Dwight Eisenhower famously said, “I have always found that plans are useless, but planning is indispensable”. Clearly, as both General and President, Eisenhower developed and issued specific plans to his subordinates. However, I believe this statement sought to both highlight the folly of relying on an inflexible course of action and to emphasize the critical importance of thoroughly understanding your own operations.

For many businesses, the development of a detailed financial model represents an important component of the rigorous planning needed to reach their goals. Quantifying all potential revenue streams and costs components provides an effective structure for companies to conduct “internal due diligence” on their operations. These businesses often rely on rigorous financial models for real-time decision support, especially as they process the daily (and often hourly) flood of insights from “Big Data”. Most firms need a means to assess the new opportunities and, more frequently, new obstacles that inevitably appear.

As the start of the budget process will soon begin for many organizations, management teams may see the creation of financial models as a “necessary evil” or merely the means to record their aspirational goals. We believe that, by avoiding rigor in the modeling process, businesses forfeit an excellent opportunity to prepare for success and willingly accept a disadvantaged competitive position. In essence, they embark on a long and potentially difficult flight while leaving their navigator at home.