Scenario forecasting proves crucial for award-winning childcare provider

As part of an initiative to streamline budgeting processes, we worked with BestStart to implement our budgeting and planning system, Six Degrees. With the disruption caused by COVID-19, Six Degrees allowed budgeting and re-forecasting (four versions in all) to be completed quickly, ensuring they could stay focused on the business at a crucial time.

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Time-consuming spreadsheets

BestStart identified that they could streamline their budgeting and forecasting process. Their budgeting model had a heavy dependency on IT, who were responsible for maintaining the integrity of the budget data. There were numerous challenges associated with this, including:

• Difficulties around visibility and understanding around calculations in the model, with reliance upon IT for any changes to macro assumptions.  
• Lack of control and understanding of the assumptions and calculations driving the output by finance led to a high degree of risk in the calculated results.
• In the case of auditing a result, having a high level of confidence was difficult; IT were under pressure to review all logic.
• Results from the model needed to be transferred to spreadsheets for consolidation and reporting. This was inefficient and time-consuming, with multiple iterations from fine-tuning.
• If year to date results weren’t completed by a specific date, the outlook data wasn’t necessarily relevant or accurate for Centre Managers anymore.

Consolidating over 260 centres’ worth of budgeting was a timely and complex process, with each Centre Manager looking after their own budgets and inputting data into input forms provided by IT. There was no instant feedback, and rolling forecasts weren’t available. A lack of autonomy and control over these budgeting processes also made it difficult for Centre Managers to work independently, and Head Office didn’t have an up to date forecasting view over all centres. There were also issues around security; specifically around adding new users and removing previous users.

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New system, new processes

After experiencing another lengthy annual forecasting process, BestStart decided it was time to move away from spreadsheets and create a more sustainable, manageable model. They wanted to provide rolling forecasting capabilities, save time on data input, and be less reliant on IT. With a range of budgeting and forecasting applications available, Theta’s Six Degrees came out on top. Being a New Zealand product was a particularly attractive feature. As Sean O’ Donoghue, IT Manager at BestStart, explains,

“From an IT perspective, having an integrator involved in a product that’s written in New Zealand for New Zealand, and direct access to the architects, was pertinent. With our complex business model, we looked at what kind of support we’d get when rolling it out and what the future looks like as we evolve the business. A big part of the decision was having hands-on experience from Theta.”

The robustness of Six Degrees meant it was easy to apply a model setup and customisable configuration for their business processes (including how fixed assets work, financial rules, and configuring financial statements). BestStart also had existing in-house knowledge and an environment based on SQL, which was a good match for the SQL based infrastructure on Six Degrees. It provided confidence that they could manage this themselves going forward

A mixed team effort also proved valuable. BestStart were able to perform a big chunk of data integration themselves, giving them control and familiarity over the system. With it being a brand-new system, we took a waterfall approach so that all functionality and setup performed as planned – and all challenges were solved before release. Jill Barnard, Finance Director at BestStart, says of the partnership,

“It was the most seamless system rollout I’ve done. In any moments of frustration, Theta stood up to the table and soon fixed them. We worked really well together as a meeting of minds between two organisations.”

A vital part of the project was the opportunity to review the entire forecasting process, as well as the underlying assumptions that drove it. We were able to check existing rules, remove old ones and add new ones. By the end of the project, hundreds of rules were completed. The new balance sheet and cash flow rules are a good example; created to ensure the production of accurate cash flow, forecast and balance sheets.

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Instant visibility, just at the right time

Centre Managers can now enter their data directly into the Six Degrees interface, giving them an instant consolidated view of their specific centre. It also provides a rolling forecast, the budget from last year and budget year to date. Having this immediate view gives transparency over key financial data and provides valuable feedback from the result of their data input. And it couldn’t have come at a better time as Jill shares,

“From a Centre Manager perspective, the feedback I’m getting is that they’re enjoying the different scenarios. We have four different versions of forecast budgets – pre-COVID, conservative (post-COVID), stretch and optimistic. They’re finding that useful and the uptake has been really good.”

At a Head Office level, they have earlier visibility and better control of an individual centre’s performance, as well as the aggregated performance over all centres. There’s a better level of control for calculating forecasts themselves, rather than reliance on IT. Head Office can change rules and models as and when is needed and are reassured that the rule revision is creating accurate data. We’re also working on another layer of the project that enables the automation of new users/removal of previous users; adding further value and security to the system.

The consolidation of groups of centres into regions allows the regional managers to check the task list to see the state of the budget inputs, as well as providing overall better visibility for them too. As Jill explains, they’re supporting users with the new system,

“Our Business Improvement Leader has rolled out an operational excellence programme across the country, and she’s had a lot of positive feedback about the platform and usability from business managers.”

What was once a previously lengthy annual process of forecasting and budgeting has now been become a more efficient monthly process, with a rolling outlook. In the future, there’s a view to weekly reporting and moving completely away from a hybrid model. BestStart have the most recent data at hand to remain agile and adjust where is needed. Jill comments,

“Despite everything over the past few months with COVID, the budgeting rounds after implementing Six Degrees have been relatively painless. We’ve been able to keep focus on the business at such a crucial time.”

Being able to re-forecast quickly has proven to be a vital advantage, allowing BestStart to continue delivering their award-winning services.