Reinventing Planning and Budgeting for the Adaptive Enterprise : Market Research Report

Reinventing Planning and Budgeting for the Adaptive Enterprise

Published: May. 1, 2006 - 224 Pages

Chapter 1: An Agenda for Change: Research Findings; The Strengths of the Annual Budgeting Process; Accountability; Weaknesses of the Annual Budgeting Process; Structural Shortcomings; Goal Setting; Forecasting; Resource Allocation; Process Shortcomings; Balanced Scorecard; Behavioural Problems; Incentive Compensation; Devolved Responsibility; Self-assessment Checklist: the current status of the budget
Chapter 2: Creating an Adaptive Organization: Defining an Adaptive Organization; Appropriate Devolution; A Dynamic Tension; Continuous Learning; An Adaptive Vision; Senior Management Commitment; A Compelling Case
Chapter 3: Alternatives to the Conventional Budget: Case Overview; Disentangling the Budgeting Process; An Interlocking System; Managing with Adaptive Processes: six principles; Self-assessment Checklist
Chapter 4: Reinventing the Budget to Support Strategy: Aligning Strategy with the Budget; The Balanced Scorecard; Strategic and Operational Budgets; The Balanced Scorecard and Beyond Budgeting; Shareholder Value Analysis; EVA Explained
Chapter 5: Moving to an Adaptive Model - challenges: Culture: the most difficult challenge; Research Findings; Myriad Cultural Barriers; The Role of Senior Management; Senior Management Resistance; Middle Management Buy-in; Devolved Decision-making; The Importance of Trust; Teamworking; The Support of the Finance Function; Turf Protection; More Enlightened Professionals
Chapter 6: Decoupling the Bonus from Annual Targets: The Downside of the Budget/Bonus Linkage; A Ceiling and a Floor; The Problem of Negotiation; Relative Targets; Shareholder Value Techniques; Economic Value Added; Nine Priciples of EVA-based Incentive Compensation; Aligning Compensation to the Balanced Scorecard; Difficulties in Scorecard/Compensation Link; Weighting Perspectives; Scorecard-based Plans; Quarterly bonuses
Chapter 7: Conclusion and Agenda for Change: Future Developments; No Change Expected; Some Change Expected; Significant Change Expected; Key Questions for Becoming an Adaptive Organization
Chapter 8: Eight Case Studies: Boston Scientific; Henkel; Herman Miller; Nordea; Scottish Enterprise; Statoil; Tomkins; UBS - Global Wealth Management and Business Banking

Abstract

Use this new strategic report to:

Transform budgeting pain into corporate gain
Create lean, effective planning and budgeting processes
Solve the cultural challenges of developing an adaptive enterprise
Implement workable alternatives to the annual budget De-couple incentives from annual fixed targets
De-couple incentives from annual fixed targets

For the first time, this report provides a comprehensive guide to the practical options, a migration plan and benchmarks for improvements. It shows how to undertake goal-setting, planning, resource allocation and performance-linked compensation using more appropriate frameworks and tools. Alternative tools and techniques are only part of the requirement. Find out how to bring about the all-important cultural challenges in behaviour and working practices that make next-generation planning and budgeting possible.

Dissatisfaction with the annual budget is driving companies to a tipping point. It is not just the time, effort and cost eaten up by conventional budgeting. Once delivered, it undermines an organisation’s ability to adapt and respond to changing operating conditions and market forces. And when linked to rewards, the annual budget often distorts decision-making and management behaviour.

Designed for a business era that has long passed, the annual budget is now a constraint and liability.

Some organisations - private and public - have developed innovative solutions, even abandoning the budget altogether. Their objectives: to create more responsive and flexible forms of planning, forecasting and performance management. Their reward: better business control and greater responsiveness to a roller-coaster business environment. Plus dramatically improved business results.

The Report In Brief

Why next-generation planning and budgeting processes are key to the adaptive enterprise
Step-by-step advice on how to migrate from traditional budgeting
Inside advice from pioneers of new approaches to planning and budgeting
Detailed assessment of alternative models and techniques
A framework for re-engineering planning and budgeting

Armed with this report, you can be prepared for the journey ahead: discover how others have solved the problems of moving from the old to the new order. Business Intelligence’s research distils the experience of leading companies to provide you with the benefit of the insights they have gained. In addition, there’s advice from experts who have helped organisations to implement these new ways of working.

How the innovators tackled their projects, the lessons they learnt and the new processes and practices they adopted are all mapped out in detail here to provide you with a comprehensive guide to transforming planning and budgeting. The report gives you the inside stories of companies that have transformed planning and budgeting. Case studies illustrate the benefits to be gained:

Boston Scientific saw a dramatic 62 per cent rise in global sales with greater predictability in performance after the introduction of a 12-month rolling plan updated quarterly.
Herman Miller attributes its compound growth rate of 14.6 per cent since 1996 largely to its focus on Economic Value Added, EVA, which also involved a wholesale change to the role of the budget.
Henkel successfully cut its planning costs from €4.75 million to €2.9 million in 2005, and reduced its FTE requirement from 89 to 55 after re-engineering its processes.
UBS’s search for a superior way of implementing strategy led to the abandonment of its budget and the introduction of quarterly re-forecasting. Improved resource allocation, sharper decision making and reduced waste are three of the benefits the bank has chalked up.

These - and other companies covered in detail in this Report - have benefited from achieving a tighter grip on their businesses and better allocation of scarce resources. All claim bonuses from freeing up management time to concentrate on the business issues that really matter.

The dominant motivation for companies in changing their processes has been inspired by the ambition of raising their performance. It is not so much the desire to eradicate the inefficiencies of traditional budgeting that has driven them to change but the conviction that there are real opportunities to become more responsive and adaptive through innovative approaches to planning and budgeting.

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Reinventing Planning and Budgeting for the Adaptive Enterprise

Table of Contents

Abstract