Financial Planning, Budgeting, and Forecasting in the New Economy by Nick Castellina and David Hatch Aberdeen Group A Report from March 2011 The entire report is online at DSSResources.com. Click here to read the PDF document. Executive Summary A sound financial plan is the vehicle which clearly states strategic business objectives in financial terms. A well-prepared budget forms the foundation of decision-making throughout the fiscal year. However, it is the forecast which allows the business to adjust future expectations based on recent actual performance. With a renewed focus on growth as a strategic goal, and alignment of strategy with corporate performance, companies that hope to achieve Best-in-Class status must be armed with tools that provide visibility and flexibility to strike a balance between aggressive plans for recovery and caution. Best-in-Class Performance Aberdeen used five performance criteria to distinguish Best-in-Class companies. These top performers are notable for achieving the following aggregate average results: 104% overall budget accuracy (ratio of actual performance to budget) 103% forecast accuracy 15% improvement in profitability year over year 96% always or usually finalize budget priot to the next fiscal year are 34% more likely than all respondents to streamline the process with key technology enablers Competitive Maturity Assessment Top performers in this study shared several common characteristics. The Best-in-Class: are 125% more likely to receive alerts triggered by external events and 121% more likely to receive them for internal events are 89% more likely to establish enterprise-wide collaboration across all departments/functions are 400% more likely to link compensation to budget performance for all employees Required Actions In addition to the specific recommendations in this report, to achieve Best-in-Class performance, companies must: Use technology to automate and assist in the budgeting process Have visibility into all factors and collaborate with all stakeholders Consider alternative scenarios and have the ability to change forecasts, plans and budgets mid-stream. This complimentary report has been provided by the SAP BusinessObjects CFO Line of Business team to readers of DSSResources.com. About the Authors Nick Castellina is an Aberdeen Research Associate Enterprises Applications; David Hatch is Aberdeen Senior Vice President, Strategy and Solutions, Technology Market Solutions. Citation Castellina, N. and D. Hatch, "Financial Planning, Budgeting, and Forecasting in the New Economy", DSSResources.COM, 04/01/2012. Chris Herbert of mi6agency.com provided permission to post this summary and the complete PDF document as part of the DSSResources.com ongoing relationship with the SAP CFO Intellectual Exchange Network on March 23, 2012.