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Scrapping Budgets the New Best Practice for Finance Organizations?

by Graceanne Bowe

May 3, 2011

by Graceanne Bowe, SAPinsider Events

According to leading companies, the answer to this question is a resounding “yes!”  Annual budgets, with their excruciating level of detail, are being abandoned in favor of rolling forecasts that offer businesses the flexibility to continuously adapt to new events and changing market conditions.  

In a recent CFO Magazine article, “Let It Roll” (May 2011 issue), companies such as Unilever and Statoil—both SAP customers—have scrapped their annual budgets in favor of rolling forecasts for several reasons, one being that, since budgets can take anywhere from 3-6 months to prepare, they are usually out of date by the time they go into effect. Unilever updates its forecast on a quarterly basis, based on inputs from multiple departments as well as customers.  Statoil has divided its former annual budgeting process into separate target-setting, resource allocation, and forecasting processes. 

WIS Publications’ research indicates that adoption of formal business planning and forecasting tools, such as SAP BusinessObjects Planning and Consolidation (BPC) is on the rise.  It will be interesting to see if this application can be successfully used as a flexible forecasting tool.  To that end, Insider Learning Network would love to hear from customers who are us ing BPC in this fashion, and what your experiences have been so far.   Please feel free to leave your comments below this blog post.

 

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