Making the Budgeting Process Work

The advantages of an effective budgeting process go far beyond numbers. While the process may highlight cost savings; a good budgeting strategy can also promote efficiencies, encourage innovation, challenge mindsets and create a shared vision of success.

Most companies go through the budgeting process every year, and as a result the process may have become stale; with the Departments just requesting an uplift on last year’s budget, with little thought about how they could improve or innovate.

Whilst some companies spend so long going through their budgeting process, that budgets are agreed upto six months into the year.

A common issue with the budgeting process is that some companies merge the budgeting and performance management processes, so staff are rewarded on achieving their budget.  The result is that Departments look for a less challenging budget, whilst the Management Team look for a more challenging budget.  This leads to a negotiation between Departments and Management, which may or may not lead to the right budget for the Department and the company.

The Finance Team’s input into this process can be patchy.  No doubt the Team will provide the individual Departments with a breakdown of costs against last year’s budget, but not necessarily with any analysis.  In many cases this is because the Finance Team just don’t have the time to review what is going on within each Department, and across the business as a whole.

If only there was a tool which could help the Finance Team analyse what has been happening; and would allow them to run scenarios easily and quickly to support the Departments in setting their budgets!  This is where IBM Planning Analytics can help the Finance Team, and indeed the whole company.

Planning Analytics will pull together all data sources across the business, providing one version of the truth.  This saves a great deal of time for the Finance Team, thus enabling them to spend time on added value activities such as analysing what has happened; and working with the Departments to run scenarios of what could happen and the impact on the business.  The result is a robust budgeting process, which drives innovation and improvements within the business.

To find out more about Planning Analytics please contact us.

Working with Spitfire Analytics has resulted in the Finance Team becoming an integral part of the business. We are now able to provide analysis and strategic advice on the future direction of the business, rather than spending our time poring over endless spreadsheets.


- Lee Boyle, Finance Director – Engineering, NG Bailey

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