The above gives us a way to understand how the volume of bread sold relates to the price per loaf. Now that we have this understanding, we can go back to our original question and answer how revenue changes depending on the price you charge. We can choose a couple of different price levels, and work out an estimate of what your revenue would be at each of those different price points:.
Some of these price points might be ones you've already tested, but the beauty of this analysis is that it also lets us answer what-if questions about price points we haven't tested. And there you have it.
You've just carried out a basic what-if analysis, which looks at how changes in one thing the price of bread affect another your revenue. If you've seen examples of what-if analyses before, they might look far more complex than this. In reality though, what-if analyses all follow the same basic procedure:. The benefits of what-if analysis extend far beyond bread making.
What-if analysis helps answer questions about all sorts of business decisions:. Note that the questions above come from a broad range of different business areas. If you're involved in making business decisions, no matter your focus, you can benefit from building what-if scenario analyses. Let's look at how to build what-if scenario analyses in two different tools; Excel and Causal. Excel features a section of 'what-if' tools, to help users understand questions like those posed in the sections above.
To use scenario manager, you first need to build up a model. This isn't as difficult as it might sound, a model is simply a set of inputs, with an output that's a function of those inputs. For example, we might create a model with the inputs Price of Bread and Bread Sold , and the output as Revenue :.
Get free Project Management updates! Expected Monetary Value Analysis The phrase expected monetary value analysis refers to a specific analytical technique in which a calculation is made to determine Monte Carlo Analysis The project management term Monte carol analysis, despite the images that are conjured on first glance by the term, in Assumptions Analysis [Technique] Assumptions analysis refers to a specific technique that is used by project team members to minimize risks involved in making Learn how to create dynamic what-if models and plans for different scenarios including top-line, headcount, and OPEX.
Learn More. Business and market dynamics are moving faster than ever before, impacting organizations of all sizes and industries. On the other hand, a powerful platform that automates manual tasks and enables multidimensional scenario planning and what-if analyses gives decision-makers the data-driven insights they need to make the right decision when it counts.
From CFOs to CEOs to finance and operational managers, forward-thinking teams turn to innovative planning tools to transform static models into actionable, flexible, and robust plans for any likely scenario.
Spreadsheet-based scenario planning poses significant challenges, not the least of which is version-control confusion.
When you spend too much time emailing templates to solicit input from stakeholders and then have to manually clean and aggregate the results, you have little time left to extract insights and guide company strategy.
A centralized and accessible data source that automates aggregation can save time, generate broader alignment behind a course of action, and unite the organization around strategic decisions based on that shared data. With Workday Adaptive Planning, toggling between versions is as simple as a few clicks. See a demo. Driver-based models that incorporate a wide array of financial and operational metrics—from subscribers and average selling price to productivity and utilization—enable organizations to run the holistic what-if analyses necessary to support critical and timely decisions.
Sensitivity analysis of these key drivers allows finance to test the impact of various what-if scenarios and explore multiple courses of action. Additionally, models ought to be flexible enough to combine high-level, top-down growth and margin-based targets with detailed bottom-up personnel rosters and pipeline forecasts—enabling planners to reconcile gaps and identify opportunities.
A dynamic business environment requires the ability to re-forecast easily. Staying on top of your business requires a continuous picture of company health. A rolling forecast gives you the tools you need to keep assumptions up to date. Automating the actuals import shortens forecast cycles and helps you run faster what-if scenarios. With the capacity to re-forecast easily, you can save time and decrease gaps between your assumptions and actual market conditions.
A changing marketplace calls for active, continuous planning and monitoring of results. The ability to quickly and easily assess potential outcomes best case, worst case, most likely case is extremely valuable when variables are constantly changing.
This means monitoring actuals continuously so you can keep an eye on organizational financial health. It also means keeping track of your leading key performance indicators e.
You need easy-to-use, flexible, and robust reporting that captures all of the above, and does so on a continuous basis. Transform your reporting processes from a monthly rote exercise to a dynamic driver of organizational change.
Involving and engaging the broader organization in scenario planning and what-if analyses is critical in two ways:. A collaborative process doesn't have to be difficult.
And when you work together from the same dataset, you'll improve stakeholder alignment and get buy-in faster. Workday Adaptive Planning scenario planning and what-if analysis capabilities give you powerful insights that help decision-makers respond quickly and effectively to business challenges and opportunities. Improve business agility and thrive in a changing environment.
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