The Financial Controller and CFO's Toolkit, 3rd Edition

Chapter 9A Lean Annual Planning Process—Ten Working Days or Less!

OVERVIEW

Annual budgeting and planning can be completed in two weeks provided we take a fresh look at the process. The only thing certain about annual planning is that it is wrong as soon as the ink has dried, so we need to get it wrong quicker. This chapter explores why annual planning needs to change radically. It discusses the foundation stones and better practices behind a lean annual planning cycle, and how to sell the change to management.

This sounds impossible, yet annual planning can be completed in two weeks. It takes good organization, plenty of abandonment, and awareness that the annual planning process is not adding much value to the organization as the numbers are wrong as soon as the ink has dried. Annual planning is undermining an efficient allocation of resources, encouraging dysfunctional budget holder behavior, negating the value of monthly variance reporting, and consuming huge swathes of time from all those involved.

When was the last time you were thanked for the annual planning process? You have a situation where, at best, budget holders have been antagonized; at worst, budget holders now flatly refuse to cooperate.

The future for planning in any lean organization is quarterly rolling planning, which is covered in Chapter 16 in this book and is developed from the Beyond Budgeting movement, which I fully endorse. However, it will take upwards of nine months to implement quarterly rolling ...