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Scenario simulation: How does good software help with this?

Scenario simulation: How does good software help with this?

By simulating scenarios, entrepreneurs have the possibility of creating action plans for the most different possible situations, which makes its practice recommended.

Given that scenario simulation should be performed as close to reality as possible, it is important to do it based on reliable data. It is at this time that the aid of a good system is welcome!

Keep reading and understand how software can help your company create more realistic scenario simulations!

Understand how scenario projection works

Originated in the military world, simulation is nothing more than a set of action strategies prepared on the basis of potential events that may involve the enterprise. Its purpose is to quantify factors, positive and negative, and plan the management so that the company remains competitive.

By designing different future scenarios, the entrepreneur can optimize his profitability in positive situations and avoid losses in negative scenarios.

The number of projections that a company can create is huge, as vast as the number of factors that can influence them. Despite this, it is possible to mention some that are usually most used:

  • strategic projections: aim to outline and compare the business performance possibilities;
  • budget projections: simulations made based on company resources and the different ways of applying them;
  • economic projections: simulation about changes in the economy that can influence the business performance;
  • financial projections: projection of possible changes in the cash flow of the enterprise, and how it may affect it;
  • operational projections: simulation of the various ways to use the company’s output.

Learn about the main types of scenarios to consider

As for the preparation of a scenario simulation, it can basically be done in three different ways. See below:

Zero-based scenario

In this type of projection, a copy of all the information contained in the budget, such as distribution channels and cost centers, is made. Then the amounts of the new simulation must be set to zero.

This projection is widely used in the creation of zero-based budgets, as it considers, in an analytical way, the revenues and costs of an enterprise.

Adjusted scenario

As in the first projection, it is necessary to create a copy of the budget. However, instead of zeroing the amounts, they are used to superimpose those of the new simulation.

This simulation is effective for the so-called impacted budget view.

Copied or incremental scenario

All budget information, as well as the copy’s base-projection amounts, is copied. The operation is usually done for the creation of comparative scenarios or in budget revisions.

Understand how good software can help

For a scenario simulation to be done efficiently, it must be prepared based on reliable data. In this context, the use of software is useful because it makes the process safe and fast.

Keep reading and understand why!

Reliability of information

Management software, such as ERP, integrates all sectors of the company and brings together various data related to its operation. By using a Business Intelligence application, it is possible to present this information in a report in an organized way.

Since the data is accessed directly from its original source, the risk of errors due to the inclusion of incorrect data is eliminated, and the process becomes safer.

Process agility

As the process is automated, it becomes faster, so that the manager can have access to the secure information, presented clearly, in real time.

Cost reduction

Given that the procedure of collecting data and adding it into the system is automatic, employees who carry out this task can dedicate themselves to more productive activities, thus reducing the cost of time and financial resources.

By projecting scenarios, managers and entrepreneurs can prepare their companies so that they remain strong and productive even in times of crisis. Using a good system makes this process simpler.

Now that you understand how using software can help your company perform a more realistic scenario simulation, visit our website and find out more about technology solutions for your business.