The world of financial planning and analysis has observed changes of such magnitude that they cannot be described by our traditional statistical and analytical models.
The future is unpredictable, the current business environment is harsh, competition is fierce. In these times of change, modern FP&A is both exciting and challenging. It is exciting because it utilises better and more sophisticated tools than previously, can embrace automation and the incredible power of online collaboration. However, it is difficult because old finance management practices are still alive: they are inadequate for the modern world.
On 12th October 2017, 22 senior finance practitioners from such companies as Ericsson, IDG (International Data Group), Lagardére Sports, MSD, Nutricia, Philips, Pirelli, Regus, Salesforce, Telia, Tieto, etc., gathered in Stockholm to interactively discuss why Driver-Based Planning matters for modern FP&A. The discussion was thought-provoking and interesting: many finance practitioners considering fully driver-based planning model, however, just a few organizations have them.
On 13th June 2017, 29 senior finance practitioners from such international and local companies as ABN AMRO, CRH, Diageo, Gemalto, Henkel, Ingram Micro, Naspers, PvH Europe, Regus, Sandoz, Staples Solutions, TIP Trailer Services, Vlisco, etc., gathered to interactively discuss Rolling Forecast Best Practices at the FP&A Board in Amsterdam.
Organisations are finding it increasingly hard to plan or predict future performance due to the fast pace and complexity engendered by today's global, online business environment. And yet, within the vast quantities of data. available to management, there are tell-tale trends and correlations that reveal valuable insights to the direction they should take to maximise results.
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In this article, we will explore the concepts of Zero-Based Budgeting and Zero-Based FP&A. The word “Budget” is not associated with flexibility and dynamics. Zero-Based Budgeting has started to be evolved to “Zero-Based Everything”:
Most recently, I have been observing significant changes in business models in many organisations around the globe.
Many FP&A Board members say the future can no longer be predicted based on only historical data since we are living in an environment of “Unknown Unknowns”.
The concept of Zero Based Budgeting (ZBB) is by no means new. It has been around for almost 50 years and has been used by many commercial and non-commercial organisations whose overriding objectives are to shed the unnecessary expenses.
In a rapidly changing business environment, the traditional, out-dated budgeting mentality is being challenged more and more. While the process of moving away from a traditional budgeting mentality is painful and slow, it is happening around the globe. The question is, are we ready to abandon the traditional budget completely?