Solving the problem - XLerant

How do YOU define an “effective corporate budget process”?

There is a boatload of advice on how to shorten the time it takes to complete a corporate budget cycle. I’m all for that. But faster doesn’t necessarily make it any better. If the budget process doesn’t deliver business value to begin with, then the goal of making it faster produces the same lame results in less time. I don’t think anyone ever got promoted for that.

The truth is when you’re flat out of ideas to make the corporate budget process better — to make it deliver business value — then you fall back on trying to make it go away faster. I think this is where a lot of people are stuck.

Efficiency is about how fast a process can be run. If <all> you care about is efficiency, then let me give you outlandish piece of advice. Have someone on your staff take last year’s numbers and increase them by some inflation rate. If they sit in their office and do that at a high level for the whole organization, it should take them about 30 minutes, maybe less. It would be the model of efficiency. Of course you know that’s bad advice. Doing you’re organization’s budget in 30 minutes would produce a piece of paper that nobody would even look at. Efficient yes, effective, no.

Do you just want to roll up bad numbers faster? Of course not. There’s no real value in that.

Let’s talk about effectiveness. Effectiveness is getting the right budget. A budget that’s well documented and understood, one designed to achieve the goals of the organization. One that your line managers feel ownership of and will go out and execute.

Every CFO I know would trade a good budget for a fast budget every time. We want both, of course, but the focus has been primarily on the goal of “faster”… and it needs to be shifted to “better”.

So how you define an “effective corporate budget process”? And have you ever experienced one?

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