How Profoto reduced the time for a forecast from 3 months to 3 weeks

Profoto

For an international company that stands for high quality and innovation, it is particularly important that everything works as intended.

With offices from Tokyo to New York, a turnover approaching one billion and an IPO under its belt, Profoto is a shining example of an organization that has harnessed the power of data to become more efficient, flexible and profitable. Amanda Åström works as Head of Investor Relations and Finance Business Partner at Profoto. She was a key cog in the IPO and has had a major influence on the company's business intelligence solution.

Beyond Budgeting, performance management and OKR

In a changing world where conditions are constantly shifting, it's important for an organization to have robust strategies to deal with them. From pandemics to AI, companies need to know where they are going and how to get there. To achieve this, Profoto works with Beyond Budgeting, scorecard and OKR. Here, goals are set at company level and then broken down to each individual.

The Beyond Budgeting approach together with INSIKT is what allows Profoto to focus on what is most important - developing the best products on the market and increasing its growth. In INSIKT, Profoto can easily review its goals every quarter and ensure that it can plan to achieve them. Flexibility is also required in the actual budget.

- Previously, the budget process took 3-4 months. By the time you finished it, you had lost a quarter, you had planned for a project that would be done in 12 months, but when you did it, you did it because it was planned and you forgot to question what was actually the purpose and goal of the project and whether the project is even still relevant, Amanda explains.

Now a lot of time is saved in the planning process. The time to get started is much shorter because there is less time between forecasts. It also makes data entry easier as you only need to enter adjustments and don't have to start all over again. Profoto has also streamlined the actual input. Now you only enter values for main products. Accessories and attachments are keyed to the main product and automatically get their values based on previous results. This also saves a lot of time and effort.

Beyond Budgeting

Beyond Budgeting is about moving away from conventional budgeting processes in order to streamline the management of an organization over time. By abandoning the traditional budgeting methods, Beyond Budgeting aims to create a more decentralized organization and an adaptable set of management processes.

Flexibility is key

This is precisely why the decision fell on INSIKT. Profoto needed a flexible tool that would allow for changes and re-evaluations as time goes by. They do this through two different perspectives. First, from the bottom up, where every salesperson in the entire organization is involved and makes a forecast for their customers and the quantity they think they will sell to each customer. Then the cost managers go in and set a profit and loss budget and plan all the department's costs. After this, the figures are reviewed from the opposite perspective - from the top down. Instead, the focus is on whether the planned values will lead to the company achieving its financial targets. If they do not, the forecast is simply adjusted to meet those targets.

The importance of flexibility became very clear during the pandemic when, in the second quarter, the company suddenly lost around 60% of its sales. They needed to adjust in the middle of a forecasting process. They created a cost-saving program with targets and procedures and put it in the budget. In this way, they could effectively control the result. The result was a profitable EBIT after just two quarters.

A circle of lessons learned

Working in this way suits Profoto perfectly. They also get a very clear division of responsibilities. Each cost center gets its budget, which they also created themselves, and can easily compare planned values against outcomes, which later creates more knowledge and a more accurate budget next time.

- That's what's so cool. Over 100 people are involved and contribute their expertise to each budget. As a process manager, I hardly have to do anything," says Amanda with a twinkle in her eye.

Amanda's task is instead to ensure that the activities carried out are actually profitable.

- When we have had interviews to appoint new Business Controllers, we have several times been asked "But what do you mean, don't you put in the budget for organization? Isn't that what I'm supposed to do?". It is very nice to be able to answer that their task will be to simply check that what everyone else has entered is profitable and that you actually follow the plan.

Amanda's 5 benefits of Beyond Budgeting

It's incredibly agile. For a company with many challenges and moving parts, it is perfect for keeping up.
It creates commitment as more people are involved in the planning work.
Cost awareness increases as responsibility is spread throughout the organization.
The work becomes more efficient through the delegated responsibility - both for planning and follow-up work.
It becomes easier to get quick indications of profitability and then act if something goes wrong.

Analysis

A user-friendly tool that allows you to do everything from identifying trends to building reports and sharing with your colleagues - right in your browser.

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Planning

Everything you need for accurate planning. Through the product's web interface, you can involve the entire organization and streamline your work.

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Project

Project is a comprehensive tool for project management. The tool supports the entire project needs of the business, regardless of whether it is small administrative projects or large investment projects.

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