2007 Budgeting and Forecasting Survey

PricewaterhouseCoopers advisory services prepared a study entitled 2007 Budgeting and Forecasting. Let me take a moment of your time and inform you about the main business points we have revealed.

Highly effective financial planning is now recognised by leading finance organisations as critical to the successful execution of business strategy. It is no longer sufficient to just measure past performance. Budgeting and forecasting has become a critical competency for organisations to effectively plan, manage, and execute on strategy. As a result, finance organisations face new challenges: building financial plans with strong links to strategic initiatives and fostering new collaboration between financial management and business operations.

This study is based on research conducted in an attempt to understand how financial executives are responding to these new challenges. We examined both established financial planning practices and emerging trends to uncover links between leading practices and the overall satisfaction with financial planning processes of large organisations. The research was executed via 200 cross-industry web surveys and four in-depth interviews with organisations whose revenues are greater that $2 billion.

As the result of our study, we have revealed some key indicators in business:

• 65% of the budgeting and forecasting effort is spent on low-value activities, including data collection and consolidation, review, approvals, and report preparation.
• 70% of respondents are dependent on spreadsheets for all or a major portion of their financial planning activities.
• Management and employee dissatisfaction with the current planning process is high due to the level of granularity and lack of alignment with business strategy.
• 65% percent of respondents believe that the strategic relevance of budgeting and forecasting will increase over time, while only 5 % expect a decrease.
• 52% reported that creating closer links between strategy and operations was one of their top two priorities.
  

We have divided the findings in our study into several trend groups:

• Budgeting and forecasting processes face significant transformation; linkage to strategy is top of mind;
• Today’s process is too granular and not focused on value-added activities;
• Underlying technologies and applications lack integration;
• Finance and operations must be more closely aligned; and
• Standardising processes and systems is the primary focus for improvement.

At the end of our study we would like to present to you the lessons we have learned (corporate insights from various businesses) and also tips and tools for optimising the financial planning process and how to tackle budgeting and forecasting improvements.

2007 Budgeting and Forecasting Survey (pdf 4,18 MB)