What is wrong with budgeting and planning?

This is explained firstly by the business environment, which has become increasingly dynamic and complex over the past decade, so making planning and budgeting more challenging. Secondly, many decision-makers also stated that the quality of their planning outcomes is not good enough, with too little attention paid to strategic aspects in the planning process. What are the reasons for this and how can these shortcomings be remedied?

Many obstacles stand in the way of efficient financial planning. Many companies already stumble at the very first hurdle. For instance, 76 per cent of all the firms that were surveyed say that they simply do not have enough time for the complex planning process, as all their resources have to be deployed to handle their core tasks in the daily business. One in three companies complains of inadequate access to the necessary operational data and financial parameters. One in four of the companies surveyed does not have a big enough budget to bring about a far-reaching improvement in its planning process. The following factors must therefore be satisfied to achieve a sustainable improvement in the planning process:

  1. Implementation of the planning process must be both efficient and fast
  2. Adequate access to the required data must be guaranteed
  3. Low-cost implementation of the improvement must be possible

Excel the time-waster

In the companies surveyed by Cubewise, the average budgeting process took three or more months while simple gathering and processing of the data required one month and more. The main reason for this circumstance is easily identified: 86 per cent of all businesses still bank heavily on Excel in their planning process. In a company with 1,000 employees an average of some 400,000 Excel sheets are in circulation. No wonder, then, that so much time is wasted handling data. Integrated planning solutions provide a good alternative here. They can be incorporated quickly and at low cost into existing IT systems and ensure efficient performance of financial planning and budgeting.

Clear demands

A variety of demands are placed on financial planning. Around three-quarters of all businesses believe it is important for planning and budgeting to simplify the management of financial information. Half of the decision-makers stated that this is first and foremost the key to knowledge transfer between the finance department and the company’s operational management level. More than half would like to see the automation of core processes while ensuring that information from various sources is incorporated into the analytical process.

Learning from the best

A glance at the results of the Cubewise survey show which factors and methods are vital to the success of corporate planning. One important success factor for the best-in-class businesses that emerged is the use of driver-based modelling which have proved particularly important for the implementation and execution of the corporate strategy.

To increase the value of the planning process, which is otherwise seriously questioned, the scenario modeling method has proved valuable. This enabled the process to be designed more transparently, efficiently and effectively overall.

With integrated planning, the various partial sub-plans – such as workforce planning, capex planning and sales & demand planning – are connected (or unified) into the overall planning model (P&L, balance sheet, cash flow). This enables the planning quality to be increased materially, so raising the level of acceptance of the entire planning process within the company and encouraging collaboration between the different branches of the business. In general, the results of the study show that integrated planning leads to better performance.


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