Harvard Business Review: Key Functions of Successful Business Budgeting

Planning a corporate budget is always a challenge—and it certainly isn’t getting any easier, especially as the role of finance is under pressure to become more strategic

So today, with 2017 fast approaching, we review two of the four functions of successful business budgeting as defined in the Harvard Business Review’s, “Budgeting Seeing the Future.” Below is the short and sweet version of the first two main functions.

1. Planning

A financial plan ensures that your organization has the resources to achieve its goals. Defining those goals is a subset of the planning step. Goals should reflect the mission of your entire organization. They can be as broad or specific as you’d like, as long as reaching the goal will help to achieve a greater organizational target.

One you define your goals, you have to weigh the options you have for meeting them. For example, if your goal as a software provider is to increase customer satisfaction by 10 percent, you may consider acquiring the most talented technology experts, or investing in more training, as a way to achieve that goal.

Once you weigh the options, part three of the business budgeting process is to make a decision on how to achieve the goal, and allocate the appropriate funds within your budget. If, as a software provider, you decide training is the way to go, make sure your corporate plan reflects the cost of technology training and certification.

2. Coordinating & Communicating

Coordinating means taking all of the disparate departmental budgets and consolidating them into a master budget that defines your organization’s overall objectives. In order to do this, great communication and collaboration is needed across the organization. It’s one of the reasons why so many businesses today are investing in cloud-based budgeting and forecasting software tools. These tools increase collaboration among sales, marketing, operations, development, and customer service; all of which must be involved in the process in order to develop a holistic master budget.

Another component to add: upper management needs to communicate the company’s goals to all departmental levels so that each level can create their own budget with the right goals in mind. Cloud CPM & BI software allows all of this collaboration to happen in real-time, making the corporate budgeting process much more efficient and freeing-up more time to focus on other strategic tasks.

Watch a Demo and See Workday Adaptive Planning in Action.