Traditional calendar year budgeting has been the dominating management control system globally for decades. In recent years a process of change has started towards frameworks like forecasting, rolling forecasting or Beyond Budgeting.
Where as budgeting is retrospective in nature and typically considered obsolete a few months into the fiscal year the rolling forecasting is forward looking and focusing on optimization of the future business.
The optimization focuses on the operating model of the company and key drivers that defines the DNA of that business. Questions like “do we have right amount of resources to deliver the forecast” or “should we hire or fire?” etc. The rolling forecasting provides an ongoing prioritization of resources and thereby an optimization so that the company can have a continuous learning curve and integrate these improvements into the company. This should lead to better decisions and improve shareholder value. The traditional budgeting is typically a political process where gaming and power is implicitly on the agenda.
Face it - Rolling forecast cannot be supported by Excel
Acquire a software like Jedox and avoid the cumbersome manual processes in either Excel or the ERP system.
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Should the static budget be abolished after the implementation of rolling forecasting? Typically not because its such an incorporated management control process and incentives are normally build up on the yearly target (budgets)
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