It’s October. The annual budget, which was approved in November of the previous year after weeks of deliberation, is based on market assumptions that are now three months old. A major customer has pulled out, a new competitor has put pressure on prices, and raw material costs have developed differently than planned. Nevertheless, the budget remains in effect through December.
Most controllers are familiar with this scenario. It is not the result of poor planning, but rather a structural problem inherent in traditional annual budgeting: it is a snapshot, not a dynamic management tool.
Rolling planning solves this problem – not by increasing the workload, but by adopting a different planning logic: continuous rather than one-time, rolled forward rather than reported backward.
Thinking about moving to rolling planning?
Whether rolling forecasts fit your planning process is something we can assess in a short conversation.
What is rolling planning – and how does it work?
Rolling planning refers to a planning approach in which the planning horizon is continuously extended forward. Instead of creating a fixed annual budget once a year, the horizon is extended by one period at regular intervals – usually monthly or quarterly.
The classic model: a rolling 12-month forecast. As soon as January is closed out, a new January for the following year is added. The planning team always has a full-year horizon ahead of it – not one that gets shorter every month.
The key difference lies in the quality of control. An annual budget becomes less reliable as more months pass – because the planning assumptions become outdated. A rolling forecast, on the other hand, remains constantly up to date. For a technical foundation that enables rolling planning, we recommend the article “Top-Down and Bottom-Up Planning in TM1.”
Why is the traditional annual budget reaching its limits?
Criticism of the traditional budgeting process is nothing new. Three weaknesses are frequently cited:
1. Outdated planning assumptions
A budget is based on market assumptions that were valid at the time it was prepared. Six months later, the reality may be completely different. Nevertheless, the budget is used as a benchmark, even though its underlying assumptions no longer apply.
2. The budgeting process ties up a massive amount of resources
According to the BARC Planning Survey, traditional budgeting cycles last an average of 6 to 10 weeks. McKinsey estimates that finance teams spend up to 60 percent of their planning time on data management alone.
3. Political Bias
Traditional budgets encourage the inclusion of buffers. Departments negotiate their budget targets as low as possible in order to look good at the end of the year. The result is budgets that reflect the outcomes of negotiations rather than realistic plans.
Rolling planning directly addresses the first and second problems: planning assumptions remain up to date because they are regularly adjusted. And the effort required per planning cycle is significantly lower because there is no need to start from scratch – only to update the existing plan.
What does rolling planning look like in practice?
Rolling planning is not a single method, but rather a family of related approaches:
Rolling Forecast (12+0 or 18+0)
The most traditional approach: The forecast always covers a fixed horizon of 12 or 18 months. Each month or quarter, the next period is added, and the last one is dropped. The budget, as a fixed annual framework, is eliminated or reduced to a guideline.
Budget plus rolling forecast (12+3 or 12+6)
A compromise that many companies choose as a starting point: The annual budget remains in place as a strategic framework, but is supplemented by a short-term rolling forecast. Over time, the budget loses its operational significance.
Quarterly Replanning
Some companies don’t update their budgets monthly, but quarterly: A new 12-month plan is developed each quarter. This requires less effort than monthly updates, but is significantly more up-to-date than a purely annual budget.
What if your next forecast was ready in hours instead of weeks?
We’ll show you what rolling planning looks like in practice with IBM Planning Analytics – using your numbers, not abstract demos.
What are the practical benefits? Two examples
Länsförsäkringar AB: 10 planning cycles per year instead of one
The Swedish insurer Länsförsäkringar AB uses IBM Planning Analytics for its rolling planning process. The company has increased the number of planning cycles to 10 per year, thereby significantly improving the accuracy of its long-term forecasts. Instead of dealing with significant annual uncertainty, the finance team now works with continuously updated forecasts that are validated on a short-term basis.
IBM Itself: Contactless AI Forecasting Process
IBM uses Planning Analytics internally for its own financial planning. Following the integration of AI capabilities into the forecasting process, forecasts are now updated fully automatically in some cases – without the need for manual data entry. Since 2023, the company has saved millions of work hours annually by eliminating manual reporting. This demonstrates the benefits of rolling planning when consistently combined with AI-powered forecasting – read more about this in the article “AI in Controlling.”
What are the requirements for rolling planning?
Rolling planning also requires the right technical foundation. Three prerequisites are crucial:
- Integrated Data Source: Rolling forecasts only work if actual data is automatically and continuously fed into the planning model. Anyone who manually exports data from the ERP system every month and pastes it into Excel is creating more work for themselves, not less.
- Driver-Based Model: A rolling forecast that manually updates every single line item is just as time-consuming as an annual budget. The solution: driver-based models, in which a few key value drivers automatically update all dependent variables.
- Cultural Readiness: Rolling planning means there is no longer a final, one-time planning cycle. In addition to technology, the transition requires clear communication about what is changing and why.
IBM Planning Analytics is designed specifically for this use case: automatic import of actual data from SAP, driver-based modeling, and a rolling planning framework. Learn more about the platform in the article “IBM Planning Analytics.” Planning Analytics’ data integration is the perfect complement to rolling forecasts.
When is the right time to make the switch?
Three signs clearly point to rolling planning:
- Your budget cycles take longer than four weeks, and the results are already outdated by the time they’re approved.
- Management or the board of directors are increasingly requesting forecasts during the year, which you cannot deliver in a timely manner using your current process.
- Your industry is volatile – commodity prices, exchange rates, regulations, and customer demand change faster than an annual budget can keep up with.
The switch makes less sense if the company operates in a very stable environment, lacks the financial capacity for regular planning cycles, or does not yet have the data infrastructure needed for automatic import of actual data.
- Classic budgeting rounds take 6–10 weeks (BARC Planning Survey)
- Finance teams spend up to 60% of their planning time on pure data management (McKinsey)
- Länsförsäkringar AB: 10 planning cycles per year, significantly improved forecast accuracy
- IBM internal: millions of work hours saved annually through an automated forecast process
- Companies using rolling planning reduce planning cycles by up to 50% (BARC)
- BI2run: 200+ TM1/Planning Analytics projects in the DACH region
Why BI2run – and what the switch actually means
BI2run has implemented rolling planning in over 200 Planning Analytics projects in the DACH region. What we see time and again is that the technical aspect is usually less involved than expected. The greater effort lies in modeling – that is, determining which drivers are truly relevant for management decision-making.
That’s why, in our initial meetings, we don’t start with technology – we start with your current process. We also recommend taking a look at the article “IBM Planning Analytics vs. Excel,” which explains the technical basis for rolling forecasts.
Rolling Planning · IBM Planning Analytics
Introducing rolling planning – how do we go about it?
In a 30-minute conversation, we’ll clarify whether and how rolling planning fits your company.
Book a conversation →FAQ: Frequently Asked Questions About Rolling Planning
What is the difference between rolling planning and traditional budgeting?
Traditional budgeting creates a fixed plan once a year for the coming fiscal year. Rolling planning continuously updates the plan while simultaneously extending the planning horizon by one period. The result: The plan is always up to date, and the planning horizon remains the same length.
What does “rolling forecast” mean in German?
“Rolling Forecast” is the English term for a rolling forecast or rolling projection. Both terms refer to the same concept: a forecast that is updated regularly and always covers a constant planning horizon.
How long should the planning horizon be for rolling planning?
12 and 18 months are common. A 12-month horizon always covers a full fiscal year. An 18-month horizon makes sense when investment decisions or workforce planning require longer lead times.
Is it possible to combine rolling planning with an annual budget?
Yes – that’s actually the most common starting point. The annual budget remains in place as a strategic framework and is supplemented by a rolling short-term forecast. Over time, the budget loses its operational significance, while the rolling forecast becomes the actual management tool.
What software is needed for rolling planning?
Simple rolling planning can be implemented using Excel as long as the volume of data is manageable. As soon as multiple areas and automatic imports of actual data are required, a planning platform is needed. IBM Planning Analytics (TM1) is the solution BI2run uses to implement rolling planning – with direct SAP integration and an Excel front end. Learn more in the article “Planning Analytics for Excel.”
