How to better connect planning, forecasting, and budgeting


Finance professionals are taking on strategic duties in addition to traditional reporting and compliance roles, and they’re becoming more influential in their organizations. But they still have an opportunity to make improvements, particularly when it comes to the use of forecasts.

“[The] increasing speed and complexity of business has caused a rapid decrease in the planning time horizon,” strategy experts Michael Coveney and Gary Cokins explain in the introduction to their CGMA book Budgeting, Planning, and Forecasting in Uncertain Times. “As a consequence, the traditional planning processes of strategic planning, annual budgeting, quarterly forecasting, and monthly reporting have become unsuitable for most organisations’ needs. In light of this, senior management struggles in determining what planning techniques they should adopt as a replacement.”

Their book is based in part on a survey of 495 CGMA designation holders, who offered insight on the state of budgeting and planning. Here are some takeaways from the survey:

Deficit in scenario planning. The looming specter of black swan events hovers over businesses. But so does the possibility that companies will be able to leverage new technologies for sudden, significant gains. Many businesses aren’t entertaining these possibilities in their planning. Just 46% of CGMA designation holders said in the survey that scenario planning is part of their organization’s planning process. Lack of adequate resources was a common reason listed for not engaging in scenario planning, while many respondents (23%) said scenario planning was unnecessary.

Spreadsheets still rule. Although technology is advancing, spreadsheets are the tool of choice of CGMA designation holders for many tasks. At least half of respondents said they use spreadsheets or personal productivity tools for cash planning (71%); capital planning (67%); forecasting (64%); financial planning/budgeting (56%); strategic planning (53%); and tactical planning (51%).

Finance leaders still love budgets. Although improving and expanding forecasting is a priority for many businesses in the digital age, finance leaders still possess an affinity for traditional budgeting. About 62% of CGMA designation holders said they are somewhat or very satisfied that financial planning and budgeting processes are achieving their purpose in their organization. Fewer respondents (55%) said they are somewhat or very satisfied that forecasting is achieving its results in their organization.

Leverage forecasting in strategic decisions. Businesses sometimes underestimate the importance of forecast data in guiding strategic decisions. Many organizations struggle to get their forecasting and strategic planning in sync. Just 50% of CGMA designation holders said they are somewhat or very satisfied with the alignment of forecasting with strategic planning in their organizations.

Essential role for finance. Eighty-eight percent of respondents to the CGMA budget and planning survey said the finance function has at least moderate involvement in strategic planning, and 86% said finance has high or very high involvement in forecasting.

Steve Player, CPA, CGMA, the North American program director of the Beyond Budgeting Round Table, offered insight into the state of the budget and the shift toward better forecasting methods:

On abandoning budgets: “The debate about abandoning budgets is ongoing actively, and many companies are actually dropping the budget. Yet, finance organizations in many cases are the last bastion to hold on to the budget. Understand how damaging that is to the organization, how irrelevant that makes finance, and really make finance the leader in breaking free from that, and instead going to a continuous rolling forecast in terms of moving forward.”

On tracking the right metrics: “You have to step back and say, ‘What is our strategy? What’s critical to our success, and what metrics tell us if that’s happening?’ And you need to make sure you’ve got a balance of metrics, not just output measures, not the final score. … Move that even further upstream to begin to have not only process measures, but predictive measures. What things have to start way at the beginning of the process that foretell the future results coming down the road in terms of where we’re marching to?”

On communicating results: “We’ve got to convert into more moving pictures, more graphics, more understanding how to highlight and illuminate the important things, more how to tell the story of what’s really happening in operations and understanding the key drivers. … Finance people ought to be great storytellers, but right now we just stack up the numbers and hope somebody else can sort it out. If we’re going to become relevant and the kind of people we can be, we’ve got to understand how to convey messages of what’s really important.”

The full version of this article, “How to Better Connect—and Communicate—Planning, Forecasting and Budgeting,” by Ken Tysiac and Jack Hagel, is available at More information about the CGMA book Budgeting, Planning, and Forecasting in Uncertain Times is available at    

Jack Hagel, editorial director
CGMA Magazine

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The Institute of Business Ethics (IBE) launched a free mobile-device app and online toolkit to provide users with immediate guidance on a range of scenarios from accepting gifts and hospitality to conflicts of interest.

The launch comes on the heels of an IBE survey that shows bribery, corruption, and facilitation payments remains the most significant ethical issue for 80% of respondents from FTSE 350-listed companies.

Through the app, users can answer a series of questions to determine the appropriate conduct in a particular scenario. The content focuses on anticompetitive behavior and situations covered by the UK Bribery Act. The IBE version of the app is believed by some to be the first of its kind.

The full article, “Introducing: The ‘Conscience in Your Pocket,’ ” by Samantha White, is available at

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The same technology that can help employees work more effectively is distracting them from their jobs. Internet use not associated with work duties is the most common cause of employees’ frittering away their time in the workplace, a new survey shows.

Thirty-two percent of more than 2,100 US CFOs surveyed by staffing consultant Robert Half Management Resources said non-business-related internet use—including social media—is the biggest time-waster at work for employees. Employees chatting and socializing—cited by 27% of CFOs—ranked second among time-wasting activities, and personal calls or emails (20%) was the third-most commonly cited misuse of time.

The full article, “How to Keep Employees From Wasting Time,” by Ken Tysiac, is available at  

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Regulatory changes and scrutiny are the risks business leaders are most concerned about for 2014, according to a new survey conducted by North Carolina State University’s Enterprise Risk Management Initiative and consultant Protiviti.

The survey took responses from 370 executives and board members about the risks that concerned them most. Economic conditions was the No. 2 risk. For the full list of the risks, read “Regulation Leads List of Top Ten Risks for 2014,” by Ken Tysiac, at


CGMA Magazine is published in conjunction with the Chartered Global Management Accountant designation, which was created through a partnership between the AICPA and CIMA. The magazine offers news and feature articles focused on elevating and emphasizing management accounting issues.

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