SOURCE: Adaptive Planning

Adaptive Planning

February 16, 2011 08:00 ET

Finance Executives Report Improved Economic Conditions and Record Levels of Optimism for 2011

Quarterly Survey Finds Improvements in Many Economic Indicators; Unemployment Continues to Be Leading Concern

MOUNTAIN VIEW, CA--(Marketwire - February 16, 2011) - Sixty-four percent of finance executives expect the overall economy in 2011 to fare better than in 2010 -- an optimistic outlook reflected by reports of improving economic conditions, reduced fears of a "double-dip" recovery and increased expectations for revenue growth. These results are part of the findings of a quarterly poll of finance executives conducted in December 2010 by Adaptive Planning and the Business Performance Innovation Network.

The Q4 2010 Business Volatility and Variables Survey revealed that fears of a double-dip recovery are falling -- 36 percent predict a "W-shaped" recovery, down from last quarter's 41 percent. In parallel, predictions for a "U-shaped" recovery have risen to 34 percent from 29 percent last quarter. The majority view current economic conditions to be the same (43 percent) or better (42 percent) than they were six months ago.

At the same time, 52 percent of finance executives believe economic conditions will improve over the next six months -- the first optimistic majority recorded since the quarterly survey began in 2008. Expectations have risen significantly from last quarter, when only 36 percent expressed optimism. At the same time, only 10 percent anticipate a worse economy in six months -- a significant drop from 20 percent last quarter.

Unemployment remains the single greatest concern for the overall US economy, with 64 percent citing it among the top challenges. And the expected timeframe for a meaningful improvement in jobs growth continues to be pushed back -- only 41 percent expect meaningful jobs growth will occur in 2011, compared with 62 percent last quarter.

Respondents from small companies are more guarded in their optimism than those from larger companies. While pessimism is low across companies of all sizes, only 43 percent from small companies (under $10 million in annual revenue) expect conditions to improve over the next six months, compared to 55 percent from midsized or large companies (over $10 million in annual revenue).

"We are enthusiastic about finance professionals' increased optimism," said Greg Schneider, Vice President of Marketing for Adaptive Planning. "In addition to the optimistic expectations for the overall economy, the highly positive outlook for respondents' own companies is especially notable. After all, as finance professionals, respondents have very well-informed and credible perspectives of their companies' future growth prospects."

When asked about the outlook for their own companies over the next 6 months, finance executives expressed significant optimism. Nearly double the number of respondents expect jobs growth at their companies (31 percent) versus jobs losses (17 percent). A full 62 percent expect revenue growth over the next six months, up from only 49 percent in Q3 2010, and 39 percent expect increased profit margins, an increase from 29 percent in the prior quarter.

Finance executives from manufacturing industries were particularly bullish about the future of both the overall economy and their respective companies. Sixty-eight percent from this sector expect economic conditions to be better in six months, compared to 50 percent of non-manufacturing finance executives. Also in six months, 79 percent anticipate that their company will have higher revenues and 50 percent expect higher profit margins, compared to 60 percent and 38 percent from other respondents.

However, despite the growing optimism the economic outlook continues to be uncertain, with 42 percent of finance executives reporting high or very high levels of uncertainty. This uncertainty continues to drive frequent re-forecasting and scenario planning. In fact, 35 percent re-planned or re-forecast on a monthly or more frequent basis in Q4 -- the highest level in the history of the poll -- and 53 percent expect to increase the frequency of their re-planning and what-if analysis next quarter.

The survey also captured the top challenges that finance teams would like to address in 2011. The top three responses were managing performance against key metrics (e.g., cash, margins, etc.), revenue management / growth, and revenue planning / forecasting. Nine of the top 12 challenges are addressed by business performance management software solutions.

The online poll surveyed financial professionals from companies in over twenty industries and ranging in size from under $10 million to over $1 billion in revenues. This is the eighth quarterly poll examining perspectives on key economic conditions, individual company performance, and the role of planning and forecasting in the current economic downturn.

The Business Volatility and Variables Survey is conducted once per quarter, with results tallied against those of previous quarters to identify trends in overall economic conditions and planning practices. For more information on the summary report of the findings, visit: www.adaptiveplanning.com/uploads/docs/Business_Volatility_and_Variables_Survey_Q4_2010.pdf.

About the BPI Network

The Business Performance Innovation (BPI) Network is an influential group of senior-level executives driving transformation, process re-invention, organizational innovation, lean operation, and competitive adaptability in multi-national enterprises worldwide. Members of this change-centered affinity network represent companies with combined annual revenues of more than $1 trillion. The aim is to share thinking and advance best practices in how enterprises can "transform to better perform" as they seek to tap more complex, cost-sensitive, growth markets with large, diverse and evolving consumer and infrastructure needs. More information is available at: www.BPINetwork.org.

About Adaptive Planning

Adaptive Planning is the worldwide leader in on-demand business performance management (BPM) solutions for companies and nonprofits of all sizes. Adaptive Planning's solutions allow finance and management teams to obtain real-time visibility into performance metrics, streamline financial planning and reporting, and drive better business decisions. By offering affordable annual subscriptions and rapid implementations, and by eliminating the need for new hardware or IT support, Adaptive Planning makes it easy to move beyond spreadsheet-based processes without the cost and complexity associated with traditional on-premise BPM applications. Adaptive Planning is headquartered in Mountain View, Calif. and can be reached at 650-528-7500 or www.adaptiveplanning.com.

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