Dynamic budgeting takes center stage

Note from the editor

James McKinsey of McKinsey & Company, the global advisory firm, is the father of the traditional budget, which turns 100 in 2022. His book, Budgetary Control, launched the modern budgeting process in 1922, but there’s no shortage of critics who think it’s time to take a new approach. Rolling budgets, zero-based budgeting, driver-based budgeting all of these are variations on the traditional approach and they’re popular for a reason. To be relevant at a time when information flows instantly, budgeting must be dynamic. 

To share just a few ideas on how to make your budget process more dynamic, we’ve compiled a selection of pieces from CFO Dive that we hope will encourage a useful assessment of whether you should make changes in your process. 

Among other things, we look at driver-based budgeting, which pushes the process out of finance and into the business functions, both to better align the numbers with the organization’s strategic goals and to get buy-in from operational units, which are ultimately held to account for their performance. We also look at zero-based budgeting, which over the years has come in and out of favor. Today, thanks to cloud computing, it’s much easier to budget from scratch each year than it was when the concept was introduced in the 1970s. 

If your budget process needs a tune-up, maybe one of these pieces will help you get started.    

Robert Freedman Editor

Driver-based budgeting touted for integrating financial and operational planning

Tying resource allocation to what moves an organization forward is an exercise that leads to strategic insight that could otherwise remain hidden, says Vena FP&A chief Tom Seegmiller.

• Published Oct. 4, 2021

Zero-based budgeting makes a comeback, but it's different this time

With help from cloud platforms and AI-assisted technology, going back to the start each budget cycle is easier and leads to more accurate cuts.

• Published Oct. 4, 2021

Why zero-based budgeting is back in style

The pandemic has driven firms to rethink how much product they're buying and how much they'll need to meet demand.

• Published Oct. 4, 2021

How zero-based budgeting improves operations

Switching away from traditional budgeting is neither cheap nor easy, but it makes for more efficient, better-aligned spending.

• Published Oct. 4, 2021

Consultants tout benefits of rolling budgets

Don't move from a static annual process all at once; start with your business drivers and phase in other metrics later.

• Published Oct. 4, 2021

How a spirits company reduced stranded inventory with rolling forecasts

The company was losing sales when its popular products weren't in stock so it stopped using static forecasts to anticipate demand.

• Published Oct. 4, 2021

How to transition from a static to a rolling forecast

Tools available today to help you sharpen your insights can't work if you're still using a static forecasting process, a consultant says.

• Published Oct. 4, 2021

Rethinking the budgeting approach

The pandemic has driven firms to rethink how much product they're buying and how much they'll need to meet demand. Zero-based budgeting, rolling budgets, driver-based budgeting — all of these are variations on the traditional approach and they’re popular today for a reason.

included in this trendline
  • Why zero-based budgeting is back in style
  • How a spirits company reduced stranded inventory with rolling forecasts
  • Driver-based budgeting touted for integrating financial and operational planning
Our Trendlines go deep on the biggest trends. These special reports, produced by our team of award-winning journalists, help business leaders understand how their industries are changing.
Davide Savenije Editor-in-Chief at Industry Dive.