The same volatility that has made running a business so challenging over the past years has finally forced companies to admit that traditional budget processes have become largely a waste of time. Most businesses are faced with large swings in currency, rapid development of new sales channels and very fast technological innovation. Budgets are expensive to make. They drive a lot of work, in preparing the budget, and in the detailed analysis of deviations to budget. They are not completely bad: the introspective process of developing the budget can be worthwhile. But there are much better ways to determine what should be targetted, what those targets should be, and to track progress.
Most businesses, large and small, really only need to concentrate on a small list of influencable profit drivers. They also need to build the ability to identify surprises and trends early, and react do something about them at least as fast as competitors.
The rolling forecasts and other alternatives that companies are now embracing have been advocated for years, but it has taken the frustration of one blown forecast after another to finally convince a critical mass of companies that there must be a better way."
(summary from CFO Magazine) Read the full article here.
See also: Traditional Budgets: a waste of time.
GrowthPath is a strong advocate of replacing slow, complex budgets and traditional business planning tools with fast, simple responsive approaches.
You definitely need to prepare your business for the future, but that preparation should be making you business quick to see opportunities and threats, and fast at responding to them. That's what you don't get from traditional business planning. For more, please read about the Focused Agile Business program.