Ditch the Budgeting Headache – Drive Growth Instead

Try as you might, you’ll be hard pressed to find someone with tenure in Finance or Human Resources who hasn’t been part of a cost-cutting initiative at one time or another. Painful and sometimes emotional, finding new, creative, and seemingly impossible ways to trim the budget is anything but enjoyable.

Why is this process so tedious and stress-inducing? First, there is a general disconnect between the higher and lower levels of management—and a trickle-down approach to cuts that often impacts mission-critical operations. Plus, businesses often take a blanket approach in deciding on cuts to make—so the same budget reduction is applied to everyone, regardless of the business units performance, growth trajectory, or headcount. Finally, the disconnect between the budget holders and Human Resources creates another cyclical exercise where both parties are working with limited information and almost zero visibility.

At its core, the operating expenditure budgeting process is far more than a cost-cutting exercise and it can provide tremendous insight across the value chain. Rather than serve as a point of friction, the budgeting process can help stakeholders understand how to optimally allocate resources and keep expenditures aligned with strategic plans.

Doing so is easier than you might think. With the right approach and the right tools, departments and business functions can collaborate to build budgets that are focused on driving growth rather than simply trying to do more with less.

Value chains that can support strategic imperatives

It’s no secret that organizations today are searching for value—and an environment of mounting pressure from competition, disruption, economic uncertainty, and geopolitical tension continues to demand increasingly more of their resources. To maximize the effectiveness of operating expenditures, your conversation and approach must go beyond collecting and consolidating budgets.

To this end, visibility, collaboration, and what-if scenario capabilities allow organizations to be more strategic in how their resources are leveraged. Technology with these capabilities can help leaders understand where and why to scale back, when an expenditure is required to meet growth targets, and how to better capitalize on their investments.

Setting strategic targets at the highest level of the organization and then allocating that information in ways that are advantageous to the business is another core component of success. Using a cloud-native enterprise planning platform can provide the flexibility and visibility needed to better support such dynamic analysis and decision making. This type of planning platform can also help OpEx targets cascade throughout the business in meaningful ways by comparing budget needs and requests at granular and detailed levels, aligning with workforce plans from Human Resources, and generating outputs that are best for the business.

Additionally, impacts to the P&L can be evaluated in real time and scenarios can be immediately created based on changes in the leadership vision and any necessary adjustments.

From a burdensome struggle to a strategic benefit

Aligning the strategic plan to financial and operational planning processes can reveal enormous value across the organization and allow stakeholders and budget owners to remain focused on the targets and direction of the organization. Decision makers can make improvements that are effective and better determine how resources can be repurposed for or allocated to more optimal activities.

And, by bringing budget-holders into the conversation around desired results, there is more room for collaboration, negotiation and concessions. Focusing the organization on such efforts to drive growth turns the perception of expense planning into that of a strategic process rather than just another necessary evil.

When OpEx optimization is supported by the right planning platform, it can be highly strategic—rather than burdensome—to integrate with the organization’s overall vision and provide an overarching direction for the entire organization to work toward.

[“source=forbes”]