In April, we held the 5th Stockholm FP&A Board. The Board was debating about the Beyond Budgeting philosophy. 26 senior finance professionals, representing companies such as Electrolux, Ericsson, Roche, etc., shared their experience with dealing with the budgeting process.
The Meeting Agenda
- What is Beyond Budgeting (BB)?
- Why does it work and what are the key benefits of this management system?
- “BB evolution and implementations in the Nordic region”. Presentation by Knut Fahlen, Author and Beyond Budgeting thought provoker
- Small groups discussion on Beyond Budgeting Philosophy. "Are we ready to abandon the budget and what does it require?"
- Conclusions and recommendations.
Quite a few of the leading Nordic companies have already abandoned the budget: e.g. Handelsbanken, The Maersk Group, Statoil, etc. Nevertheless, the weighted average budgeting pain ratio is usually at around 6.8 (where 0 was awarded for an easy and 10 for the extremely painful process).
During the Board, we conducted a small survey. Only 20% of the members are enjoying the relatively short and easy annual budgeting cycle of 3 months and less, while 20% have a process that is longer than 6 months and 60% manage the process within 4 to 6 months.
This breakdown is in line with our global statistics and is a great indicator why the traditional budgeting process does not work anymore: it is often outdated before it is final.
The Board suggested a number of practical steps for transformation that you can find on our website.
Many thanks to Dr. Knut Fahlén, Swedish BB thought leader and author, for his excellent presentation and for the books.
We are very grateful to Michael Page and SAP for sponsoring this meeting.