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Best Practices

Planning is a little different. For one thing the process itself is often defined differently across companies. One company might think of planning as encompassing everything from strategy development to operational planning and quarterly forecasting, to management reporting and performance scorecards. For another company, planning might mean nothing more than developing departmental budgets once a year. A declared "best practice" for this company may simply mean than it's able to consolidate its departmental budgets faster. While that's a good thing, it may not mean as much to another company that's looking for a way to link strategic planning with concrete operational plans - its goal for a best practice.

That brings us to another point. The performance measures for the planning process vary far and wide. Of course cycle time and FTEs (Full Time Equivalents) are often used, but once again these measures may not be very comparable across companies, given the many different ways companies define the process. Obviously a company that defines the start of the planning process with the initiation of strategic planning, and ends it with the final approval of next year's budget, will define their cycle as being longer than a company that doesn't consider strategy as part of planning.

Are these efficiency measures, like cycle time and FTEs, all that meaningful? Improved efficiency implies reduced costs, and that's always welcomed. But is that the only goal? If it is, then seriously consider halting planning, and you'll be able to realize 100% of your goal overnight. Unlike Accounts Payable or Accounts Receivable, there is no absolute necessity for the process, is there? The real purpose of planning - which companies can easily lose sight of - is to improve decision making. Better planning also provides powerful foresight, more focused execution, and improved operational results. Are these benefits captured in measures like cycle time and FTEs? Obviously not, and that's the reason why these measures - although helpful - are inadequate on their own.

The point here is that the term Best Practices as it applies to planning should be taken lightly and not absolutely. The five Best Practices that are described here are the most widely discussed solutions to better planning, and most likely are the ones you've heard of. Consider them as providing some degree of insight and innovation, and most certainly "food for thought".

Use the links to the right for the approach you're most interested in. You'll find a brief description and a summary of pros and cons. If you want to add your own opinion or experience, you'll have the opportunity to do so.

 
  ROLLING FORECASTS
  BUTTONWOOD VP
  BALANCED SCORECARD
  VBM / EVA
  ACTIVITY BASED BUDGETING
  ZERO BASED BUDGETING
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