Zero Based Budgeting
Budgeting & Budgetary Control continues to be one of the most effective ways of putting a Road Map in place and walking an organization down the budget path.
A well-drawn Budget compels a thought process that aligns and directs an organization through predictive results, forming the basis for analysis of actual performance vs. budget and reasons for variance.
Over the years however, traditional budgeting methodologies were found lacking given the current business environments of fast changing markets, products and technologies. Historical data and incremental performance targets were not representative of best or innovative practices, and organizations adopting traditional budgeting face the danger of sliding in the marketplace.
Zero based budgeting compels you to breakdown all tasks into their smallest elements and rethink and rebuild processes from the ground level, questioning every step and adopting the latest technologies and practices – often resulting in ground breaking innovation.
This methodology brings the essence of market leadership to the character of an organization, making it immensely capable of achieving path-breaking results.
The fact that the budgetary process is not limited by past performance but looks at all aspects of the organization’s business from a fresh perspective, gives a whole new approach to business and keeps the organization’s budgetary process dynamic and innovative. Performance reporting and variance analysis becomes a critical tool to achieve such a zero based budget once adopted.
Sonny Gujral is a Partner at BGD, overseeing the Managed Services area. In his 30-year career span, Sonny has assisted numerous companies to improve their performance and solve their business challenges through financial turnarounds and extensive business re-engineering efforts. Learn more about Sonny Gujral.
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