Harvard Business Review: Key Functions of Successful Business Budgeting

Hand holding a piece of white puzzle with word 2017 BUDGET.

Planning a corporate budget, always a challenge, and it certainly is getting any easier, especially as the role of finance is under pressure to become more strategic

So today, with 2017 fast approaching, we review two of the four functions of successful business budgeting as defined in the Harvard Business Review’s, “Budgeting Seeing the Future.” Below is the short and sweet version of the first two main functions.

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1.       Planning

Harvard Business Review Adaptive Planning Financial Forecasting Best Practices WhitepaperA financial plan ensures that your organization has the resources to achieve its goals. Defining those goals is a subset to the planning step. Goals should reflect the mission of your entire organization. They can be as broad or specific as you’d like, as long as reaching the goal will help to achieve a greater organizational target.

One you define your goals, you have to weigh the options you have for meeting them. For example, if your goal as a software provider is to increase customer satisfaction by 10 percent, you may consider acquiring the most talented technology experts, or investing in more training, as a way to achieve that goal.

Once you weigh the options, part three of the planning process is to make a decision on how to achieve the goal, and allocate the appropriate funds within your budget. If, as a software provider, you decide training is the way to go, make sure your business budget reflects the cost of technology training and certification.

2.       Coordinating & Communicating

Harvard Business Review Adaptive Planning Financial Forecasting Best Practices WhitepaperCoordinating means taking all of the disparate departmental budgets and consolidating them into a master budget that defines your organization’s overall objectives. In order to do this, great communication and collaboration is needed across the organization. It’s one of the reasons why so many businesses today are investing in cloud-based budgeting and forecasting software tools. These tools increase collhttp://www.adaptiveinsights.com/aboration among sales, marketing, operations, development, and customer service; all of which must be involved in the process in order to develop a holistic master budget.

Another component to add: upper management needs to communicate the company’s goals to all departmental levels so that each level can create their own budget with the right goals in mind. Cloud CPM & BI software allows all of this collaboration to happen in real-time, making the corporate budgeting process much more efficient and freeing-up more time to focus on other strategic tasks.

Our CFO Indicator Q4 2016 report reveals that while 85% of CFOs say their teams have direct access to the financial and operational data needed to generate accurate reports, it is the non-value-added tasks—like data gathering, verifying accuracy, and formatting reports—that take time away from the strategic analysis desired by top management and other stakeholders. Most CFOs also cite data integration as the biggest technology hurdle to gaining actionable reporting information, given the increasing need to report on both financial and operational data typically housed in disparate, unconnected systems. Read our other CFO Indicator reports here.

 

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