Mary C. Driscoll on CFO.com discusses their Metric of the Month: Budget Iterations.
In an ideal world, the budgeting process would be fast and painless. But for many division heads, finance teams, and CFOs who see the same spreadsheets crossing their desks over and over, it is an exercise in frustration.
Curious how many budget iterations companies generate before approving a final, enterprise-wide budget? So were we at APQC, the nonprofit business benchmarking and research firm I work for. So we dug into our Open Standards Research database and pulled out metrics from companies (of all sizes).
The top performers in this exercise represent the best 25% of the data set (in all, 485 companies based in the Western Hemisphere). These winners get the job done in three iterations or less. Meanwhile, the bottom 25% goes through nine or more different iterations before finally settling on a budget. In other words, the bottom performers are doing three times as much work as those setting the curve.
Cortell Director David McWilliam responds:
Budgets should be one result of sound strategy definition to define the key drivers around which plans, budgets and performance monitoring processes need to be built.
At Cortell, we deploy specialist financial modelling tools which allow our clients to mirror their changing operating model, and manage all of the processes and functions of driver based planning, budgeting, management reporting, performance monitoring, scenario modelling and rolling forecasts.
The speed and agility that this solution offers allows a view and control from the top, while still being able to grant ownership of bottom up budgeting where this is appropriate.