Jack Welch, the former CEO of General Electric once characterized budgeting as follows:
It sucks the energy, time, fun, and big dreams out of an organization. It hides opportunity and stunts growth. It brings out the most unproductive behaviors in an organization, from sandbagging to settling for mediocrity. … And yet … companies sink countless hours into writing budgets. What a waste!
(Source: ‘Winning’ by Jack Welch & Suzy Welch)
Jack’s take on budgeting is nothing new. In fact, the opinion continues to resonate with many CEOs and executives. They believe that budgeting, planning, and forecasting in most organizations is a very expensive and time-consuming affair that has often failed to deliver its intended value.
And yet, in a survey of CFOs conducted in 2017, 52% of respondents ranked Strategic Planning as a top-rated business priority, outranking everything else. It was ranked third as a finance department priority, outranked only by increasing cash flow & reducing costs.
Something doesn’t add up. If strategic planning were a top priority for CFOs (which we know it is), enterprises must have had budgeting, forecasting and long-term planning under control by sheer focus. However, it isn’t the case for several reasons.
To understand why, let us first look at some of the common challenges involved with planning & budgeting. We’ll explore these challenges in detail in subsequent blogs.
Common Challenges with Enterprise Planning, Forecasting & Budgeting:
- It sucks in a lot of time & effort
- Too many details and too little value
- It is susceptible to market volatility & changes
- Promotes a culture of conservatism that reduces appetite for risk-taking
As we review the above in depth, we’ll also look at recommended best practices for better financial planning & analysis (FP&A), and how products such as ValQ may help.
ValQ is Visual BI’s solution for Modern Visual Planning using Microsoft Power BI. It is a serverless, lightweight, multi-purpose application running on Power BI supporting use cases such as planning, forecasting, budgeting, time series forecasting, and value driver planning. ValQ is designed to enable executives, decision-makers and business analysts to seamlessly connect to data to make effective decisions. ValQ is fully customizable, mobile-compatible and has a highly engaging and intuitive interface. It is now available for SAP and Microsoft Power BI.
In our other blogs, we’ll review more topics of interest such as tips on getting the most out of value driver trees, best practices, how-to recommendations, software evaluation considerations, exciting features of ValQ, and more.
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We’ll also share step-by-step instructions that will help you get started