Better Planning and Budgeting

Over at Intelligent Enterprise, Mark Smith of Ventana Research has an article titled “How to Get to Better Planning and Budgeting” that provides five questions finance organizations should ask:

1. Is the planning and budgeting process as strategic as it could be?

2. Are the budgets as accurate as they should be?

3. Does your planning really help increase your company’s agility?

4. Could your process provide deeper insight to more people?

5. Is the process itself of high quality?

The questions — and the following advice on what to do next — are reminders that performance management is still in its infancy at many companies.  A companion study shows that less than half of companies are at a mature “strategic” or “innovative” state and 20% at a primitive “tactical” state.  As an industry, we have a long way to go.

The article also reinforces my supposition that budgeting is not the same thing as planning. In Ventana’s words:

Recognize that planning and budgeting are not the same. While these two activities are related, there are important differences between the two. Planning is about creating a program for action; it’s part of an overall design to achieve specific objectives. Budgeting is about creating a statement of the financial position of an organization for a specific period of time based on estimates of revenues and expenditures. Planning is about things such as activities, people, resources needed and time spent. Budgeting is about money. Ventana Research believes that companies spend too much time budgeting and not enough time planning.

The rest of the article is worth a read as well.

2 Responses to Better Planning and Budgeting

  1. Edoma says:

    I found a little gem of a website for free budgeting online and it’s anonymous too. It’s called Out Of The Dark (OOTD).

    It literally transformed me financially.

    Happy budgeting

  2. Terri says:

    I enjoyed your article on budgeting.

    I also have a few articles on my blog on budgeting. You can check out my articles on budgeting, personal finance, and money management at http://yourpersonalfinances.wordpress.com

    Great article!

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