What-if Analysis
Every business has changes. Every business has “what-if” questions
What-if business modeling creates the opportunity to evaluate a variety of scenarios rapidly, allowing more time for analysis. It also creates
more consistency and discipline in the analysis. Both of these factors result in better business decision making.
A model may show how a number of variables change depending on changes in one or more inputs. Using a model you can reproduce or test
reality without actually experiencing it. Planners use models to address questions such as these:
- What profits can we anticipate next year if inflation is 7 percent and we continue current pricing policies?
- If we open a new plant, what profits can we expect?
- What if we were to hire 55 people in Sales, 10 in Marketing and 35 in R&D?
- What is the impact on manufacturing and shipping if the price of oil increases 15% during Q2?
- What would be needed for raw material and inventory if the demand of a product went up 20%?
By using models you will have sales projections, materials and labor requirements, and projected income statements for alternative
scenarios.
Features and benefits of what-if analysis with TM1:
- Flexibility and multidimensionality to meet changing business strategies. Enter your data and change it as many times as you want,
immediately see the changes and compare with historical data or other projections.
- Leading financial and non-financial indicators – lower latency for performance measurement and corrective action.
- Dollarized performance management – expressing corporate goals in financial measures.
- Strategy embedded in line functions – means increased agility, empowerment and self-optimizing behavior.
- Create, update, share and link models across the enterprise.
- Self-documentation and audit logs for changes to the model.
- Comprehensive and expressive modeling structure allows you to handle complex business models such as risk analysis, activity-based
costing, inventory and merchandise planning, supply & demand, customer/product/brand profitability and compensation planning.
Learn more about TM1:
Learn about what-if analysis with Cognos 8 Planning 
