Management Consultancy

Budgeting For Success

A Cranfield Business School survey found that 80% of companies are dissatisfied with their budgeting process. At Parkwell we believe that companies often use budgeting processes that take too long, cost too much and encourage people to strive towards inappropriate goals.
A good budgeting process will inspire management to meet targets, driving the whole business towards the agreed strategy. There are a number of factors which we believe are the hallmarks of a good budgeting process:
  • The budget objectives reflect the overall business strategy.
  • It is not wholly cost and revenue focused. A good process will use a range of KPI’s to focus on corporate objectives.
  • The right technology streamlines the whole process, saving time and cost.
  • The budgeting tool and process is flexible, allowing iterative updates throughout the year to reflect changes in circumstances.
  • There should be relatively few iterations.
  • The management team actively participate in development and are clear on the defined targets.
  • The budget takes into account external metrics.
  • The process is actively managed as a project.
Parkwell has developed a method for ensuring the business derives greater benefits from the budgeting process. In order to be effective the objectives need to be aligned to the business strategy. To this end we recommend the following steps:
Step 1 - Understand the key strategic drivers and align the budgeting objectives to this. It is essential that the board agrees these objectives and has the control needed to drive the business forward.
Step2 - Review the current process. By talking to the creators of the budget we can identify what is actually happening at ground level. We will then have a clear picture of the ‘as is’ process as well as the ‘to be’ objectives.
Step 3 - Budgeting theories vary from fixed annual budgets to ‘beyond budgeting’, which purports to replace the budget with a series of constantly moving targets. Step three of our process is about finding the appropriate solution for your business. The right solution will depend upon the complexity of the business, the sector and the culture of the organisation. 
Step 4 - Design phase. This includes the identification of the budgeting solution, selection of the best technology and determination of roles and responsibilities. We will ensure that the agreed process:
  • Aligns with strategy
  • Is flexible, allowing for new iterations throughout the year
  • Uses the right technology
  • Makes use of integrated modeling wherever possible
  • Incorporates appropriate external benchmarks
  • Applies the correct level of detail, ensuring the output targets are clear and relevant
Step 5 - Project manage the implementation of the newly designed process. Parkwell has over fifteen years experience of managing change within large organisations and have developed our own project methodology.
If you are interested in discussing our approach to improving your budgeting process then please contact Jason Raikes on 020 7648 4848