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What’s your secret sauce in orchestrating your work and budget plans?

It sounds like a simple question but when we approached large enterprises with this question, the first reaction is a blank stare. Let’s take an example of one of our customers – a large national bank which over the last few years experienced a decrease of business customers to a competitor and decided to engage in an aggressive advertising campaign. Given the strategic importance to grow the number of customers despite a limited budget allocation, it lost track of its spending control. The bank soon saw significant overspending in the entire marketing budget resulting in a total misalignment between budget, strategic goals and constraints. 

By following these five steps in budget alignment, our customer took control of its huge budget and aligned it with its current strategy. By aligning it top-down and bottom-up, it has real-time, dynamic control of the process of annual budget planning and continues to execute its strategy on the level of its day-to-day operations. Needless to say, year-after-year this large organization experiences a reduction in budget planning time and overhead, while feeding its marketing engine.

Planning for the Unplanned in Annual Budget and Program Planning 

In fact, the right approach in budget planning needs to plan for the unplanned event. This means all types of unplanned events – from small issues that happen due to poor planning in IT demands, or from a last minute decision by marketing to sponsor an exhibition, to a major transformation such as merger or acquisition. Not only do unplanned events, which happen every year, have an impact on your budget, they also have a major impact on your strategy execution. Executives in a large organization need analytical tools to understand and control these unplanned changes on both the budget and strategy fronts. 

Furthermore, each line in a budget plan must be connected hermetically to the strategy plan or a plan for business transformation. If a company remains working in a siloed manner in which its budget is disconnected from the strategy plan, what are the chances that change can be actualized? Only when all the required resources across the organization are connected to goals can budget planning be accurate and support desired changes, contrary to previous research cited. 

In fact, the larger and more complex your organization, the more you require agility in your budget planning, including analytical tools to real-time dynamic planning. I’d like to refer to this agility as structured flexibility. Structured flexibility keeps your budget grounded within the reality of your constraints, policies and maximum resources. It enables you to cover the unexpected and extend to finance your visionary plans. But to have structured flexibility, you must have easy access to a single source of data and the tools to see the impacts of changes you are considering across your organization.

Here’s your test: Audit your budget process

Your budget process is probably gated with authorizations, but is it transparent? If there were changes, make sure there’s a tracking of why the changes were made, including all the needed approvals behind the changes. Take the time to perform an audit to ensure that the changes stay within the guidelines of the strategic plan.

As the budget season approaches, this is the time to change budget planning culture. This is the opportunity to do away with using offline spreadsheets. Do away with offline planning. Synchronize your planning across the organization in one dashboard with a gated process for clear tracking and authorization. Use a uniform process for planning annual and multi-year budgets, enforcing accountability and business logic. Ensure you have all the relevant information across the organization in one dashboard view. Finally, obtain analytical tools with “what-if simulations to quickly see the implications of unplanned changes across the entire organization.

You may still have to begin your planning process months before to get everyone on board, but at least you know you’ll have a controlled, streamlined process. And if control isn’t your number one priority in your budget and annual planning process, then becoming the backbone of your company’s strategic plan or major business transformation just may be.

30/03/16 Webinar: Program Governance
How to make sure we do the RIGHT things RIGHT?