Digital Adaptation

Planning for a secure financial future is not easy, particularly in an economy that is faltering and erratic. Traditionally, financial planning has relied on yearly budgets laid out with the use of a spreadsheet-type software program. The budgets are based on management input with assumptions concerning expenses, revenue, accounts payable and receivable, and personnel, and they are used to judge performance annually.

“The production of an annual budget that is used for an entire fiscal year is the old approach. Today, companies need to manage an increasingly divergent set of assumptions in real time as economic and market conditions change,” said William Soward, CEO of Adaptive Planning Inc., Mountain View, Calif.

Actually, performing multiple financial forecasts during the fiscal year was always considered a best practice, but was not done much until the recent downturn.

“This new economy has created a cultural sea change and has given companies no choice but to perform multiple financial models during the year,” Soward said.

Companies should adapt to constantly making financial forecasts.

“Adaptive planning, rather than just creating traditional budgets, is the continuous examination of underlying assumptions and the refreshing of the company’s financial model to reflect changing conditions,” Soward said.

Adaptive planning is a predictive activity, while traditional annual budgets are static and unchanging in nature.

“To be adaptive, a company wants to have a financial model that is flexible enough to change variables within the model without breaking it and creating errors that make it stop working as intended,” said Kel Hoffmann, president and CEO of Whitebirch Software Inc., Salem, Mass.

Financial software available today goes beyond spreadsheets and allows companies to be more adaptive and to create “what if” scenario analyses, with the goal of understanding the effect of changes in key assumptions. With multiple versions of future predictions available to it, a company can examine various potential outcomes.

“Creating ‘what if’ scenarios demonstrates the impact of the assumed changes in conditions on all aspects of the business, enabling the company to act more quickly if actual conditions change as projected in the scenario analysis,” Soward said.

Manipulating assumptions

In a way, predictive planning and scenario analysis differ from traditional financial planning only in technology, not in concept, Hoffmann said.

“Traditional financial models created with spreadsheets are just more difficult to manipulate. Newer technology and software [are] less error-prone when changing assumptions to create forward-looking analyses,” he said.

Having fewer errors improves the contractor’s confidence in the results.Modern financial modeling software also helps the contractor manipulate assumptions by providing an easy-to-use interface.

“Today’s software makes it easier to see the results if, for example, personnel is reduced in the model, and to determine the effect of that change in terms of salary, benefits, costs, etc.,” said Rand Heer, CEO of Alight LLC, Placerville, Calif.

In general, Soward said, any performance management software makes it easier for a company to change its assumptions and examine the effect of those changes more quickly, easily and thoroughly.

“In a traditional spreadsheet, making changes to the underlying assumptions in the model can become so complicated that the impacts throughout the company are not fully understood,” Heer said.


A major benefit of adaptive planning and scenario-analysis capable software is that it enhances collaboration because all key stakeholders to the financial process can readily access the same system and information at the same time.

“Particularly with browser-based applications, everyone can see the changes made to the underlying assumptions in real time, promoting communication, involvement and accountability,” Soward said.

Actually, according to Heer, modern financial software modeling is specifically designed to create collaboration.

“The financial model is the vehicle that makes the numbers come together and creates collaboration through everyone’s involvement.”

Another benefit, Heer said, is the enhanced decision-making made possible through financial modeling software.

“Each change made to a potential scenario drives a different possible decision. Scenario-analysis software allows the company to sort through various conditions and fully understand the kinds of decisions that need to be made and actions that need to be taken,” Heer said.

Early detection of financial issues and a better understanding of cash flow are other benefits, Soward said.

“Scenario-analysis capable software enables the contractor to quickly see variances between what should be and what is. Having that kind of information in real time enhances cash and expense management and provides early identification of both potential problems and opportunities,” he said.

Other benefits include access to data by multiple users, more tools available for analyzing the data, and more opportunities for building relationship models between the various financial aspects of the company.

“By enabling management to actually see the effect of potential financial decisions, preconceived notions can be challenged, and the company can be better prepared for the future,” Hoffman said.

Adaptive planning and scenario-analysis software can be Web-based. One of the advantages of using the Web-based, Software as a Service (SaaS) model is that the software does not have to be installed at each computer.

“The benefit of using browser-based technology,” Soward said, “is that it does not require an investment in any additional technology, software or hardware.”

However, according to Heer, the system still needs to be integrated into the general ledger software to obtain the required financial data.

Apply as Needed

Adaptive Planning provides on-demand budgeting, forecasting and reporting solutions that help companies improve their financial agility, strengthen collaboration and drive better-informed and more strategic business decisions. Adaptive Planning’s centralized, Web-based modeling environment makes it easy for business users to set up and manage sophisticated, multidimensional financial models that enable changed assumptions, added dimensions and updated organizational structures. The Software as a Service (SaaS) approach means lower costs, faster deployments, easier use, more transparency and lower risk. For more information, visit

Whitebirch Planning from Whitebirch Software offers a budgeting, forecasting and planning solution that delivers fully integrated financial models. Budgets and rolling forecasts improve the accuracy of a company’s strategic plans and enables rapid responses to changing market conditions. Whitebirch Planning models are designed to be transparent and easy-to-follow, with dynamic budgets that use key financial and nonfinancial business drivers. True integration enables the development of flexible, sophisticated budgets and forecasts. Visit for more information.

Alight Planning provides a flexible, easy-to-use, collaborative application for budgets, rolling forecasts, strategic plans and financial reporting. Features include a driver-based planning architecture for integrating operational elements of the business into financial budgets and forecasts. The software’s modeling tools and scenario analysis capabilities deliver actionable knowledge, letting managers translate financial forecasts into action plans. Alight’s importing and integration of actual data with financial plan data ensures accurate reporting of budget variances and identification of critical operational and financial trends. Visit for more information.—D. B.

What to look for

The most important feature to look for in financial planning software, according to Hoffmann, is flexibility.

“It’s best to choose a provider that offers the ability to make modifications and customize the model to the contractor’s specific needs as well as the ability to create multiple scenarios for the most flexible analyses,” he said.

Ease of use is high up on Soward’s list for must-have features. Software, he believes, should enable the contractor to easily determine its budget, build a more extensive financial model, understand the company’s key financial drivers and determine the variances between forecasts and reality.

“Make sure the technology can support your financial modeling needs across the company,” he said.

For construction companies, in particular, it is important to have a system that will integrate with the customer or project planning system already in place. The application chosen, according to Heer, should enable the contractor to run scenario analyses in project-based models.

“For example, if the contractor has 10 projects, it needs to determine the labor and materials costs by each project. The financial planning program has to be easily integrated with the project planning system to fully analyze the impact of any changes in the number of projects, cost of materials and labor, etc.,” he said.

Planning for the future

Existing technology is mostly focused on modeling income statement data. According to Hoffman, providers are going to have to start including balance sheet and cash flow tools for the contractor to use to examine various scenarios.

“Banks and other institutions are increasingly demanding to see that kind of information if they are going to loan money,” he said.

Heer believes that, in the future, businesses are going to understand that annual budgeting is insufficient.

“It’s happening already,” he said. “There is an increased emphasis and focus by businesses on forecasting that provides more immediate feedback on performance.”

Over time, more companies will begin using the SaaS, Web-based model. The technology, Soward said, is becoming more inclusive, and the industry will continue to see additional planning and modeling applications become available to a broader base of users.

“The technology is evolving into a real-time, forward-looking management operating system that increases participation across the company and even throughout industry peer groups,” Soward said.

BREMER, a freelance writer based in Solomons, Md., contributes frequently to ELECTRICAL CONTRACTOR. She can be reached at 410.394.6966 and

About the Author

Darlene Bremer

Freelance Writer
Darlene Bremer, a freelance writer based in Solomons, Md., contributed frequently to ELECTRICAL CONTRACTOR until the end of 2015.

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