3. 3QUOTES
“The budget is the bane of corporate America. It should never have existed. Making a
budget is an exercise in minimization, i.e., showing how little you can do.”— Jack
Welch, former CEO, General Electric (February 2006)
“The budget evolved from a management tool into an obstacle to management .
Charles Edwards
“If companies would invest as much time in their strategy cascade as they do in their
budgeting process, most would perform a lot better”
4. 4
INDUSTRYPULSE-Accuracy
2/3
28%
70%
Our Budget would be
obsolete within 6 months
of the fiscal year
We cannot forecast more
that a single quarter out
Our Budget is irrelevant
before the year even begin
Most conventional
budgets are not as
accurate as
perceived. Many
budgets become
obsolete before the
fiscal year begins.
5. 5INDUSTRYPULSE - Process
4
17%
44%
32%
We are very satisfied with
our budgeting process
The company budgeting
process is aligned with the
actual performance
Linking budget and
strategy needs strong
improvement
6. 6
COSTLY AND TIME CONSUMING
12M$
60%
12% annual budget cycle in less than two months
budget cycle exceeding three months
annually for organizations with $10 billion
or more in revenue
7. 7
CHANGING ENVIRONNEMENT
• Annual budgets cannot keep pace with the constantly
evolving business environment, making annual budgets
obsolete.
• Tendency to leverage N-1 numbers.
• Rapid change is the new norm
8. 8
WRONG FOCUS & BARRIERS
Compensation
Sponsorship
Technology
Compensation should be linked to how employees contribute to the bottom line
rather than how they perform against budget
Significant change requires strong corporate and business-unit sponsorship
Technology can either impede or enable progress
9. 9TRANSITION TO BEYOND BUDGET
Five Core Components
5
4
3
1
2
• Extendsbeyond the calendar/fiscal year and
covers a standard number of periods
• Updated on a regular and pre-determined basis
• Emphasizing on key business drivers
• Enables Rapid forecast creation
• Blends actual performance along with the
updated forecast
10. 10
Implement a driver base model
Retain prior-period forecasts for back testing
Ensure cultural shift
Technology support
Select the accurate forecast horizon
RECOMMENDATIONS
11. 11
• Resources availability
Select the accurate forecast horizon
RECOMMENDATIONS
No need to go the extra mile
• Lead time Align your forecasting horizon with lead times associated
with the business
12. 12
Implement a driver base model
RECOMMENDATIONS
Leading vs Lagging
Alternative scenarios
Improve with time
Allows ressources allocation
15. 15
Profitability and cost management
Financial Close
Reporting and analytics
Budgeting and forecasting
Strategic planning
TECHNOLOGY
Ensure complete technology support
Collaboration
Workflow
Storage
