Jack Welch once noted that “Making a budget is an exercise in minimization. You are always trying to get the lowest out of people because everyone is negotiating to get the lowest number”. One of the ways to achieve this is to go beyond Budgeting. Beyond Budgeting has been a hot topic in finance for a long time and unsurprisingly, it has become the subject of the 6th Geneva FP&A Board.
30 senior finance practitioners were debating on the questions of how to redefine the outdated traditional budgeting practices and how to make a budgeting process more flexible. According to the Board, it is vital to unmistakingly determine the stage when it is high time to fully abandon the budget. The Board members, representing such companies as Coty, Nestle, PepsiCo and others, shared their expertise and exchanged their professional experience with colleagues.
The Meeting Agenda
- Beyond Budgeting: key definitions and principles.
- A case study from the field: to be confirmed soon.
- Small groups discussion on Beyond Budgeting Philosophy. "Are we ready to abandon the budget and what does it require?"
- Conclusions and recommendations.
The main highlights from the event were the following:
- Everybody understands that the traditional process is too expensive and inefficient. However, it is deeply embedded in the organisational culture.
- The process of transformation should be gradual. The flexible budgeting process is a good intermediate step on the way.
- Analytical driver-based models that are implemented through modern systems are essential.
- Rolling Forecast and sophisticated flexible target system should be considered.
To learn more about the meeting, read a report by Anne-Marie Rice, EMEA Director at AFP.