Business Modelling is about finding a systematic way to unlock a long-term value for an organization while delivering valuable products and services. It encompasses a wide range of factors, such as defining the characteristics of the products to be sold, foreseeing how to reach customers, the forms of advertising and promotion that will be used, the target audience to which the product will be aimed, etc.

The term modelling itself is quite obsolete and reflects the concept of transforming reality into a scaled and simplified picture. Planning, on the other hand, is associated with the process where we decide on how to organize our work to proceed towards gaining benefits and achieving certain goals.

Strategic business planning is one of the most common areas, where the combination of modelling and planning can provide a greater value for the organization. For example, Modelling and Planning can be used to predict what the future will look like under multiple scenarios and how to prepare for them. It is an incredibly powerful tool to save time, secure finance, prioritize efforts & evaluate opportunities as it provides guidance, steps or even a roadmap on how to approach our goals and progress to their achievement.

Business Modelling and Planning also helps companies organize how they will generate revenue and make a profit. They can describe what products or services the business plans to manufacture and advertise as well as what expenses it will incur in the process. Models are widely used for different types of business planning as well as to help identify potential bottlenecks or inefficiencies with the used business processes as well as identify potential solutions. We have all seen good examples of financial models such as balance sheets, income statements, and cash flow statements, which represent the current state of the business.

Apart from the budgeting and financial planning, which is quite popular and well known, Business Modelling and Planning can also contribute to better-informed decision-making in all other aspects of the business. Some of the benefits, which Modelling and Planning offers to the modern business are:

  • It mitigates the risk of making decisions based on inaccurate understanding of the situation by giving a clear representation of the current state of the business. Furthermore, Modelling and Planning can be used to run simulations and what-if scenarios of proposed business changes, helping companies evaluate desired results;
  • It can integrate all related or influential factors within the organization to ensure completeness of a solution, subject to implementation. Moreover, Modelling and Planning allows companies to identify the relationship between the different business processes and see the whole picture behind their business;
  • It aids companies in setting clear and measurable goals as well as the right direction where they are heading. Modelling and Planning helps companies focus on their target markets and customers and align their goals with their missions and vision for the future;
  • Modelling and Planning helps companies measure their performance by letting them set initial KPIs and milestones and compare them with their actual results. Consequently, it increases operational efficiency by guiding the managers on how to set priorities, focus resources and energy in order to achieve and maintain the organization’s competitive advantage;
  • It is much easier to communicate business changes, risks or simply unify processes when effective Modelling and Planning exist within the organization. With a good planning process, you can regularly review your performance, track progress, and adjust to new developments.

In our ever-changing business environment, being able to utilize Business Modelling and Planning is not only a prerequisite to success, but a primary need. Numerous companies have already realized that fact and thus gained a competitive edge.

In the last 30 years, technology has revolutionized how businesses do their planning. Spreadsheets have given us a very flexible and easy to use initial planning tool. Yet, driven by their growing business needs companies are moving from massive spreadsheets to more elegant planning applications, which can be linked with their CRM and other systems, automate various tasks and provide a single platform for their entire planning activities.

Author:

Kristina Mihaylova