CFO Feb 1998

Like an aching tooth, there's no escaping the business planning process for most finance executives.To find out just how painful the process is, CFO recently surveyed 500 readers about their attitudes toward business planning and their current efforts to improve it. Designed by Lawrence B. Serven, a manager with Deloitte & Touche Consulting Group, the survey found that while approaches to budgeting and forecasting may differ, most respondents are dissatisfied with their current processes and believe there is plenty of room for improvement.

Room for Improvement: How finance executives rate the importance of several business planning responsibilities and their performance in these areas.

No Magic Bullets: For finance executives, there is a huge gap between the use and the perceived value of leading planning methodologies.

Operating in a Vacuum: The lack of value in the planning process, say finance executives, can best be explained by the absence of a well-defined strategy.

Different Languages: Percent of companies with common enterprise-wide definitions.

Room For Improvement: How finance executives rate the importance of the following business planning responsibilities and their performance in these areas

	Importance (1=not important, 5=extremely important)	Performance (1=very poor, 5=excellent)
To provide timely consolidation and reporting of planning data	4.3	4.0
To provide meaningful decision support	4.2	3.9
To partner with depts./areas served to add value to their business	3.9	3.5
To facilitate effective planning review and approval sessions	4.0	3.6
To provide clearly defined planning instructions and requirements	3.9	3.8

No Magic Bullets: Gap between the use and the perceived value of leading planning methodologies

	% Utilizing Pervasively	% Seen as Significantly to Extremely Valuable
Activity-based budgeting	23%	63%
Rolling forecasts	16%	63%
Zero-based budgeting	10%	37%
Value-based planning	7%	31%

Operating in a Vacuum: Lack of value in the planning process

Lack a well-defined strategy	57%
Lack a clear linkage of strategy to operational plans	53%
Lack individual accountability for results	45%
Lack meaningful performance measures	34%
Lack pay for performance at either the senior- or mid-level management	21%
Lack data availability	19%
Lack regular monitoring of actual performance against the plan	8%
Lack decision support from finance	6%
Lack data accuracy	2%

Different Languages: Percent of companies with common enterprise-wide definitions

Geography	49%
Organization unit	43%
Purchased items	43%
Product/service	41%
Supplier	39%
Customer	32%
Business process	3%

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Heavy on the Financial: Frequency of items used in tactical plans

Financial Plans	100%
Performance improvement targets	89%
Resource plans	84%
Business cases	78%
Link to strategy	78%
Operational targets	76%
HR requirements	68%
IT requirements	68%
Product development	65%
Market share	59%
Organization	46%

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Tool Time: Companies use the following planning tools

Trend-based projections	81%
Scenario evaluation	65%
Contingency planning	62%
Benchmarking	51%
Activity-based management	41%
Business life cycle	38%
Zero-based budgeting	35%
Probabilistic analysis & simulations	22%
Technology S curve	3%