Budgeting for Success

Moving away from the annual budget process and into one that is more frequent is a core topic in the recent eBook from CFO.com. The rationale behind it - business changes so frequently that the annualized budget gets out of date pretty quickly. The fact that employees’ performance, and often compensation, is based on this annual plan makes things worse as the battle for the budget usually ends up with a much more conservative, thus achievable, plan. This pretty much makes it out of date out of the gate.

What to do?

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The Fan Experience Matters: Overview

The desire to deliver a world-class fan experience may not be found in data, but a world-class fan experience almost always starts with decisions born out of data.

There are two schools of thought in sports and entertainment. One holds that winning rids all sins. This may be true to a degree. Winning is one measurement that counts most insports. The other says that fan experience is the ultimate measure of success, especially in the absence of a championship.

Fan experience matters because it is the fire that ignites fan engagement!

But what does “fan experience” really mean?

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Sports and Analytics: Vision for Tomorrow

Imagine traveling back in time to attend a major sports event in the early 20th Century. The game-day broadcast may be available, but only on the radio. You may be able to buy hot dogs, but there are no fancy drinks or snacks. Forget about large-screen monitors or billboards. And the only thing that fans bring to the game is themselves—no smartphones, and no tweeting.

Now, contrast that image against the world of sports today. The comparisons are amazing, and they remind me of how computer systems no more powerful than a pocket calculator were able to guide astronauts in theApollo mission to the moon.

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Why Budgeting And Stretch Targets Are Incompatible

What is a stretch target?

First of all, what is actually meant by a stretch target. This can differ depending on where you sit. As the budget holder of a sales division this may mean setting sales targets that are higher than what would normally be expected. For production this may mean producing more goods for less, while marketing may see this as attracting more enquiries than last year.

Stretch targets are by definition, pushing the boundaries on what can be realistically achieved. And each has the increased potential to reduce organisational performance – the very opposite of what they were supposed to do. For example, if the increased production volume is not achieved but sales achieve their goal, then customers won’t get what they ordered in time. Similarly, if manufacturing achieve their goal but marketing falls short, then valuable resources will be tied up in stock. Both scenarios will adversely impact the company. In the first case it will be their reputation with customers, while the second will impact working capital. The end result of both will be to decrease profitability.

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Budgeting vs Forecasting

One of the problems about using terms such as ‘budgeting’ and ‘forecasting’, is that there is no generally accepted definition of what they mean. Budgeting is often referred to an annual exercise where the organisation’s resources gets spread among the departments, while forecasting is about predicting the future.

In recent times, forecasting is seen by some as a replacement for budgeting, and the mechanism through which continuous planning can be achieved. Given my understanding of ‘budgeting’ and ‘forecasting’ I would have to disagree – but it may be that I have misunderstood what is implied by these terms.

This makes it very confusing for organisations wanting to adopt a ‘best practice’ approach as they too may misunderstand what is meant. For example, making a statement such as ‘replace your outdated budgeting process with rolling forecasts’ could imply that budgeting is bad while forecasting is all you need. Which could be both right and wrong depending on how your understand what is meant by each.

Now I’ve got you totally confused, let me explain how I sees the difference between planning, budgeting and forecasting.

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5 Reasons Not to Cut Your 2014 Marketing Budget

Understand the changing role of marketing and you’ll likely want to re-examine how you value and fund this function.

As budgeting season approaches, we huddle around projector screens and decide how to best allocate the overall expenditure budget. We try to determine which expenses are likely to have the biggest impact on growing the top and bottom lines.

After more than 15 years in the industrial world, I’ve learned one certainty: marketing budgets are the most unloved of all budgets at most industrial companies. It also raises two crucial questions:

Why is marketing the first budget line to get axed when the overall numbers don’t jive?
Is doing more with less really the path to success?
There are five good reasons why maintaining a smart and healthy marketing budget could be the most important thing you do to ensure the future of your business.

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FP&R, or, How We Kicked The Spreadsheet Habit

Are you missing the “A” in your FP&A (financial planning and analysis)? Maybe missing some of the “P” as well? Are you and your department getting a bit tired of the “FR” gig you seem to have landed?

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Big Data is In Fashion

Big data is, of course, one of the business world’s most in vogue buzz words. It may even be having an impact on how various industries function. Case in point, today’s Wall Street Journal reports that several firms are selling data and services to fashion brands and retailers (Fashion Industry Meets Big Data, Sep 9).

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