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How Do You Plan Beyond Best-Case Or Worst-Case in TM1?
A smarter way for finance teams to model uncertainty with IBM Planning Analytics (TM1)
Why the three-case model is no longer enough
Many finance teams still plan to use three scenarios: best case, worst case, and base case.
This approach is easy to set up but doesn’t work well when markets change quickly. A new law, global event, or shift in costs can make all three plans outdated almost overnight.
To handle uncertainty,finance teams need faster, more flexible ways to plan. IBM Planning Analytics (TM1) gives teams the tools to build smarter scenario models that react quickly and guide better decisions.
1. Build a stronger scenario framework
Instead of stopping at three static forecasts, start with a scenario framework.
This framework lists the main business drivers that affect your results, such as sales volume, exchange rates, or raw material costs.
In TM1, you can link these drivers to your financial models. When a driver changes, all related calculations update automatically.
Example
- Driver: Fuel cost per unit
- Impact: Cost of goods sold and gross margin
- Result: The change flows through both P&L and cash flow immediately
This setup creates a single, connected structure for all scenarios.
2. Add probabilities to improve decision-making
Not every scenario has the same chance of happening. Some are much more likely than others.
In TM1, you can assign probabilities to each scenario and calculate a weighted average result. This gives management a clearer view of likely outcomes instead of focusing on extreme possibilities.
You can move the conversation from “what if this happens” to “what’s most likely to happen, and what should we do about it.”
3. Use live data to update scenarios automatically
Modern scenario planning works best when it uses live data instead of static spreadsheets.
TM1 can update assumptions automatically when new data arrives from other systems. For example:
- Sales pipeline changes can refresh revenue forecasts
- Updated exchange rates can change cost and margin forecasts
- New operational data can trigger instant recalculations
This automation keeps scenarios current and reduces manual work for finance teams.
4. Use TM1 features to make models more flexible
TM1 has several features that make complex scenario planning easier to manage:
- Sandboxes: Test ideas safely without changing the main data.
- Rules and feeders: Keep calculations updated when key inputs change.
- Versions: Manage multiple forecasts within one model.
- Hierarchies: Drill down from company-wide to detailed views.
These tools help finance teams plan faster and more accurately while staying in control of their data.
5. Use decision trees to visualize options
A decision tree is a simple way to show how one choice can lead to several possible results.
In TM1, you can build models that show:
- A new product launch and its possible demand outcomes
- The financial effect if demand is high, medium, or low
- How each result affects cash flow and profit
Decision trees make it easier for leaders to see trade-offs and choose the most balanced option.
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Putting it all together
Scenario planning is changing.
Instead of using static spreadsheets, finance teams now need dynamic,data-driven models that adjust automatically as business conditions change.
By moving beyond the best-worst-base approach, teams can plan for uncertainty with more confidence.
With TM1, finance teams can model multiple outcomes, test assumptions instantly, and make faster, better-informed decisions. Request an expert consultation on scenario planning to learn how TM1 can help your finance team plan smarter for the future.
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