% of key stakeholders
have access to financial performance data. Therefore, the planning process
can become more collaborative. Further, organizations with BI are more
likely than those without to actually provide the data in the time needed by
those managers. Providing data to more employees when they need it will
impact how agile the organization can be when altering plans. This is
evidenced by the fact that organizations with BI saw a 15% decrease in time-
to-decision over the past year in comparison to 11% for organizations
© 2013 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897
The Impact of Business Intelligence on Financial Planning, Budgeting, and
Forecasting: Aiding Insight and Confidence
Page 4

without BI. And of course, this accuracy and efficiency impacts the bottom
line when it comes to revenue and operating margins.

Table 1: The Value Proposition

Business
No BI
Intelligence
Percentage of stakeholders with access to
financial performance data 72% 61%
Percentage of internal reports that were
delivered in the time needed by managers 78% 76%
Decrease in time-to-decision over the past year 15% 11%
Revenue growth over the past 24 months 10% 9%
Change in operating margins over the past 24
months 9% 5%
Source: Aberdeen Group, January 2013

Key Takeaways
The key components of success in planning, budgeting, and forecasting are
agility and accuracy. These goals are difficult in volatile markets where
organizations may have an inability to trace success in key components
during long and resource intensive forecasting processes. For these reasons,
Best-in-Class organizations are 78% more likely than All Others to have
implemented an enterprise-level BI solution. In addition, the Best-in-Class
are over twice as likely as All Others to have implemented predictive
analytics. These tools help enable a series of capabilities that facilitate the
planning, budgeting, and forecasting processes, including:
• Sixty-eight percent (68%) of organizations with BI have the ability to
identify performance by product line, sales person, or business unit.
• Organizations with BI are 51% more likely than those without to
have the ability to perform “what if” scenarios.
• Organizations that have implemented BI are twice as likely as those
that have not to have real-time updates to financial metrics.
• Organizations with BI saw a 15% decrease in time-to-decision over
the past year in comparison to 11% for organizations without BI.
These benefits lead to greater accuracy, can facilitate the planning process,
and will give business leaders the confidence they need when guiding the
organization to prosperity.

© 2013 Aberdeen Group. Telephone: 617 854 5200

www.aberdeen.com Fax: 617 723 7897
The Impact of Business Intelligence on Financial Planning, Budgeting, and
Forecasting: Aiding Insight and Confidence
Page 5

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Financial Planning, Budgeting, and March 2013
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Author: Nick Castellina, Senior Research Analyst, Business Planning and
Execution (nick.castellina@aberdeen.com)
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This document is the result of primary research performed by Aberdeen Group. Aberdeen Group’s methodologies
provide for objective fact-based research and represent the best analysis available at the time of publication. Unless
otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be
reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by
Aberdeen Group, Inc. (2013a)

© 2013 Aberdeen Group. Telephone: 617 854 5200

www.aberdeen.com Fax: 617 723 7897