Essential Budgeting and Planning System Components: Part 1 - Workflow

An efficient budgeting, planning and forecasting process is a cornerstone of successful organizations. Software goes a long way in driving that efficiency – and I’m not talking about Excel. If you’re outgrowing spreadsheet-based planning and will be evaluating dedicated planning solutions to facilitate more accurate, timely and agile planning, over the next few articles, I’ll be laying out the system components, or specific features, you’ll want to look for. You can see these components demonstrated in my recent webinar on Budgeting and Planning in 2013, but here I’ll write about them in more detail and explain why they’re important to the success of your planning initiative.

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The Role of Planning

We live in an unpredictable world where the future is uncertain. If it was then we would all make a fortune by making strategic ‘bets’ on certain outcomes – we would know what products and services to back, what level of stock and staffing to have, and when and where to market our capabilities for maximum effect.

But the world is not like that.

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Take a Guess - What is the #1 Issue Holding Finance Back Today?

(This is second in a series of articles addressing best practices towards improving the finance function.) What is the #1 issue that’s getting in the way of Finance delivering game-changing decision support… of Finance consistently being called in when executives are making important decisions… of Finance being regarded as having the utmost competency? EPM Channel…

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Mind The Gap: What is the Perceived and Actual Perception of Finance Today?

According to survey results, Finance believes that they are capable of “game changing” levels of decision support while Non-Finance respondents were far less likely to agree.

While Finance is getting a seat at the table, they can clearly be delivering more value once they get to that table.

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Historians versus Futurists – Who is More Valuable?

Futurists enjoy taking out their crystal ball and projecting future innovations, but they are typically wrong. For example, George Orwell’s book, “1984,” which was published in 1949, did not come close with its projections. And in the 1960s, I recall a Walt Disney television show describing automobiles that required no driver and were guided by a magnet-like strip imbedded in the street’s or highway’s roadbed. Nice try.

In contrast, historians research the past to determine what lessons might be learned and applied today. For example, historians examine the judgments, policies and actions of past U.S. Presidents and international government leaders to assess what actions may best serve citizens today. The recent movie “Lincoln” is an example.

But which group — futurists or historians – provides more useful information?

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How Much Time Should Finance Spend Doing the Right Thing?

As far as I’m concerned, doing the right thing is worth whatever amount of time it takes you to get there.

With budgeting and reporting, doing it fast is the basic goal – reducing the number of approval cycles and automating consolidations. It’s a process we just want to get done. Some pundits refer to the budgeting process as a headache; the goal is to reduce pain. Others note that budgeting is about not failing*. Most agree that budgeting has very little to do with doing the right thing to drive your business forward.

Business planning is all about doing the right thing. The “right thing” requires planning at the right level of detail with the right people in the room to make financially-sound decisions at the right time to drive your business forward and impact the bottom line.

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Overcoming the Unwritten Rules of Budgeting

What Rules?

We all have personal ‘rules’ and beliefs that direct the things we do and how we respond to situations. Many of these rules are ‘unwritten’ – that is we follow them religiously even though they are neither compulsory nor explicit company policy. We do them because we do, quite often without thought as to their origins or whether they actually make sense.

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Improving Strategy Execution through Effective Budgeting

Budgeting is nearly always portrayed as a management process that helps an organisation  to execute strategy.  Fine words indeed, but how many budgets and associated budget processes actually support that ideal?  Surveys reveal the reality that most budgets are totally disconnected from strategy and that the resources essential to success are often missing or unavailable. …

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Continuous Strategy Planning

There is nothing complex in [the budgeting] process. It is logical, makes sense and should be straightforward. But personal experience and various surveys show that this isn’t the case. In the Harvard Business Review article ‘Turning great strategy into great performance’, only 50 - 60% of the potential within a strategic plan is ever realised with the top reasons for failure being inadequate resources, poor communication, and actions required to execute not being clearly defined. It goes on to say that the cause of this failure is laid squarely on breakdowns in the planning and execution process.

So what’s going wrong and what can be done to put it right?

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