xlerants presentation on 10 day budgeting

BudgetPak… XLerate your budget process

XLerant’s Presentation on 10 Day Budgeting

Copyright 2009 XLerant, Inc.Not for distribution or commercial purposes

• Two Basic Views of Budgeting

• An Audacious Goal

• Budgeting as a Process

• Key Points of Friction & How to Address Them

• Summary

• Other Recommendations/Quick Hits

• Action Steps!

Outline

Two Basic Approaches

There are two basic approaches to planning and budgeting out there. There are those who believe the budgeting and planning process is all about trying to guess what the future might be. For them it’s like trying to predict the weather; or the odds that the Dallas Cowboys will win the super bowl this year. It’s all about models and variables. The second school of thought says it’s not about models, it’s about people. For them budgeting is a commitment exercise, and planning isn’t about trying to predict the future – it’s about building a plan to make it happen. Let’s look a little more closely at both.

Crystal Ball Approach

For people who look at budgeting as a crystal ball exercise, their quest to improve the planning process centers on trying to build more elaborate models, fine tuning the variables used. It sounds compelling. If only we had the right model, we could just ask managers for a handful of assumptions; put them through the financial model and presto – a budget. 10 Day budgeting? ‐‐ why not about 10 minute budgeting! I’ve been in this business for more than 20 years and I’ve seen some companies invest millions of dollars in this approach and fail spectacularly. Why? For three reasons. First, because of lack of ownership and buy in of the numbers. A model that Finance develops Finance owns. Second, the world is changing too fast for any model stay meaningful for long. Which gets me to my third point. It’s the front line managers who are first to spot changes, and the first to know how the world is changing. They are the ones who really know what’s going on in the business because they live it on the front lines every day. So if you’ve come to hear how to tweak a financial model to improve your crystal ball, you’ve come to the wrong webinar.

Cooperative Approach

Communication

Engagement

Transparency

We believe that COOPERATION is the single largest determinant of both the efficiency AND effectiveness of the planning process. So this webinar is about how to improve the planning process by doing a better job of engaging the people who best know the business ‐‐ the one’s whose DAILY decisions make or break your success. The REAL reason why the budgeting process takes too long and delivers too little value is that we’ve been wasting manager’s time. But the solution isn’t to involve them LESS, but to use their time better. It’s about making those interactions with line managers more efficient and effective. That’s the real path to 10 Day Budgeting. So with that in mind, let’s take a look at 10 Day Budgeting, starting with the goal itself!





• Summary


• Action Steps!

Outline

The equivalent of “6 Sigma” for budgeting

Might never get there – but it’s the

right goal

Forces bold thinking, not

instrumentalism

Progress in the right direction

10 Day Budgeting – An Audacious Goal

Let’s be honest. 10 Day Planning <is> and audacious goal. But it’s the right one to have. Let me draw an analogy here. General Electric Company added a lot of credibility to a quality improvement effort called 6 Sigma. Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors). It’s called Six Sigma because the targeted error rate is 6 standard deviations from the mean – or essentially 3 defects per million. It’s an outlandish goal that almost nobody has achieved – but it’s proven to be highly effective none‐the‐less. Why? Because it changes the way people approach a problem. Most companies are nowhere near 6 Sigma defect rate when they start – more like 1 or 2 sigma. But when they established their goal so far from where they started from, it forced them to change their thinking. No idea was too crazy, every option as on the table. And they knew they’d never get to where they wanted to be with just a little tweak here or there. They needed to rethink the problem entirely. That’s the benefit of setting an audacious goal like 10 Day Budgeting. You might never get there, but it’s going to force you out of your comfort zone and get you to reexamine everything.





• Summary


• Action Steps!

Outline

Process

Start End

Error checking

Quality Control

Remediation

Focus on improving the front end of the process to improve the back end “first pass yield”

Back in the old days, manufacturers – or really anyone looking to improve a process – focused on the back end. They put all their effort to identifying errors and putting in remediation steps to fix them. Then along came a man called W. Edwards Deming who said “Wait a minute. Why don’t we prevent problems before they happen.” So he shifted the focus to the front end of the process, as a way to improve the back end and what’s referred to as “First pass Yield” meaning stuff that doesn’t need rework. So what’s the implication when it comes to budgeting?

Process Improvement ‐ Budgeting

Start End

Find & fix excel errors

Find budgets that are “outside the tolerances” and ask a lot of questions

Rework, rework, rework

Minimize opportunities for error

Set clear expectations for tolerances (baseline)

Improve communication for justifications

A lot of finance organizations have focused on the back end of the budget process. Some have invested heavily in reporting tools for this purpose. There are tools, for example, that will flag a line item if it’s more than X% greater than the guideline, or even color code variances as Green Yellow and Red. That’s all good, as is the effort to find and fix Excel errors. But those efforts will never – on their own – get you anywhere near 10 Day Budgeting. We need to take a page from Deming here and look upstream at the start of the process. We need to figure out ways to minimize the chance of human error – and I don’t mean locking down spreadsheets. That just frustrates people and makes Finance the bad guy. We need to look at how baseline budgets are developed that establish “tolerances” and we need to figure out how to improve communication in the process so that the good, justifiable variances to guidelines don’t get thrown out with the bad. That’s not everything we need to do of course, but it’s a start. The take‐away here is we need to shift our thinking from the back end of the process to the front end if we’re going to make any real and lasting change.

Role of Finance

Partner in the Business Budget Police

Find & fix excel errors

Find budgets that are “outside the tolerances” and ask a lot of questions

Rework, rework, rework




And when you shift Finance’s focus to the start of the process, you also change perceptions about what role Finance plays. Because, in fact, Finance IS playing a different role. Improving communication and making sure the right investments are made – even if they do fall outside the guidelines – is what a true partner in the business does.





• Summary


• Action Steps!

Outline

3 Areas of Friction

Communication Errors

Errors in Judgment

Mechanical Errors

There are 3 major areas of friction that need to be addressed. We’ll be talking about each one in turn, but we wanted to introduce them to you briefly here. The first is mechanical errors. These are formula errors, broken spreadsheet links, reports that get messed up because someone inserted rows in a budget template – all that stuff that drives everyone crazy. Then there are Communication Errors. This happens when someone in Finance keypunches numbers into a budget template on behalf of a line manager or some other non‐technical user. How do you know when this error has occurred? The first time you hear the words “That’s not MY number.” Now fixing communication errors isn’t as easy as fixing a formula. That’s the reason why a lot of finance folks shy away from even trying to address the topic of communication. And then there are errors in judgment. You know, the guy who wants to triple his travel budget for no clear reason, or the manager who insists that Revenue will be down next year when just last quarter the company booked a record increase in sales. Let’s face it. This is one of the main reasons why Finance wants to be the one keypunching numbers into the budget template. At least they know they won’t have to back out some crazy assumption someone tried to sneak in. But that solution – to have Finance own the budget input – comes at a high price you might never have considered. As long as it’s your fingerprints on the keyboard, it’s your budget. So how can you address Errors in Judgment without giving up control of the process? We’ll address that later. But for now, lets’ turn our attention back to solving the issue of mechanical errors.

Areas of Friction

Pareto Chart*

=Sum()Inserting

Rows

Unit X

Rate

Linking

Spreadsheets

Driver Lookup

Complex Formulas

97% of errors

*Buttonwood Group, LLC Survey

The Buttonwood Group did a survey a while back that documented the s of mechanical errors people made in the budget process. I think it surprised a lot of people that it wasn’t the big nasty nested what‐if statements that accounted for most of the problems – it was the basics like

type

writing an =Sum formula. In fact, 97% of the errors stemmed from the relatively simple, every day stuff. Let’s dig into that a little bit further by taking a look at an illustration.

Areas of Friction

Budget holders create errors when writing formulas, inserting rows, linking spreadsheets

In this illustration a Budget Holder inserted a couple of rows to add some line item detail. That would actually be helpful in seeing how he came up with his budget, but in this case he blew it by messing up the “Equals Sum Formula” and including a row he didn’t intend to.

Areas of Friction

“Lock down the template”

Inflexible, limiting

User frustration

Forced to go offline

Good, rich rationale behind the numbers is lost

One solution is User Training – but that’s been tried a million times with mixed results at best. Another solution to the problem is to lock down the spreadsheet, like they’ve done here by graying out the option even to insert a row. But that comes with its own problem It’s inflexible, frustrates users, and forces them to go offline. But the worst part about it is the rich detail you would have to see how someone actually derived their numbers is now lost. It might exist somewhere – but not in the system.

s.

Areas of Friction

“Have Finance do it”

Expensive approach

scommunication

hat’s not my number

Mi

“T ”

The other old approach is to have Finance do everyone’s budget for them. That’s the throw‐people‐at‐it solution and it’s expensive.

t the end of the day “It’s not my number.”

And because it’s not the Budget Holder doing it – there’s a lot of room for miscommunication and misinterpretation – and a

6 Sigma Solutions

Think Big

Now before we look at a better solution to this problem, let’s remind ourselves of what we’re trying to do here. We’re not looking to tweak the process and nibble around the edges. We’re trying to rethink the problem and come up with solutions that tr sform the process. So when we’re looking at how to address the problem of minimizing mechanical errors th t plague the process, we’re looking for something more than just locking down spreadsheets or throwing people at it.

ana

We’re looking for a game changer.

Areas of Friction

Requirements for solution

Eliminate the need to memorize & write common Excel (or Excel like) commands when budgeting.

Replace with plain English prompts and selections – like when booking travel plans on Expedia, shopping on Amazon, or doing online company benefits enrollment.

Well here’s a provocative idea ‐‐ if we’re looking to address the problem of formulas errors, get rid of the formulas! I know that sounds like a joke, or it’s far‐fetched, but it’s not. You know plenty of examples in your own life. For example. If you book a trip on Expedia, you plug in where you want to travel and when; and then pick from the options provided. After you’ve made your selections, the system will provide you with a breakdown of costs. And what’s amazing is that you can add a car or hotel and Expedia will keep track of it all.

Like you take for granted that you don’t have to write formulas when you make a purchase on Amazon ‐‐ or that here wasn’t a need to write calculations when you enrolled in your company’s online benefit program. In all these cases there’s some pretty heavy lifting going on under the hood – but there’s nothing for you to do but follow the prompts and make your selections. So if you’re building your own budgeting system here’s one requirement you want to hand over to your IT Department. Make the most common formulas used for budgeting available at the press of a button – rather than have users write them.

ou probably take that for granted. Yt

Areas of Friction

Communication Errors

Areas of Friction

Someone from Finance meets with a line manager…

Interview

Interpret

Keypunch

“Looping”

Okay, let’s take a look at a typical process. Someone from Finance is going to be inputting budget numbers into a template on behalf of a line manager. So by a combination of telephone calls and emails, and maybe a face‐to‐face, the line manager communicates his or her needs and equests to the Financial Analyst who interprets the results… and then keypunches budget figures into a Budget Template. Ahhh, if only it were that easy! At some point the Financial Analyst needs to verify they interpreted everything correctly, so they meet again with the line manager to hand them their budget template. That’s if they have time. If they don’t they’ll send it over via email or talk about it over the phone. The really complacent line managers will just accept whatever you hand them – which is not always a good thing and could come back to bite you in the end. The more engaged managers will pay attention and may have you rework some things… which starts the whole process over – what people who study this stuff call “looping”.

r

Areas of Friction

Someone from Finance meets with a line manager…

And here’s the real problem. Most Financial Analysts aren’t meeting with just one person. They have multiple internal clients. So things get complicated real fast, and it’s not easy to keep everyone’s requests straight.

6 Sigma Solutions

Think Big

Areas of Friction

Requirements for solution

Self service within a controlled environment.

So how do you minimize miscommunication and misinterpretation? By making the process itself more Self Service. Studies have shown that self service processes are 3 times more efficient than those that involve a middleman. And a lot of that efficiency is gained by eliminating miscommunication. An analogy here would probably be helpful. Let’s use online benefits enrollment for that purpose. <CLICK> If you go about five years ago, before online benefits enrollment began to take off, you would find a situation eerily similar to what budgeting looks like in a lot of companies today. There were forms that needed to be filled out, similar to budget templates. And since HR often worried that people wouldn’t really know what they were doing, HR would do it for them based on conversations with the employee. There was actually a lot at stake. Benefit selection actually impacts Payroll runs, so if you did something wrong then someone’s paycheck could get messed up. That was a good reason why HR took ownership of filling out the forms. But the process was plagued with miscommunication and misinterpretation. And employees weren’t really fully aware of the choices they were making or what impact they would have. So it was all a bit of a black box. Sound familiar? Well some enterprising people over at MetLife and other insurance firms changed all that. They developed a self service approach within a controlled environment. Gone were a lot of the miscommunication and misinterpretation problems – and that alone greatly accelerated the enrollment process. But there was another benefit – people finally “got” what was in or out of their benefit program. They owned it. We don’t have time today to go into a lot of detail on what exactly self service budgeting looks like; but applications do exists. And I’d be remiss if I didn’t tell you that our company has one of the better ones out there. But regardless of all that – if you’re building you own system take a page from Online Benefits Enrollment. Do away with budget templates and replace them with a plain English workflow like what you see here.

3 Areas of Friction

Errors in Judgment

Okay, let’s talk about the hardest area to address – errors in judgment. First of all, there is no way you can eliminate all errors in judgment bucan do something to drastically reduce them.

t you

• Senior executives review & approval

Areas of Friction

Vice President

Director

Manager

Manager

Manager

So let’s take a look at the typical review & approval process today. As we discussed before, individual line managers work with someone in Finance who prepares their budget. Now that person in Finance is supposed to scrub the budget and make sure it looks right. But there are a couple of obvious problems with this. First, the person in F nance is supporting a lot of people and there’s only so much time they

hird, the Financial Analyst is usually a peer or subordinate to the manager they’re pulling together a budget for. So when the manager tells the nalyst to put more spending into the budget or to lower revenue projections, it’s hard for the Analyst to say no.

It’s really up to the managers’ Director to say no, and in theory

ican spend digging into things. Second they’re probably great at accounting and finance, but they aren’t operational experts and they can’t be expected to review the business rationale behind a manager’s budget the same way that managers’ Director would. TA

those operational reviews should be happening. But in reality it’s spotty and inconsistent. And sometimes those operational reviews are nothing but a 5 minute hallway conversation between meetings. And that lack of consistent, meaningful operational review causes problems then at the next stage, when the executives meet to review and approve budgets.

Vice PresidentVice President

President

Director

Manager

Manager

Manager

Director

Manager

Manager

Manager

Areas of Friction

So now Finance Presents the Budget to Senior Management. And if you videotaped these meetings you’d find something interesting. It’s Finance

ack

key reason why the budget cycle akes so long. So what can you do about it?

who does most of the presenting and answers most of the questions. But it’s not supposed to be Finance’s budget. Right? We want operational ownership of the budget, but it sure sounds like ours when we’re presenting it. Given everything we talked about earlier, this is a natural outcome. Finance pulled all the numbers together ‐‐ they know where they came from and how they were developed. So Finance presents the numbers ‐‐ and at that point they’d be hard pressed to shift ownership of the budget bto operations. And there’s another interesting dynamic. Since a lot of these budgets haven’t been through a rigorous operational review, what ultimately gets presented to Sr. Management can be way off the mark. And we all know the rework that comes after that. This is at

A Seal, in an East Asian context, is a general name for printing stamps and impressions thereof that are used in lieu of signatures in personal documents, office paperwork, contracts, art, or any item requiring acknowledgment or authorship.

Sealing wax is a material which, after melting, quickly hardens (to paper, parchment, ribbons and wire, and other material) forming a bond that is difficult to separate without noticeable tampering. Wax is used to verify the sender's identity.

Areas of Friction

Before we get into specific recommendation I wanted to introduce a concept to you. And it’s a pretty old one.

oday electronic sign offs have taken he place of seals, but they serve the same purpose. They ensure an audit trail and verification that documents an

o let’s see how that applies to improving the budgeting process.

For close to a thousand years when authorship of a document needed to be verified, a seal was used. Interestingly, this was a global concept because the need was so widespread. People everywhere wanted authentication that a document was authored or reviewed by the right person. Twere reviewed by who they need to be reviewed by! Of course you don’t need an electronic sign off – someone’s signature on a paper budget cserve the same purpose. S

6 Sigma Solutions

Think Big

Vice President

Director

Manager

Manager

Manager

Areas of Friction

What if Finance orchestrated the process, but leveraged self service budgeting in a controlled environment. Maybe they still sit with managers and go through the budget screens screen together, making decisions as they go along. But it’s the manager himself or herself that electronically signs off of the budget – automatically promoting it up the line to their boss for review and approval. And what if that sign off process continued right up the line? From our experience, it can radically change behavior. In the old world with Finance doing my budget for me, I could always hide behind the excuse that they didn’t get it right. And I could make unrealistic requests without risking much. But if I have to sign off on my budget, knowing the next person to see it is my boss, I’m going to make sure it’s right, and that it’s defensible. I’m going to make sure there’s a real business rationale for everything I’m asking for. And that operational review I have with my boss is going to be way different than a budget review with someone in Finance. And it’s because of that, that there’s a much greater chance that budgets are going to be more realistic and buttoned up to begin with. That means less rework and Higher First Pass Yield.

Requirements

Address Communication Errors

Address Errors in Judgment

Address Mechanical Errors

+ 1 More

So we talked about how to address each of these major areas of friction, but there is one more requirement we need to cover.

Requirements

Start




Goal: Get the “business rationale” behind requests to go beyond the baseline.

If we look back on the process flow, we said we need to address the front end of the process, which we did. But what about setting expectations through a baseline, and communicating justifications?

ionale so your anagement can decide if it makes sense and they want to approve it.

Okay, with that in mind, let’s examine the key friction points and how to overcome them.

Remember the ultimate goal isn’t to prevent people from going outside the guidelines – the real goal is getting the business ratm

Vice President

Director

Manager

Manager

Manager

Why it matters

Remember, our goal here is to have a more effective OPERATIONAL review and approval process; which can happen only if the people approving the budgets have ready access to good documentation and supporting detail.

Areas of Friction

n legal pads or posit‐it notes or in a shadow spreadsheet or just stuck in omeone’s head. The point is it’s NOT part of the system so it’s not readily accessible and reportable.

ut let’s dig into that just a little bit further and see what we can do about it.

That’s not always true today. Supporting detail ‐‐‐ if it exist at all ‐‐‐ is lost os B

Areas of Friction

Communicating requests outside the baseline

• Explanatory notes

• Line item detail

• Earmark spending (special project, strategic initiatives, one‐offs, etc.).

Here are three common ways that supporting detail – detail that explains the rationale for going outside the guidelines ‐‐ is typically communicated.

People may add explanatory notes, or provide line item detail. Or they may bundle their expenses into projects or initiatives or marketing campaigns or other forms of earmarked spending. Let’s look at the first two.

Areas of Friction: Notes & Detail

It’s not intuitive how to write cell notations, and you’ve got to scroll through a template to find & read them:

Adding a note in a lot of budgeting tools, including Excel, is not intuitively obvious. And if it’s not intuitively obvious, people won’t do it. But even when people do add notes you’ve got to open up a template then go scrolling around, looking for a little red dot in the upper right hand corner of a

’s also very inefficient to have to open up a spreadsheet or template and go scrolling thru it to see if someone added line item detail. That wastes a good chance you’re going to miss something.

cell. That’s not very efficient. In fact it’s a little ridiculous. Itlot of time and there is a

6 Sigma Solutions

Think Big

Auto reporting of explanations and detail

Make line item detail & notes entered in a budget screen automatically appear in a report:

A more efficient and effective approach to make it easy and fool proof to add line item detail without having to write formulas and then have that line item detail automatically appear in a report. So here’s a case where the Accounting Department is going to get whacked with a pretty big bill for Sarbanes Oxley. There standard audit, which appears in the first line, is $170,000. But then they’ve got another $100,000 in related Sarbanes Oxley fees for a total spend of $270,000. They added a note about this in the box below. Well this is great, but if I have to open the budget template for the Accounting department to see this, it’s way less helpful. And if the CFO, who needs to approve the budgets for departments underneath him needs to open up the Accounting department template to see this detail, that’s not likely to happen. For this type of detail to be REALLY effective it must be easily accessible. In other words, it should come right out in a standard report. So here you can see the $270,000 in Audit Fees… you see the explanatory note to the right of the amount… and the asterisk indicates that’s there’s supporting line item detail, which you see highlighted below. So what you saw on the input screen appears right in the report… making life a lot easier for anyone who needs to review and approve this budget.

Requirements

• Explanatory notes

• Line item detail

• Earmark spending (special project, strategic initiatives, one‐offs, etc.).

Communicating requests outside the guideline:

Okay, let’s take a look at Earmarking spending.

Areas of Friction: Earmarked Spending

The real story behind the numbers is often spread across multiple G/L accounts:

– Marketing campaigns

– Strategic initiatives

– IT projects

– Special projects

– Trip budgets

– One off events

If you think about it, <the real story> behind the numbers is usually spread across more than one account. It’s in Marketing Campaigns or Strategic nitiatives or some type of Project or One Off event. All of these things usually entail more than one account and that’s where the problem lay.

et me show you why ‐>

I L

Areas of Friction: Earmarked Spending

Requires Excel skills many managers don’t have

Create new tab in workbook

Write =Sum( ) formulas

Write =Link( ) formulas “overlay them” on master template results

ave need

to the master template and OVERLAY it on the base budget.

his is just plain too difficult and complicated – so it doesn’t get done – or it does get done but it’s lost on a legal pad or in someone’s head.

And that’s a real shame because it’s this type of project spending that really gets you the story behind the numbers. In this illustration, the entire variance to baseline for this department’s travel budget could be fully explained by this once off event.

Even setting aside money for something simple like a new college recruiting effort requires Excel skills a lot of manager’s just don’t have. They ho create a new tab in the workbook, then construct a table, then write = Sum formulas. And that’s not the hard part. When they’re done, theytto link that spending back T

6 Sigma Solutions

Think Big

Integrated Project Budgeting

Make it easy to earmark spending & report

So this next big idea – Integrated Project Budgeting – is designed to address those problems. It makes it easy to build a budget for any type of strategic initiative or earmarked spending – even something like a New College Recruiting Effort. And it makes it just as easy to report on it – getting you the story behind the numbers.

The Approach

“Baseline & Earmark”

Taken all together, we call this approach “Baseline and Earmark.” Meaning, Finance communicates the guidelines – provides managers fast and easy ways to communicate the business rationale for requests that go outside the guidelines.

but





• Summary


• Action Steps!

Outline

• Address mechanical errors

• Address communication errors

• Address errors in judgment

• “Baseline & Earmark”

Recap

So to quickly recap. Look at your budget process as a process, and work to ddress the issues you identify as mechanical, communication, or errors in judgment.

And then work to adopt a process where you establish a clear baseline budget, and have people work toward it or document necessary changes.

a

How to get to this vision?

• Customized consulting

• XLerant’s BudgetPak

From a technology standpoint, there are two ways you can achieve this vision. One way is through customized consulting. If you have an internal IT

y

team that has the time and talent to build something for you, that’s an option worth looking into. And if you don’t have internal resources, you can go to the outside for help. But allow us one shameless plug in this whole presentation; XLerant’s BudgetPak was built from the ground up, by Finance professionals who reallet it, specifically to support this vision. And our clients have on average been able to cut the cycle time in half or better because of it. g





• Summary


• Action Steps!

Outline

What’s Helpful?

People

ProcessTechnology

Training− Budgeting 101− Presenting Budgets− Understanding Actuals

Process Mapping− Current process− Future process− Roles & responsibilities

Enabling Technology− Manager friendly− Workflow− Baseline & earmark

From a larger perspective, what’s helpful? From a People perspective, you really need to focus in on Training – es around a lot of the stuff Finance people take for granted – like Budgeting 101.

From a process perspective, one of the most helpful things you can do is map your process – both what it looks like today and how you want it to look. And on the technology side, you obviously want some that supports the vision that we discussed in detail today. But to get a little more specific, it should be manager friendly, include an intuitive workflow including budget sign off & approval; and it should make it easy to “baseline and earmark”.

pecially

• Have non‐finance managers present the Actual vs. Budget results to Sr. Management.

• Provide “Budgeting 101” brown bag lunch session(s).

• Pre‐configure your budget system for delaying new hires, or changing the default salary increase.

• Base bonuses on year over year performance (not Budget vs Actual).

4 Quick Hits

Before closing the webinar, we did want to 10 Day Planning, life would be way to easy

introduce some Quick Hit opportunities. Now keep in mind none of these quick hit ideas will get you to if that were the case. But they can make things better. Okay, one idea you can try out right away is to

ment. present, you might also want to hold a brown bag lunch, or a series of brown bag lunches, to teach Budgeting 101 to your

the

– especially when these cuts come at the 11th hour. So why not pre‐build the capability to run those scenarios?

alistic

t from the start.

have non‐finance managers present the Budget vs. Actual results for the company or organization at the monthly or quarterly meeting of Sr. Executives. They say the best way to learn something is to teach it, and nothing motivates people more than having to present to Sr. ManageNow before theymanagers. Another quick hit opportunity is to pre‐configure whatever system you’re using for budgeting today – and for many of you that’s Excel –to quickly calculate the impact of delaying new hires or changing the standard salary increase. These are extremely popular options for reducing budget And this last point might not be as quick as the others, but it can reduce a lot of the game playing that plagues the budget process. And that’s to tiebonuses to year over year performance. That reduces the economic incentive to sandbag the budget, and you can wind up with a more rebudget righ

• Senior management support.

• Clear lines of hierarchy & approval.

• Well documented, calendarized process.

• Sr. Management patience to start late.

• Willingness to let go, and let the manager take responsibility.

5 Prerequisites for 10 Day Budgeting

Now before jumping in with both feet, you should ensure you’ve got som of these fundamentals in place. To begin with, you’re going to need senior management’s support and you really can’t get anywhere without it. And things are going to be a whole lot easier if it’s clear what units

e

report into what Director or VP. Before you begin, you’re going to want to document your process – put milestones, tasks and activities on the calendar. And share that calendar with your senior management. If you really want to do 10 day budgeting back up 10 business days from when your Board meets to approve your budget. See if Senior Management can wait that long to start the process. And last but not least– if you’re not ready to let go and have your line managers take responsibility – then all you’ll really be able to do is make somencremental changes. i





• Summary


• Action Steps!

Outline

Request copy of this presentation

Attend next week’s demonstration

Schedule a 10 minute call

Schedule a private demo for my team

Possible Action Items

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203/328-3787

Slide 53

xlerants presentation on 10 day budgeting

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