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    Beyond Budgeting Presentation

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    Restu Agusti
    Beyond budgeting is a new approach to management control that abandons traditional budgeting in favor of continuous planning, forecasting based on performance indicators, and greater manager autonomy. It aims to make organizations more adaptable to market changes. The Beyond Budgeting model coordinates actions according to demand, provides resources as needed, and bases goals, control and rewards on key performance indicators compared to external market data. Some benefits include faster response, innovation and lower costs, while challenges include managing without budgets and justifying high implementation costs.

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    Beyond Budgeting Presentation

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    Restu Agusti
    151 views16 pages
    Beyond budgeting is a new approach to management control that abandons traditional budgeting in favor of continuous planning, forecasting based on performance indicators, and greater manager autonomy. It aims to make organizations more adaptable to market changes. The Beyond Budgeting model coordinates actions according to demand, provides resources as needed, and bases goals, control and rewards on key performance indicators compared to external market data. Some benefits include faster response, innovation and lower costs, while challenges include managing without budgets and justifying high implementation costs.

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    Beyond budgeting is a new approach to management control that abandons traditional budgeting in favor of continuous planning, forecasting based on performance indicators, and greater manager autonomy. It aims to make organizations more adaptable to market changes. The Beyond Budgeting model coordinates actions according to demand, provides resources as needed, and bases goals, control and rewards on key performance indicators compared to external market data. Some benefits include faster response, innovation and lower costs, while challenges include managing without budgets and justifying high implementation costs.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    151 views16 pages

    Beyond Budgeting Presentation

    Uploaded by

    Restu Agusti
    Beyond budgeting is a new approach to management control that abandons traditional budgeting in favor of continuous planning, forecasting based on performance indicators, and greater manager autonomy. It aims to make organizations more adaptable to market changes. The Beyond Budgeting model coordinates actions according to demand, provides resources as needed, and bases goals, control and rewards on key performance indicators compared to external market data. Some benefits include faster response, innovation and lower costs, while challenges include managing without budgets and justifying high implementation costs.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 16
    At a glance
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    The key takeaways are that Beyond Budgeting is a new approach to budgeting that aims to overcome traditional barriers and create a more flexible and adaptable organization. It is based on 12 principles and was developed by the Beyond Budgeting Roundtable.

    Beyond Budgeting is an approach that abandons traditional budgeting in favor of more flexible planning and management based on key performance indicators. Its 12 principles include making planning constant, coordinating actions based on demand, setting goals based on external indicators, and coordinating rewards with retrospective evaluation.

    Some examples of companies that have adopted aspects of Beyond Budgeting include Svenska Handelsbanken, Deutsche Bank, Southwest Airlines, Borealis, Ahlsell, Rhodia, Toyota, Volvo, and IKEA.

    Beyond

    Budgeting
    Beyond budgeting is….a
    positive idea that uses the
    abandonment of budgeting as
    a trigger for improving the
    entire management control
    process.
    Extract from the Foreword by Dr. Charles T.Homgren,
    Professor of Accounting, Stanford University.
    So-called model Beyond
    Budgeting Model has been
    developed by the organization with
    same name Beyond Budgeting
    Roundtable, abbr. BBRT, based the
    Great Britain in 1998. It includes 60
    companies from the Great Britain,
    the Europe and the USA.
    The Beyond Budgeting Model is
    designed to:

    overcome traditional barriers


    create a flexible, adaptable
    organization

    That gives to local managers the self-


    confidence and freedom to think
    differently, make decisions rapidly, and
    collaborate on innovative projects with
    colleagues in multifunctional teams both
    within company and across its borders.
    Twelve principles of BB
    The Beyond Budgeting Model is a
    new approach to budgeting, and
    also a holistic approach to strategy
    management, business planning,
    target setting, rolling and event-
    driven forecasting, and business-
    performance management based
    on financial and non-financial key
    performance indicators.
    Traditional versus Beyond Budgeting
    Traditional Budgeting
    Pro: Contra:
    • Part of control system • Budgets lack
    • Fixed financial targets sufficient strategic
    • Financial incentives orientation
    • Annual plans- the best • Budgets ignore the
    ways to max market turbulence of markets
    opportunities • Budgets lead to
    • Leaders are the best inappropriate
    placed in resource (unethical)
    allocation management behavior
    Relations among different
    budgeting concepts
    Increasing radical changes

    Beyond
    Budgeting

    Advanced Budgeting

    Better Budgeting

    Traditional Budgeting

    Potential number of users


    Beyond budgeting
    Pro: Contra:
    • Problems relating to its
    • Faster response small circle of potential
    • Innovative strategies users
    • Lower costs • The difficulty of managing
    without budgets
    • More loyal
    customers • Not justify the associated
    high costs
    • Fear of Change
    • The lack of empirical
    evidence concerning its
    use
    References
    Robin Fraser, Jeremy Hope. Beyond
    Budgeting(Hardcover, 2003)
    Beyonв Budgeting: boon or boondoggle?, Robert C.
    Rickards Investment Management and Financial
    Innovations, Volume 3, Issue 2, 2006 62
    Beyond Budgeting or Better Budgeting?,
    Bytheresalibby, Ca. and R. Murraylindsay, Strategic
    Finance, 2007
    Beyond Budgeting: questions and answers, Jeremy
    Hope, Robin Fraser, 2001
    www.bbrt.org
    √ to base goals
    on the EXTERNAL
    performance indicators;
    √ to set HEIGHTENED goals

    To make planning To coordinate


    a constant and
    overall process Constant reward with the
    RETROSPECTIVE
    adaptive evaluation
    To coordinate
    actions process
    To base control
    according to the
    on the effective
    demand
    managerial principles
    To provide an and a set of the
    accessibility of the performance indicators
    resources needed
    Svenska Hendelsbanken
    Deutsche Bank
    Southwest airlines
    Borealis
    Ahlsell
    Rhodia
    Toyota
    Volvo
    IKEA
    goals
    key performance indicators

    in comparison with the market indicators


    • disposal of the influence of the uncontrollable
    input factors
    • measurement of the managerial
    improvements

    Managers: - reward is based on KPI;


    - more freedom in actions
    (and more responsibilities)
    • Enterprise Resource Planning:
    fluent reaction to the demand
    (the center – operations,
    not departments & functions)
    • Forecasts:
    - are made according to the results of previous quarters
    - separated from the evaluation of efficiency and control
    - based on the moving average

    Internal reporting of Borealis


    Cost Current The same Cumulative Moving % changes of
    center month month total for the average the moving
    last year current year for 12 average for
    months the last year

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