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Budgeting Best Practices 

Just to recap, we have covered the four best practices for budgeting through Budgeting Best Practices with SAP Business Planning – Part I and Budgeting Best Practices with SAP Business Planning – Part II of this blog series. Here we cover 5 & 6:

Budgeting Best Practice # 5: Collaborative Planning 

Similar to carrying out a real time activity, where every department co-ordinates with each other seamlessly, to run the business operation, Budgeting should also be collaborative across the various functional departments. Sales planning created by the Regional Sales department should seed the production capacity planning of Operations Manufacturing department. The shortfall in capacity should lead to investment and capital expenditure planning that would be prepared by Projects department, and this in turn will lead to cash flows and funding plans. There would be parallel streams to recruit new people that will lead to Workforce Planning by Human Resources department, and also to prepare marketing planning. The whole process should be iterative and co-ordinated through a seamless flow. When an organization spends time in putting up a collaborative budget in their planning cycle, results are bound to be very effective since all departments have converged into an integrated plan for the next year. The below chart explain the collaborative planning:

 

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SAP Business Planning product allows for very effective collaborative planning through the concept of Business Process flow. The users can approach the product from a process centric approach rather than a function centric approach. The entire annual budgeting process is modeled as a business process flow and the different departments can collaborate and create multiple iterations of budgets.

Budgeting Best Practice # 6: Adaptable and continuous planning 

Every plan becomes successful only when it is flexible to change based on the internal and external events. Annual budget needs to constantly reviewed and forecast created atleast every quarter if not at a shorter frequency. This will facilitate to incorporate the impact of the events, especially in this fast changing business environment. Best practices recommends rolling forecasts coupled with annual planning, to ensure the business plans reflect the latest scenarios. This will also ensure identifying new opportunities for business that did not exist when the original budget got prepared.

 

To support such an event based, adaptable and continous planning, it is very essential to have software solutions that can support the change. Also the more important consideration is that the solutions should be business user enabled, in order to implement business plan change rapidly. SAP Business Planning solutions with its very flexible, easy to use administration capabilities fits this need very well. It is truly enabled for the Empowering the business user to implement business change with CPM. In addition the insight module within the solution allows for automated variance analysis that helps in identifying the events that is causing the variance. This is achieved through existing transactional, market and operational data that is loaded into the database that may reflect the dependant events.

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