Extract from “Pareto’s 80/20 Rule for the Corporate Accountant” published by John Wiley & Sons Inc
This sounds impossible yet it is achieved. It takes good organization and recognition that the annual planning process is not adding value, instead it is undermining an efficient allocation of resources,encouraging dysfunctional budget holder behaviour, negating the value of monthly variance reporting and consuming huge resources from the Board, senior management team, budget holders,their assistants and of course the finance team. When was the last time you were thanked for the annual planning process? At best you have a situation where budget holders have been antagonized, at worst budget holders who now flatly refuse to co-operate!
The future for your organization is quarterly rolling planning which is covered in section 3 in the book. However, it will take upwards of nine months to implement and your annual planning cycle may be just around the corner. This section will help develop the better practices that will be carried over into quarterly rolling planning and forecasting.