Scenario Planning That Leads to Decisions (Not Decks)
Introduction — “Prepare Three Futures, Choose One Path”
Scenarios are where FP&A earns its keep — not by predicting the future, but by making the future navigable.
Done well, scenario planning replaces panic with playbooks: you’ll know what to do if demand jumps, if supply tightens, or if pricing wobbles. Done poorly, it’s just more slides. This post shows how to design lean, decision-ready scenarios, link them through P&L → Balance Sheet → Cash, and use CCH Tagetik to keep the mechanics tidy so your
airtime goes to choices, not cell references.
Why Scenarios Beat Single-Point Forecasts
Single-point forecasts pretend the world sits still; scenarios admit it moves. Instead of pretending you know
the number, you map the range, the drivers that widen or narrow it, and the plays you’ll run at each edge.
Stakeholders don’t need certainty; they need clarity — “If X, then we do Y.” That’s the promise.
CCH Tagetik makes this operational by letting you inherit scenarios from a Base case, tweak a short list of drivers, and watch impacts ripple through P&L, balance sheet, and cash without rebuilding anything (heroics not required).
The 3-Pack Discipline: Base, Best, Downside
Three scenarios are enough for 90% of decisions. More than three invites debate theatre. Define them clearly:
Base reflects today’s run-rate and signed actions; Best layers plausible tailwinds (pricing power, faster conversion, cost wins); Downside assumes stress on 2–3 core drivers (volume dip, input spike, FX swing). Write their rules once and reuse them every cycle.
Design Choices That Keep Scenarios Lean
| Choice | Default | Why It Helps |
|---|---|---|
| Drivers | Price, Volume, Mix, FX, Freight, Yield, HC | Captures 80% of variance without bloat. |
| Horizon | Next 12–18 months | Covers seasonality and hiring/capex lead times. |
| Granularity | Monthly P&L; Quarterly BS/Cash | Fast to refresh; cash still visible. |
| Inheritance | Best/Downside inherit from Base | Edit once; ripple everywhere. |
| Triggers | FX ±2%, Freight ±5%, Price ±3% | Refresh on thresholds, not vibes. |
Practical note: in CCH Tagetik, store these defaults in a central assumptions panel with
audit notes and owner names (future-you will send a thank-you note).
Cash Flow-Through: The Part Boards Really Care About
A scenario that stops at EBIT invites the question, “And the cash?” Link DSO, DPO, and inventory days to your
revenue/COGS drivers so timing effects show up automatically. A 5% volume dip with slower collections looks
very different from a 5% price cut with steady working capital — show both. Decision quality jumps.
With CCH Tagetik, P&L shocks roll into balance sheet and cash views by scenario. One click, three statements — much less explaining, much more deciding.
Executive Narrative: Options, Thresholds, Owners
| If (Trigger) | Then (Action) | Owner & Timer |
|---|---|---|
| FX weakens > 3% vs Base | Reprice top 5 SKUs; hedge +25% | Sales & Treasury, 2 weeks |
| Freight index +6% | Reroute lanes; raise surcharge 1% | Ops, 10 days |
| Volume −5% for 2 months | Pause hiring; shift spend to demand gen | HR & Marketing, 1 week |
Put this in front of leadership monthly. Decisions love a short menu (and clear owners).
Common Pitfalls and Simple Fixes
| Pitfall | What Happens | Fix |
|---|---|---|
| Too many scenarios | Analysis paralysis; meeting drift | Limit to Base/Best/Downside + 1 special |
| No cash linkage | Good story, weak decisions | Model DSO/DPO/inventory alongside P&L |
| Hidden assumptions | Trust erodes; rework spikes | Central assumption log with owners & notes |
| Spreadsheet sprawl | Version chaos; audit pain | Run in Tagetik with workflow/version locks |
Cadence & Rituals So This Stays Lightweight
- Weekly driver check (30 min): Price, volume, FX, freight. Adjust only if thresholds fire.
- Monthly scenario review (60–90 min): Refresh Base, validate Best/Downside, agree 2–3 actions. Publish deltas, not the whole pack.
- Quarterly deep dive (2 hrs): Strategic levers — capacity, hiring, capex timing — and roll decisions into the Base.
CCH Tagetik handles workflow nudges, late flags, and version locks. The process runs on rails; you run the conversation.
Real-World Moments You’ll Recognise
- Promo Pressure: Sales wants a 10% discount next month. Clone Base, adjust price/volume, and show GM% and cash impact side-by-side (calmly).
- FX Whiplash: Currency moves 3% overnight. Update the rate table; scenarios refresh; treasury sees the hedge gap before lunch.
- Freight Squeeze: Ops flags a route spike. Push a downside with higher COGS and present three mitigations with payback windows.
- Hiring Freeze: Capacity vs cost debate. Model phased hiring tied to volume triggers so both sides leave smiling (or at least nodding).
Metrics That Prove It’s Working
- Scenario turnaround: Base/Best/Downside with cash flow-through in < 60 minutes.
- Decision conversion: % of reviews ending with assigned actions (target > 80%).
- Accuracy uplift: 10–20% improvement in revenue/Gross Margin MAPE across two quarters.
- Adoption: > 90% submissions via platform; < 10% off-system edits.
Where CCH Tagetik helps most: scenario inheritance from Base, central driver tables with BU overrides and audit notes, automated P&L→BS→Cash ripple, workflow & version locks, and repeatable dashboards for “what changed / why / what we’ll do.”
Translation: less spreadsheet herding, more decision time.