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Thrive in the Chaos: Predicting the Future of Brexit and the UK Economy
Nicholas Bell, CEO at Decision Inc.
It has been said that the market is only one tweet away from a crash. This highlights the serious instability within today’s market.
Businesses need to survive, let alone thrive in a massively complex and unstable world.
They are spending significant amounts of time trying to predict the future needs of their clients, in an effort to provide them with a superior customer experience. But how easily can they predict the impact global events and issues could have on their business?
The attacks on the Saudi oil fields on 15 September had newspapers the world over highlighting that with the loss of over 5% of the world’s oil supply, prices would go up, resulting in the knock-on effect that fuel prices would increase in all markets of the world.
Over the last two years, the Brexit complexity has left the UK economy in a state of great flux. Each week provides further complexity and shifting impacts. The ruling by the Supreme Court that the suspension of parliament for five weeks was unlawful provides a new complexity in enabling the country to continue with its Brexit plans. Following this ruling, there are many calling for Boris Johnson to step down and the risks of parliament supporting a general election heighten.
Bringing it back to business
So how do businesses operate in this constant state of flux?
Throughout the weekend of the Saudi oil attacks, the reality was clear that every business with a form of transportation as an element of their cost base would have to adjust their costs for the coming months, until the oil demand settles. Brexit scenario models highlighted the risk of a $1:£1 swing on a daily basis, dependant on the belief that the government can secure a softer Brexit. Planning around the many tens of thousands of jobs that were meant to leave London has taken place, adjusting the cost to run these financial services businesses; however, recent media reports have shown that not as many jobs as was initially thought would be leaving London.
The biggest practical impacts still to be confirmed is logistical delays in moving goods from mainland Europe into the UK and what this will do for the supply chain side of business. Closer to home, the final Ireland backstop will create real world changes to how businesses interact with their own Ireland operations from both a people and goods perspective.
All this uncertainty puts significant pressure on boards and finance teams as they are required to constantly predict the impact of these changes on their business. The challenge facing many businesses is the volume of data and people involved in the planning process. This volume makes it very hard to continuously re-plan the business. Most budget cycles take 6-8 weeks and thus daily re-forecasting is impossible.
Many businesses are using Excel to manage their planning process; however, scenario models built in Excel are not robust enough to capture all the detail required to support global businesses. This results in a board with a very high-level idea of potential risks but without the depth of detail to accurately plan for the possible scenarios. This is no longer adequate in today’s world.
In a world, this uncertain information is the most valuable asset. The ability to use information to influence decisions and help the business navigate uncertainty is one of the greatest competitive advantages anyone can have.
How to build this capability and make it real
In order to leverage the potential of this information, companies need to have a clear plan to build out these capabilities within their business. This involves investing in data platforms and planning technologies that can enable them to scale their planning models to take into account the volumes and complexity of data. Further to this, their people need to understand how these many variables can have an impact on their business and financial model.
Additionally, intelligence and artificial intelligence technologies can assist in building financial models to enable leaders to understand the variables and potential impacts on the business.
A modern data and planning platform enables the business to dynamically plan and re-forecast the business with great insights, while still leveraging scalable technology to produce scenario models and re-forecast the entire business faster than ever before. These investments can provide finance leaders and their boards with the tools to adapt quickly to any outcome that the business faces.
“The ability to use information to influence decisions and help the business navigate uncertainty is one of the greatest competitive advantages anyone can have.”
In a world of great uncertainty and one where Brexit complexities will continue, the risks on businesses and their ability to progress becomes harder. But businesses don’t need to merely exist in today’s market, they can still thrive. Business leaders must have trusted partners and platforms that enable them to rapidly adapt to their changing world and enable them to thrive in the chaos.
Decision Inc. is a leading global performance and analytics business. Our teams help some of the world’s largest companies with managing this complexity. Providing their leaders with the platforms, tools and answers to help them make better decisions faster.
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