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Craig Hartman, CEO and Chairman ‘Failing to plan is planning to fail” is a clever wordplay that alludes to the importance of planning while pursuing any goal. This adage resonates well in the financial services sector as banks and credit unions continue to consolidate and competition stiffens. Planning (forecasting, budgeting, and risk assessment) has become more critical to an organization’s existence. Budgeting is so much more than just numbers on a page showing financial goals for the coming year. Planning has become an art mastered only by those who truly understand all the necessary components and how to put them together. Craig Hartman, an engineer with programming expertise was building planning systems for Fortune 500 companies when he met the banker who owned his building. They became friends and the banker engaged Hartman’s company, Plansmith, to build a system for his banks. Hartman quickly realized the market opportunities for banks and credit unions and began to focus the company’s attention on the financial services industry. 
Hartman’s experiences with planning revealed that there are five pillars that are essential for an effective planning process. Pillar #1, Commitment, is the prime mover. The desire to achieve overshadows everything and provides the inspirational fuel that drives the organization. Success reinforces commitment and brings even greater success. Pillar #2, an honest critique of the company’s internal strengths and weaknesses as well as the ability to assess opportunities and threats, brings focus to the challenges. Pillar #3, Control, is the ability to articulate and track your actions needed to achieve each objective. This is at the heart of the plan. Pillar #4, Collaboration, is critical. Everyone has to understand what is required of them, where the company is going and how you plan to get there. And finally, Pillar #5, Continuous planning. As Hartman likes to quote Dwight Eisenhower, “It’s not the plan that’s important but the planning.” Plans seldom survive reality so they are continually subject to change. “We have to re-commit, re-evaluate, re-think our actions, and keep everyone alerted to what’s happening. When any one of these is absent, the process is substantially less effective,” says Hartman.
“We built a truly interactive budgeting model that simulated the behaviour of financial instruments as rates changed along with the expenses to support these activities within the bank,” Hartman points out. “It streamlined the entire budgeting effort which, prior to this time, was totally manual. It changed their decision-making process and shortened the time required to build a budget from months to days. This also allowed them to easily explore alternative actions as conditions changed throughout the year. Rate volatility became increasingly important.
Thus, we incorporated highly sophisticated algorithms for interest rate risk analysis. Our software and educational programs support all five pillars necessary to ensure successful planning,” Hartman points out. The initial system evolved to become a flagship product of Plansmith called Financial Compass.
Plansmith aims to extend the planning culture by infusing artificial intelligence into its solutions to derive actionable insights that could help decision-makers map effective strategies for their goals and objectives
He goes on to articulate how Compass incorporates the five pillars. “Compass improves Commitment by bringing success. When an organization achieves its goals, it reinforces its commitment. As commitment grows success follows.
Plansmith’s products assist in Critiquing strengths and weaknesses by allowing the user to compare in detail its performance to competitors and peers and find improvement opportunities. Plansmith also provides insights with new and unique metrics to help better see relationships.
Control is achieved using the forecasting and budgeting capabilities to generate future balance sheet and income statement possibilities and building the actions steps required to reach these goals using its Playbook feature. Tracking financial performance and action step assignments are critical to maintaining control as the year unfolds.
Collaboration is facilitated using the immediate feedback and reporting features of the system combined within a war room environment. War room here means a large projection screen at the front of the room so that everyone can see, share inputs, and get immediate results until the financial plan is complete. All inputs from the accounting systems are automatically pulled and the driving factors such are rate forecasts are brought in. The group dynamics in this process are extremely powerful and the collaboration is vastly improved over traditional methods.
This entire process is on-going and Continuous. As the year progresses, variance analyses are reported and plans are easily revised by the group to meet the challenges of change. A major benefit of continuous planning is that it extends beyond the year end, and hence it becomes a rolling plan. It is often said that no plan stands up to reality – it must change to meet circumstances.”
Objectivity, Creativity, and Horsepower
“In addition to supporting the five pillars of a good planning process, the system provides three additional benefits - objectivity, creativity, and horsepower. Objectivity comes in the form of the powerful behaviour modelling functions that collect and analyze data and provide objective answers.
“When you mention budgeting or planning, peoples’ eyes roll because it is a difficult and laborious process in most companies. Our goal is to make planning easy and fun, more game like but with real-world results. That will get people involved,” adds Hartman.
Support Services
“We very much believe that our success is derived from our clients’ success,” says Sue West, President. “As the company on-boards each client, a team of specialists takes over to develop the interface to the company’s data processing information, develop a meaningful planning chart of accounts, and provide personal training in the model operation. Once the user has completed the personal training, any additional support is always available at no extra charge. In addition, Plansmith offers on-site user roundtables, webinars, blogs, and continuing updates to the systems. And to further support its clients, Plansmith offers advisory services for risk compliance. Regulation is a complex, time-consuming, and sometimes difficult process. Plansmith has staff of former bank and credit union examiners with expertise in risk compliance to supplement the model as well as educate users. These professionals have expertise in Asset- Liability Management (ALM), Interest Rate Risk (IRR), Market Value of Equity (MVE), Liquidity risk, and Capital risk (CECL),” West proudly mentions.
A Success from the Beginning
The owner of that bank mentioned above quickly implemented the system in all of his five banks. They were active users of its interactive features and the flexible reporting capabilities. Hartman elaborates that all of these banks acheived performance levels within the top 10 in the annual bank rankings of 250 banks in the Chicago metropolitan area. The company grew to 14 banks and eventually sold to one of the nation’s largest banks. The banker attributed a significant portion of his success to Plansmith and his ability to plan and collaborate more effectively within each bank and within the entire organization
"We enjoy working with over 1200 banks and credit unions across the country and will continue to improve our products to meet their needs"
The Journey Thus Far
“Any business requires an executable plan. And, as an engineer, planning is what I do best. Planning is the primary ingredient for success. I learned the importance of this as an engineer and still consider it valuable today to achieve business excellence. We enjoy working with over 1200 banks and credit unions across the country and will continue to improve our products to meet their needs.”
Plansmith aims to extend the planning culture by infusing artificial intelligence into its solutions to derive actionable insights that could help decision-makers map effective strategies for their goals and objectives. With this singular focus on planning, Plansmith is a major player in the planning, budgeting and forecasting space for financial services companies.
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Company
Plansmith
Management
Craig Hartman, CEO and Chairman
Description
Plansmith’s mission is to make planning enjoyable and effective by providing easy to user software, comprehensive support and coaching for banking and credit unions. The company’s proficiency in planning is centred on 5 pillars: Commitment, control, Collaboration, Continuous planning, and identification of internal strengths and weaknesses. The, put together, speak the philosophy of effective planning that is required for business efficiency in the banking and financial sector. The company has built an interactive budgeting model that simulates the behaviour of financial instruments as rates change along with the expenses to support a multitude of activities within a bank
