Our view is that Planning, Budgeting and Forecasting (PBF) sits within a performance management framework consisting of three components (the other two being Performance Reporting and Dimensional Profitability) where organisations can seamlessly link top-down, strategic targets to financial and operational forecasts and report performance against such targets.
Planning, Budgeting and Forecasting (PBF) should serve to support the business in understanding how its on-going activities contribute to delivering its future longer term strategy. It is a method for allocating scarce resources in-line with the strategic intent of the business and for planning actions to help it meet its strategic goals in response to changing circumstances.
The role of each element of planning, budgeting and forecasting is outlined below:
1. CREATE THE RIGHT ORGANISATIONAL CULTURE AND WAYS OF WORKING
2. INTEGRATE THE P.B.F PROCESS, LEVERAGING HIGH QUALITY DATA
3. DEPLOY EFFECTIVE AND SCALABLE TECHNOLOGY SOLUTIONS
Technology is moving from providing wide, impacting all areas of the business and the data governance should reflect this.The process must embrace Big Data and be utilised to deliver the strategic goals.A fully integrated performance management framework is essential to provide corporate visibility of the activities that directly deliver growth, and provide a clear framework for determining how to continuously allocate resources to support the strategy.one-off static analysis to a more regular,quicker and dynamic enabler in the process.Cloud solutions are enabling real-time reporting with continuous improvement embedded at a cheaper cost, which enables increased effectiveness and efficiency.
4 TODAY’S WINNERS ARE THOSE WITH THE MOST INSIGHTFUL GRASP OF THEIR DATA
The execution of business strategy through the PBF process is hampered by unreliable data. The challenges faced by organisations with regards to data quality is highlighted by the 45 percent of survey respondents who felt data quality was the single biggest impediment to the effective and efficient use of external data.
In my experience, poor quality data has resulted in Finance overriding numbers produced by Operations, and updating the business’s budgets and forecasts with projections based on intuition and experience. This kind of process produces a budget and forecast that the business does not feel they own.
I have seen previously-successful businesses fail as their environment becomes increasingly complex. agility in planning, as well as quicker and more accurate decisions across the organisation.Budgeting is one example where there is currently very little integration between Finance and other functions, resulting believe the incorporation of external data results insignificant improvements to forecasting accuracy.