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Driver-based planning and forecasting is generally considered a more modern approach to forecasting, where key drivers and correlation linkages are created and used to forecast performance. For FP&A teams, it enables a more analytical conversation about why results moved, not just what happened. The benefit of this approach is that it helps focus performance management/variance analysis on the drivers that were missed, why they were missed, and how they can be corrected. It also enables scenario planning, allowing users to run scenarios quickly and efficiently, as well as a rolling forecast.Consolidation Systems vs Driver-Based ForecastingIn general, an organisation should consider planning and forecasting as having two basic areas – Consolidation and Modelling.Most reasonably sized companies have Consolidation systems to consolidate or add up Actuals, Plans and Forecasts. This is done in several different views – for example, by division, country, currency, P&L, balance sheet, and cash flow line items, as well as years, months, and versions. These can be considered dimensions of the planning platform and are very useful for analysing trends and obtaining multiple views of the information. Quite a few organisations assume that because they have a consolidation system, they can run different scenarios within it. However, collecting a scenario is different from creating and modelling one.Modelling, or what we think of as driver-based forecasting, is typically done in Excel or in a planning system. When done in Excel, the challenge is that the model and its underlying assumptions are not transparent to stakeholders and are dependent on the person running the model. Modelling done in a planning system makes it easily accessible and transparent. However, even using a system for modelling can lead to multiple issues, such as excessive standardisation and manual work required to pull the data into a system.In Figure 1, this comparison helps illustrate why many FP&A teams i

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