Budget, Forecasting and Planning

2. kvartal 2012

Budgetdagen 2012

Tematillæg udgivet af Økonomiforum i forbindelse med konferencen: Budgetdagen

ØKONOMIFORUM DEDIKERET VIDEN TIL ØKONOMIFUNKTIONEN

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The Budget 1999 – 2009 The budget is dead. There is no doubt whatsoever about that. It is as dead as a doornail.

Case Story: Planning & Management Accounting at Alfa Laval Basico Consulting follows the development of new budget and planning methods in large international companies and has developed services and competences in these areas. In light of that, Basico contacted Thomas Thuresson, CFO at Alfa Laval, for an interview.

6 Steps to Improving the Budgeting and Planning Process It’s that time of year again. Review the actuals, add 4%, and look at it bottoms-up, top-down, and in regard to operations vs. capital spend. Build some assumptions, work in a few numbers, consider what a reorg would do, and run some ”what if” models. That’s right, annual planning is upon us!

Interview med Jeremy Hope Stifteren af Beyond Budgeting Jeremy Hope døde i september sidste år. Økonomiforum lavede i forbindelse med bogen ”Reiniventing the CFO” dette interview med Jeremy Hope.

Du er hvad du gør og ikke hvad du planlægger Virksomhedens aktiviteter burde være udtrykt i budgettet. Men i mange virksomheder er budgettet blot indholdsløse tal, der hverken har sammenhæng med strategi eller aktiviteter.

Resumé: The Leader’s Dilemma – How to Build an Empowered and Adaptive Organization Without Losing ControlJeremy Hope, Peter Bunce og Franz Röösli har deres fødder dybt plantet i Beyond Budgeting-tankegangen og i denne bog demonstrerer de, hvordan ledere med succes kan videreudvikle forretningen.

TEMATILLÆG · 2. KVARTAL 2012

www.okonomiforum.dk · www.budgetdagen.dk · +45 7025 6085 · [email protected]

DEDIKERET VIDEN TIL ØKONOMIFUNKTIONEN

Basico Consulting er et dansk konsulentfirma med speciale i økonomistyring, regnskab og controlling. Kernen i Basico er vores konsulenters store erfaring med drift og ledelse af økonomifunktioner i både Danmark og udlandet.Vi har kontorer i København og Århus. Herfra er vores kompetente korps af konsulenter parate til at hjælpe dig. Står din virksomhed i en situation, der kalder på uddannelse, rådgivning, erfaringsudveksling, projektløsning eller rekruttering i økonomifunktionerne, så læs mere på basico.dk eller ring 702 703 71.

Økonomisk Ugebrev CFO er en ny version af Økonomisk Ugebrev med fokus på analyser og værktøjer for økonomichefen. Hvordan håndteres den aktuelle økonomiske situation? Er der nye muligheder via BRIK-landene? Hvordan agerer top-CFOer? Økonomisk Ugebrev CFO ønsker at give økonomichefen/CFO’en analy-ser, overblik og værktøjer og er derfor mediepartner til Økonomiforums konferencer og nyhedsbrev.

Platon har skabt sig en position som en førende uafhængig konsulentvirksomhed indenfor Information Management, og har løst mere end 1000 succesfulde projekter hos over 500 kunder verden over. Platon beskæftiger over 200 erfarne og specialiserede medarbejdere, og har de seneste 12 år arbejdet med bla. Performance Management hos de største virksomheder i Norden. Læs mere om Platon på: www.platon.net.

4C Management Consulting are specialists within Business Intelligence and related areas such as Strategic Financial Management, Corporate Performance Management and Enterprise Group Reporting.We are a focu-sed on delivering BI for SAP, meaning that our goal is to provide the best BI solution for SAP customers depen-ding on their requirements and current system landscape. 4C is a BI consulting company employing only the very best people, all with a minimum of 7 years experience within SAP BW, Business Objects or QlikView

Gennem passionerede medarbejdere og veldokumenterede løsninger skaber Inspari A/S viden og vækst for landets mest spændende virksomheder. Med Performance Management og Business Intelligence optimerer vi forretninger og mennesker, og vi sætter hele vores faglighed og personlige engagement i spil for at hjælpe vores kunder fra data til viden – og fra viden til værdi.

Kapacity giver dig forretningsmæssigt overblik. Forestil dig en hverdag, hvor virksomhedens beslutninger understøttes af korrekt, entydig og lettilgængelig information. Forestil dig en hverdag, hvor data og forret-ningsmæssige behov er koblet gennem intuitiv tilgang til KPI’er, rapporter, analyser og planning/forecast muligheder. Og tænk så, hvis du dagligt har adgang til både historiske facts og prediktive informationer om fremtidige udfald. Det kaldes Business Analytics, og det er præcis det, der er Kapacity’s kernekompetence

Zap Business Intelligence til Microsoft Dynamics AX, NAV og CRM, er en “out-of-the-box” rapporterings- og business intelligence (BI) løsning, der giver væsentlige tids- og produktivitetsgevinster, giver forbedret beslutningsstøtte og mulighed for at optimere virksomhedens præstationer gennem meningsfulde rapporter, analyser, dashboards, key performance indicators (KPI’er), scorecards, alarmer og planlagt automatisk distri-bution via mail. Zap har udviklet en accelerator til generering af OLAP kuber fra din Dynamics database – med tilretninger, så du kan være i gang på dage og ikke måneder.

Solver is a Microsoft Gold Business Intelligence Partner which specializes in solutions within budgeting, ana-lysis and reporting on the Microsoft BI platform. Our product BI360 is a BI-tool with preconfigured live con-nections to several ERP systems, including Dynamics AX, GP and NAV. We are also a professional BI partner who act on a global level and won the prize ”Global Microsoft BI Partner of the Year” in 2009.

Solitwork er et forretningsorienteret it-konsulent- og udviklingshus, der er specialiseret i Data Warehousing, økonomisk og finansiel rapportering og alle aspekter af Business Intelligence. Med det udgangspunkt udvikler og leverer vi løsninger til effektiv økonomi- og ledelsesrapportering. Vores løsninger hjælper virksomheder til at få styr på alt fra budgetlægning til Performance Management, løbende håndtering af budgetter og prognoser, økonomi-rapportering og controlling samt finansiel konsolidering. Vi har eksempelvis hjulpet virksomheder med at reducere tidsforbruget til finansiel konsolidering fra flere dage til kun få minutter. Vi er både tilgængelige før, under og efter en leverance og sætter en ære i ikke kun at levere teknik, men at sørge for at løsningen understøtter forretningen.

InfoSuite er markedets ledende Business Intelligence, Budget Management og Cash Flow løsning. Et digitalt værktøj, der adskiller sig fra, hvad du hidtil har set. Med et fuldt integreret Budget- og Cashflow Management system giver InfoSuite stor effektivitet, bedre kommunikation mellem afdelinger og mærkbare besparelser. Med ét tastetryk er alle budgetter opdateret og konsolideret efter fastdefinerede parametre på alle ønskelige niveauer. Kom lynhurtigt i gang med allerede udarbejdede analyser og nøgletal i stort set alle brancher. Du får totalt overblik over virksomheden, på alle forretningsområder og alle niveauer. InfoSuite gør brugere til bedre beslutningstagere!

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Tematillæg udgivet af Økonomiforum i forbindelse med konferencen: Budgetdagen 3


Budgetdagen 2012

ØkonomiforumStore Kongensgade 59D, 3.DK-1264 København K. +45 7025 [email protected]

DistributionTillægget udsendes til modtagere af Økonomiforums nyhedsbrev, til abonnenter på Økonomisk Ugebrev CFO samt medlemmer af LinkedIn-gruppen Business Controlling Network. Antal mod-tagere Økonomiforums e-mail-nyhedsbrev 3.500 personer. Antal modtagere Business Controlling Network 4.500 personer. Antal læsere Økonomisk Ugebrev CFO 5.000 personer. I alt antal læsere /modtagere via Økonomiforum 9.800 personer i målgruppen.

MålgruppenTematillægget er målrettet med-arbejdere på taktisk og strategisk niveau i store og mellemstore virksomheders økonomifunktion.

Redaktion og projektledelseAdm. dir. Joachim [email protected]

Projektleder Betina Bladt [email protected]

MediepartnerØkonomisk Ugebrev CFO

GrafikStine [email protected]

Der har de senere år været stor debat og skrevet mange bøger om problemstillingerne ved såkaldt traditionel budgettering. Principperne i Beyond Budgeting, som er en af de bedst beskrevne og gennemprøvede koncepter inden for nye planlægningsmetoder, gør endeligt op med budgettet som styringsredskab og argumenterer for implementering af andre metoder og nye principper.

Jeremy Hope og Robin Fraser kritiserer budgetprocessen for at være unødvendig tids-krævende og ikke at skabe værdi. De mener, at budgettet hurtigt bliver uaktuelt og dets informationer dermed værdiløse. De forklarer, hvordan budgetprocessen skaber en uhensigtsmæssig politisk adfærd gennem forhandlingerne og fastholder en misforstået idé om, at budgetterede midler skal benyttes, blot fordi de eksisterer.

Finanskrise, dynamiske markeder, og den græske tragedie har de senere år gjort mange CFO’er opmærksomme på problemerne ved det traditionelle budget. Mange erkender, at virksomhedens økonomi ikke kan planlægges tolv måneder frem i tiden, sådan som det traditionelle budget lægger op til.

Selvom mange virksomheder stadig holder fast i traditionelle budgetprocesser og for-søger at sammenholde resultater med et fastlåst billede af fremtiden, begynder flere og flere økonomiansvarlige at se nødvendigheden i at finde nye, mere aktuelle og dyna-miske principper for virksomhedens økonomistyring. Målet er ikke at undgå styring, men at skabe en ny planlægningsstruktur, som har fokus på beslutninger, der relaterer sig direkte til forretningen, som den ser ud her og nu. Tempoet i markedsændringer og pludselige økonomiske hændelser lægger et pres på virksomhedens adgang til relevant information, og ikke mindst ledernes mulighed for at reagere og styre virksomheden uden at miste strategisk fokus.

Beyond Budgeting tankegangen udfordrer på mange måder erhvervslivets tilgang til ledelse, fordi dynamisk forretningsdrift ofte handler om at være i stand til at træffe den forretningsmæssige bedste beslutning. Det kræver adgang til information, beslut-ningskompetence og forretningsforståelse. Alle elementer, som kan være svært at un-derstøtte i et traditionelt ledelseshierarki baseret på central styring. Beyond Budgeting viser et alternativ til hierarkiske ledelsesprincipper.

Styring af virksomheden skal i langt højere grad bygge på tillid til, at medarbejderne i forretningen kan træffe de nødvendige beslutninger. Det skal de kunne gøre ved at have adgang til systemer og processer, der kan levere aktuel og relevant information. Og så skal den moderne medarbejder naturligvis være forretningsorienteret og vide, hvad der er bedst for virksomhedens indtjening og drift. Flyttes den reelle beslut-ningskompetence ud i virksomheden via dynamiske forecasts og relative målepunkter, kan principperne bag Beyond Budgeting også bruges som et værktøj til skabelse af forandringer, innovation og effektivisering.

Med venlig hilsen

Joachim KattrupAdm. dir. Økonomiforum

Budgetdagen 2012

Budgetdagen afholdes for 3. år i træk og samler økonomiansvarlige fra store danske virksomheder.

Konferencen har fokus på budgettering, planlægning og økonomisk ledelse.




The Budget (1922 - 2009)We are of course referring to the corporate budget, not the personal budget or fami-ly budget or any other revered variety of that which generally refers to a planned list of revenues and expenses. And while some companies may find this obituary a bit premature, others will likely tell us that it’s long overdue and that their bud-get has been dead these past five years. (One Swedish company claims that theirs died as far back as 1972.) Still, others may claim that we’ve been duped and have fal-len victim to a persuasive activist lobby that stands to gain an inheritance from the budget’s demise.

Nonetheless, we say that the budget is dead. At the ripe old age of 87, the budgeta-ry concept took its last useful breath. Of course, there will be some who will argue with sound reason that the budget is much older, and, as you will read, we believe that there is some merit to this. However for the purposes of this article we would prefer to simply report: ”Dead at 87” — a life that may have served all of manage-ment better had it been half as long.

In fact, accounting historians will likely someday remember the budget not only for what it brought to business, but also for how tightly it clung to it. This enduring grasp — a steely fingered clench — is so-mething that few management concepts have ever achieved with such speed and

This content is presented in conjunction with Business Finance

The budget is dead. There is no doubt whatsoever about that. It is as

dead as a doornail. This must be distinctly understood, or nothing

wonderful can come of industry’s 20th-century management model

that seemingly grows more dysfunctional with every quarter.

reach. Thirty years after their inception, the dictums of budgetary control were being disseminated to every part of the world, reshaping organizations and ta-sking finance executives (or putting a bit in their mouths) for generations to come.

Just how strong budgeting’s grasp remains on business might be better revealed by the number of companies that have rou-tinely reported a broad-based system fai-lure in the area of corporate budgeting and control processes, and yet these compa-nies have so far refused to part with their budgets. A recent survey conducted by Business Finance found that two out of three finance executives expect their 2009 budgets to be obsolete within the first 6 months of the year, while 28 percent of fi-nance executives reported that their bud-gets were obsolete even before 2009 began. This widespread failure of budgetary con-trols, however, is only a subtext to a much larger management quandary.

Sloan’s Last Key to Decentralization In the late 1950s, when management thin-ker Peter Drucker began writing about the shift from the command control organiza-tion (the organization of departments and divisions) to the information-based orga-nization (the organization of knowledge specialists), the practices of budgetary control seem to have been altogether rem-oved from his line of sight. Or at least his

by Jack Sweeney




writings don’t express much concern over how widely used budgetary practices and fixed-performance contracts could poten-tially undermine his vision of late 20th-century organizations.

So it was for many late 20th-century ma-nagement thinkers, whose explorations seldom peered into the finance depart-ment and with only rare exception all but overlooked budgeting.

In his book My Years with General Motors (Doubleday & Company, Inc., 1963), Ge-neral Motors chairman and CEO Alfred Sloan Jr. suggested that budgeting was de-signed not to centralize power, but to de-centralize it. ”It was on the financial side that the last necessary key to decentraliza-tion with coordinated control was found. That key, in principle, was the concept that if we had the means to review and judge the effectiveness of operations, we could safely leave the prosecution of these ope-rations to those in charge of them,” wrote Sloan, while reflecting on the accounting processes his company had adopted ne-arly 40 years earlier.

”If Sloanism was built on decentraliza-tion, it was controlled decentralization. Sloan created a powerful general office full of numbers men,” wrote John Mick-lethwait and Adrian Wooldridge in their book The Company: A Short History of a Revolutionary Idea (Modern Library Chro-nicles, 2003). Micklethwait and Wool-dridge describe a ten-man executive com-mittee headed by Sloan that handed down a centralized GM corporate strategy.

Jeremy Hope, an author of several ma-nagement texts that explore alternatives to budgetary control, suggests that many ma-nagement thinkers of the last century may not have fully appreciated the negative impact that budgetary control was having on organizations because most often they were not ”finance people,” and budgeting numbers may not have appeared relevant as management became more enamored with corporate culture. What’s more, Hope points out that it took many years (perhaps 30) to convert budgeting from its original state into the barrage of fixed contracts and performance incentives that routi-nely corrupt the system. Today, traditional budgeting forces managers at all levels to commit to delivering specified outcomes,

even though many variables underpin-ning those outcomes are beyond their con-trol, Hope explains.

”If people are going to be recognized and rewarded based on meeting the budget, then it’s very difficult to change anything else,” explains Hope, who 10 years ago helped to establish the Beyond Budgeting Round Table, a not-for-profit collaborative that offers members shared research and a guiding framework designed to help companies abandon budgeting. (Steve Player, whose interviews appear regular-ly in Business Finance, is also a director with the BBRT.)

According to Hope, budgeting remains central to how nearly every large corpora-tion is managed today. There is certainly a growing list of converts: Southwest Airli-nes, Toyota, American Express, Guardian. One company, Svenska Handelsbanken of Stockholm, Sweden, abandoned budge-ting in the early 1970s. But all in all, the number of companies that have done away with budgeting remains quite small.

”We need to create organizations that are more agile, less bureaucratic, and lower-cost, with more accountability toward the front line rather than the corporate center. Budgeting just doesn’t fit that or-ganization. Budgeting is a constraining, controlling, and stifling system. It was never designed to enable the front lines. It operates from the center,” says Hope, who in passing adds that the Internet is today perhaps the greatest threat to traditional budgetary control, as it forces companies to finally rethink how they plan, hire, and motivate people.

When discussing the impact of the Inter-net on organizations, acclaimed manage-ment thinker Gary Hamel likes to use the analogy of muskets being introduced into late 17th-century warfare. Hamel points out that 17th-century battle formations were designed very deep and square — a configuration best suited for archers. ”Eventually, these formations changed in size and scope to better reflect the capabi-lities of muskets. But it took 100 years for this to happen. Why? Because a couple of generations of generals had to die off befo-re planners were able to use this new wea-pon in a productive way,” Hamel recently commented.

... ”Dead at 87” — a life that may have served all of management better had it been half as long




To date, there have been three generati-ons of executives that grew up in an age of budgetary control. The latest generation, or Internet generation, will be the last.

The Origins of Budgetary ControlWhen accounting historians seek to iden-tify the origins of budgetary control, Du-Pont & Company and General Motors Corp. are frequently mentioned in the same sentence. While both companies can be counted among accounting innovators, it was the shared history between the two companies that has elevated their stature within the pages of accounting and bud-geting history.

In 1921, shortly after DuPont acquired 23 percent of GM’s stock, Pierre S. Du Pont became GM president and subsequently began staffing the company’s finance de-partment with DuPont & Company’s fi-nance veterans. In the aforementioned My Years with General Motors, Alfred Sloan Jr. explained how most ”specific forms of financial controls” were introduced by a finance executive by the name of Donal-dson Brown, who arrived at GM from Du-Pont at the beginning of 1921.

Sloan writes of an incident in 1924 when he was taken to task by the company’s fi-nance committee for the overproduction of automobile inside a certain number of GM’s divisions. GM’s response, according to Sloan, was to roll out an entire portfo-lio of pioneering financial controls, inclu-ding a sophisticated forecasting system, flexible budgets to evaluate performance, and a stock-based incentive plan based

divisional performance. Brown would be-come the company’s chief financial officer and later succeed Sloan as GM chairman. Said Sloan: ”I cannot, of course, say for sure how much of my thought on manage-ment came from contacts with my associa-tes. Ideas, I imagine, are seldom, if ever, wholly original. ... I had not been much of a book reader.”

Perhaps GM’s chief financial officer en-joyed books more than Sloan. If so, there was one book published shortly after his arrival at GM that would likely have reso-nated with the financially minded Brown.

James O. McKinsey was an assistant pro-fessor at the University of Chicago when he decided to take a stab at becoming the first academic to approach the subject of budgetary control as a whole, rather than zeroing in on particular aspects of budge-ting and planning procedures. His book Budgetary Control (The Ronald Press Company, 1922) has been credited by busi-ness historians as being the first printed text that connected market forecasting, the feedback loop of planning, and out-turn in an organic whole. The book put forth the notion that budgeting was a po-werful management framework.

”If effective control is to be exercised over current operations, it is necessary to plan these operations and to set up standards of performance for the separate units of the organization. This results in the pre-paration of departmental and subdepart-mental budgets. ... Budgets serve not only as standards by which to control current

... To date, there have been three generations of executives that grew up in an age of budgeta-ry control. The latest generation, or Internet generation, will be the last.

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operations; they also serve as a means of coordinating the activities of several de-partments,” McKinsey’s book explained.

Yet McKinsey appears to have understood that the procedures he carefully detailed were far from perfect. In the preface to Budgetary Control, he characterized the book this way: ”It is to be regarded as an effort to state clearly the problems invol-ved, rather than to offer full solutions.” What’s more, he explains, ”constructive criticism will be gladly received.” It seems that McKinsey was intent on outfitting the budgeting procedures he evangelized with a warning label — a small insurance poli-cy, perhaps, that might someday safeguard his text if and when such procedures fell out of favor.

More than 60 years later, professors H. Thomas Johnson and Robert S. Kaplan, in their business classic Relevance Lost: The Rise and Fall of Management Accounting (Harvard Business School, Press 1987),

made no mention of James McKinsey or his books, but they did mention a moment in time that is significant to budgeting as well as to McKinsey’s legacy.

They wrote: ”By 1925, virtually all ma-nagement accounting practices used today had been developed: cost accounts for la-bor, material , and overhead; budgets for cash, income, and capital; flexible budgets; sales forecasts; standard costs; variance analysis; performance measures. ... At that point, the pace of innovation seemed to stop. Perhaps there was little incentive to continue to develop innovative manage-ment accounting procedures, since the corporate organizational forms developed by companies such as DuPont and General Motors proved to be the model for many corporations for the next half-century.”

Christopher McKenna, University Lec-turer in Strategy at the SAID Business School, University of Oxford, suggests that the ”stagnation” of innovation in

... Yet McKinsey appears to have understood that the procedures he care-fully detailed were far from perfect.




cost accounting was due in part to an al-luring new professional incentive that began channeling resources elsewhere. ”With a better understanding of consul-ting’s true genealogy, we can see that cost accountants did not cease their investiga-tions. They simply shifted their professio-nal jurisdiction from monitoring costs as accountants to lowering costs as consul-tants,” McKenna wrote in the The World’s Newest Profession: Management Consul-ting in the Twentieth Century (Cambridge University Press, 2005).

Budgeting: Consulting’s Meat and Potato Offerings For his part, James McKinsey in 1926 would establish his own firm known as James O. McKinsey & Company (later just McKinsey & Company). In the latter half of the 20th century, as McKinsey & Company spawned offices around the world, it beca-me internationally recognized as manage-ment consulting’s most elite firm.

Among McKinsey’s early recruits was an attorney named Marvin Bower, who would eventually lead the firm for 17 ye-ars and become heralded as McKinsey & Company’s modern founder. In his pri-vately published Perspective on McKin-sey (McKinsey & Company, 1977), Bower recalled how McKinsey — ”Mac” — re-tained the firm’s first client.

”In 1926, two other noteworthy events oc-curred: Mac achieved the rank of profes-sor of Business Policies at the University of Chicago; the finance committee of Ar-mour and Company, one of the country’s largest meat-packers, decided that the company should establish budgetary con-trol, and it authorized then-treasurer Wil-liam P. Hemphill, who had read Budgetary Control, to retain Mac as a consultant. ... So Armour became James O. McKinsey & Company’s first client,” Bower wrote.

Within the pages of Perspective, Bower frequently revealed his fondness for his one-time mentor, while at the same time underscoring how McKinsey’s thinking around budgetary control helped to shape the firm’s approach with its clients for ye-ars to come. Bower wrote: ”Mac simplified the concept orally in this way: ’A budget is a statement of policy, expressed in terms of future accounts delegated to units of an organization.’ This concept is the origin of

our top-management approach.”

While professors Johnson and Kaplan tell us that the accounting and budgeting ap-proaches at DuPont and General Motors became ”the model for many corporations for the next 50 years,” their text reveals little about how such a vast transfer of knowledge was able to occur. Somehow, the maxim ”Build a better mouse trap and the world will beat a path to your door ” doesn’t seem to apply when it comes to complex accounting procedures — espe-cially when Alfred Sloan Jr. was guarding the door. The point is important, because the size and scale of the challenge manage-ment today faces when it comes to uproo-ting budgetary controls, can best be revea-led by understanding how the origins of budgetary control were uniquely timed to become the ”meat and potato” offerings of a young and hungry management consul-ting industry.

”Contrary to most accounts, James McK-insey was an innovator not because of his particular skills in cost accounting, extensive as they were, but because he in-stitutionalized his professional practices,” wrote McKenna. McKinsey was not alone. Booz Allen, Stevenson, Jordan and Harri-son, George Fry, and many other early con-sulting firms systematized the process of conducting client surveys and deploying budgetary controls.

Just as the dissemination of budgeting con-trol practices was in part fueled by the rise of management consulting in the 1920s, the adoption of budgeting practices in the 1930s would rapidly grow as New Deal le-gislation such as the Glass-Steagall act for-ced commercial banks to give up internal management consulting, leaving it to the consulting firms, McKenna’s book points out. ”And when, in the 1950s, consulting firms expanded overseas, they dissemi-nated these particularly American soluti-ons for corporate governance among their international clients,” wrote McKenna.

Wallander Returns Sloan’s Last Key On April 29 of this year, Svenska Han-delsbanken AB (Handels Bank) of Stock-holm, Sweden, did something that few other banks worldwide can boast of doing within the first quarter of 2009. It posted a better-than-expected net profit — a 21 per-cent jump. Not bad, considering that more

... ’A budget is a state-ment of policy, expres-sed in terms of future accounts delegated to units of an organiza-tion.’ This concept is the origin of our top-ma-nagement approach.”




U.S. banks failed within the first 4 months of 2009 than in all of 2008.

Just how the Nordic bank managed to snare a profit without a government loan or handout, and meanwhile steer clear of mounting loan losses, is something banking analysts have lately been trying to explain.

”The way they are organized is very dif-ferent from other banks — it’s very decen-tralized, and they don’t have a centralized committee like you find in other banks. The branches have a lot of operational freedom, but at the same time they are re-sponsible for losses,” said Fridtjof Berents, an analyst with Arctic Securities, who is quick to add that Handelsbanken was also the only Swedish bank to survive the Nor-dic banking crisis of the early 1990s wit-hout a handout from the government.

As Berents’s comments reveal, Handels-banken’s recent profit is drawing renewed attention to its management philosophy — one that it likes to refer to as ”radical decen-

tralization,” a management model designed to make organizations more agile by elimi-nating bureaucracy and pushing accounta-bility out toward the company’s front line.

Based on organizational thinking you might quickly attribute to Peter Drucker, the Handelsbenken’s model parts with most 20th-century management thinkers, however, when it comes to the role that fi-nance plays in decentralization.

Back in 1972, Handelsbanken CEO Jan Wallander ordered the bank’s finance department to stop producing an annual budget — a practice he viewed as a wa-sting of time and one that he believed hel-ped to stifle the bank’s front lines. In fact, he’s reported to have frequently referred to budgeting as an ”unnecessary evil.”

Nearly 50 years after Alfred Sloan claimed to have found the last key to decentraliza-tion, Wallander was handing it back. Bud-geting, as far as Wallander was concerned, was dead.

Kom hen på vores stand og hør om Adaptive Planning – det fleksible budgetværktøj skabt til virksomheder, der hellere vil bruge ressourcer på proaktiv budgettering end på it-infrastruktur, tung implementering og drift. Løsningen er baseret på Cloud-teknologi med al den fleksibilitet og tilgængelighed, det giver.

Hurtigere budgetproces med færre ressourcer

Meningsfuldt overblik takket være integration mellem budget og realiserede data fra virksomhedens systemer

Forbedret budgetproces på tværs af organisationen takket være et intuitivt værktøj, hvor alle nemt kan bidrage

Forbedret ledelseskommunikation på tværs takket være et ensartet, opdateret og let tilgængeligt beslutningsgrundlag

Sikkerhed for udvikling af budgetværktøjet uden besvær for jeres egen it-afdeling.

Adaptive PlanningGenvejen til effektiv budgettering

Nearly 50 years after Alfred Sloan claimed to have found the last key to decentralization, Wal-lander was handing it back. Budgeting, as far as Wallander was con-cerned, was dead.




Planning & Management Accounting at Alfa Laval

Case Story:

In light of the above Anders Olesen from Basico contacted Thomas Thuresson who is Chief Financial Officer at Alfa Laval. The reason for approaching Alfa Laval was that they fundamentally changed their sy-stem of financial management in 1999. So by now they have 12 years of experience with new methods and during this period Alfa Laval has achieved strong profita-ble growth. Basico would like to tap into these experiences and make them availa-ble for our customers: which tools for fi-nancial management did they apply, what can other industrial companies learn from Alfa Laval, etc.? So Anders Olesen was very happy to receive and accept the invi-tation from Thomas Thuresson to visit him at Alfa Laval’s headquarter in Sweden.

BackgroundIn 1998 Thomas Thuresson convinced the rest of the Group Management to abandon traditional budgets and introduce a new system of financial management. The rea-

son was similar to that of other companies that have abandoned traditional budgets: budgets out-dated early in the year due to (inevitable) errors in budget assumptions, too much time and energy spent on (more or less relevant) details, a lot of very detai-led focus during one period of the calen-dar year instead of an on-going planning that is more closely linked to the business cycle, high degree of complexity due to business structure (matrix), conflicting purposes inherent in traditional budget processes, etc.

In addition, Thomas Thuresson highli-ghted two other issues of great importance for Alfa Laval:

• The old planning process - with tra-ditional budgets - delayed important business improvements, typically because necessary changes / improve-ment initiatives had not been foreseen and thus not included in the budget.

Denne artikel udgives i samarbejde med Basico Consulting

Basico Consulting follows the development of new budget and planning methods in large

international companies and has developed services and competences in these areas. Our

experiences are gained through customer assignments and surveys. In addition, exchange of

experiences and sparring with customers and other interesting companies are pursued. In recent

years our newsletter – Basico Content – has included various planning and forecasting concepts

as well as ideas and methods for implementation.

By Anders Olesen




• As part of the annual budget process a lot of attention was on understanding and trying to manage fixed costs in a lot of detail. The company realised that much more could be gained by analysing and understanding the details of the gross profit instead.

This had to change, and Thomas explains that it was relatively easy to convince both the rest of the Group Management as well as the Board of Directors, not only because of the above mentioned concerns but also because of the Board’s trust in manage-ment. This was partly due to the quality of the company’s financial data; manage-ment could always explain the business development etc. in the financial reports – and this would of course not be compro-mised. The Board thus had the necessary confidence in management to allow them to introduce a new model for financial ma-nagement.

Which tools were implemented?Since 1999, Alfa Laval has developed a very robust model for financial manage-ment. Below we have highlighted some of the main features of the model as it is today.

Please note that this article is not exhau-stive and that we have chosen to include the elements which we believe are of most interest to senior finance executives in re-lated industries.

Principles for financial management• Strong focus on continuous improve-

ment

• Planning is continuous – not an annu-al event

• Planning is on a relatively high level – not based on details

• Detailed focus on gross profit – less focus on fixed costs

• Reporting is based on group profi-tability – not on the figures in local accounts, as these seldom are relevant for analysis

Rolling Financial ForecastsOn a quarterly basis, every entity in the group prepares a forecast of its financial performance for the coming 4 quarters. The forecast must be a realistic “best guess” rather than “wishful thinking”. There, however, is an underlying expectation of continuous improvement (i.e. increasing gross profit and/or cost reductions).

There must be a strong link between planned activities and the forecast for each entity.

When analysing the financial results and the projections in the forecast, Alfa Laval focuses on the development over a two-year period: the latest 4 quarters and the next 4 quarters.

About Alfa Laval Alfa Laval is a leading global supplier of products and solutions for heat transfer, separation and fluid handling.

Alfa Laval is listed on the Stockholm Stock Exchange and the share is included in the Large Cap segment of the OMX Nordic Exchange.

2010 revenues stood at SEK 25 billion (EUR 2,7 billion) and the market capitalization is currently SEK 50 billion (EUR 5,4 billion).

Alfa Laval employs 12.618 people and has activities in nearly 100 countries.




The level of detail in reporting to group fi-nance is the same for actuals and forecasts. Accordingly, the same system and temp-lates etc. are used for actual and forecast numbers.

The quality of the rolling forecasts incre-ased further after Alfa Laval 2 years ago decided to prepare them just before the end of the quarter, rather than at the same time as (or immediately after) the quarter-ly closing. This gave more time for prepa-ration and analysis.

The rolling financial forecasts thus pro-vide top management with an updated and realistic view on the Group’s short to medium term financial development and capacity.

Targets and target settingThe overriding principle for Alfa Laval is continuous improvement: The belief is that if the result of every individual and every part of the company improves every single year, in the long run, the total result for the group will be very positive.

Alfa Laval wishes to grow at an average rate of at least 8 per cent annually over a business cycle. Until recently the target was 5 per cent.

Towards the end of every financial year, bonus targets are set for the coming year. Targets are set top-down. Targets are set on high level, and are not broken down (or “built up”) as in a traditional budget.

Entities have individual targets. However, they are all set in terms of growth, profita-bility and cash flow.

The following elements are included / con-sidered in the annual bonus targets: ex-pected performance for the current year, market conditions, the long term growth goals as well as continuous improvement – the targets must be both ambitious and realistic.

To avoid the risk and effects of reduced efforts towards the end of a target period (which can be the case when actual perfor-mance is either far above or far below the target) management can selectively make target periods shorter than a full calen-dar year. Some sales entities, for example, have bonus periods of 6 months.

Gross profitAlfa Laval has determined that it is es-sential to understand its gross profit in much detail. Accordingly, a lot of infor-mation is captured on transaction level and is available for subsequent analysis. The company is thus able to follow and explain the development of sales (gross and net) as well as gross profit on many dimensions: customer, customer segment, business area, geography, sales channel, sales department / person, product (SKU), application, etc.

“This has proven very valuable for us – much more valuable than spending resour-ces on detailed planning and follow-up on fixed costs” explains Thomas Thuresson.

Gross profit is always reported based on group profitability. Disturbing factors such as internal transfer prices are disregarded / eliminated in all internal reporting and analysis.

For internal reporting purposes standard cost prices are updated by the manufactu-ring part of the organisation on an annual basis. Unless assumptions change drama-tically (which sometimes happens due to the volatility of metal prices) the standard unit costs remain unchanged during the year and thus serve as the benchmark for both sales and manufacturing entities du-ring the year. This simplifies reporting and follow up.

Cost controlWhen abandoning the annual budget, a ty-pical concern relates to cost control; how can costs be controlled without the an-nual budget which typically includes cost

Growth and profitability Alfa Laval’s goal is to grow at an average rate of at least 8 per cent annually over a business cycle. This growth must exceed market growth and be accompanied by solid profitability.

Over the latest five years (i.e. including the global financial crises) Alfa Laval’s EBITDA-margin was in the 15-22 % range, return on capital employed was between 33 % and 54 % and throughout this period with a healthy positive free cash flow, of which about half has been paid out as dividends.




budgets per department / account / month etc.? Below is described how this has been addressed by Alfa Laval.

Approximately 75 % of Alfa Laval’s ope-rating costs are included in cost of goods sold. As explained above, the company performs an annual costing update of its internal standard cost prices. An impor-tant part of this exercise is a thorough re-view of the cost development per product. The demand from top management is con-tinuous improvement (i.e. reduction) of unit costs; primarily through productivity increase. The goal for the manufacturing units is here after to ensure a positive de-viation from the standard costs.

Sales costs represent some 15 % of opera-ting costs. Sales entities have challenging targets in terms of growth, profitability and cash flow ref. the general comments above regarding targets. The way Alfa Laval has defined profitability for sales en-tities ensures focus on cost management and good “housekeeping”: Alfa Laval has defined a “profitability factor” which is the gross profit divided by the local over-head (sales) expenses.

Administrative costs represent 5 % of operating costs. Also in this area focus is on continuous improvement and on the overall development of costs and not on detailed follow up on cost elements such as training, travel and expenses.

Like most other large companies, Alfa Laval has procedures for cost and invest-ment approvals and these are also an im-portant cost control element.

In addition to the above, Alfa Laval has established what we find is a unique da-tabase of all its white collar employees. The database and the company’s recru-itment processes are explained in more detail below. The background for the da-tabase (from a cost perspective) is that approximately 70 % of all fixed costs are headcount related. So - simply put - when the company can manage and control the number of headcount, 70 % of all fixed costs are taken care of from a cost control perspective.

With its strong focus on and control of “the big issues” (cost of goods sold and headcount), Alfa Laval has achieved a

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very strong - and efficient - cost control without the drawbacks associated with traditional cost budgets.

Alfa Laval’s employee databaseThe company maintains a very precise and complete overview of all white collar employees. This has several purposes. As mentioned above; some 70 % of fixed costs are head count driven, so by controlling the number of head count, this takes care of a significant part of cost controlling. In addition, the database and the company’s recruitment process also provides top ma-nagement with a very important tool for managing and developing its pool of hu-man resources. The latter purpose is seen as the most important by CFO Thomas Thuresson. He explains: “Our continuous attention to and review of our resources ensures a smooth allocation of resources from (for example) slow moving to fast moving markets and careful attention is paid to all new hires. We also avoid “big bangs” when costs and resources need to be scaled down fast, as seen in many other companies.”

The database is a stand-alone system; i.e. there are no links to any other systems in the group. The system is thus completely independent from salary systems, ERP sy-stems etc. The database includes relatively few data per employee such as: name, gen-der, title/function, department, location/country, seniority, etc. Every month the number of FTE’s in the database is recon-ciled with the FTE input from each repor-ting entity (part of monthly reporting to group finance), thus ensuring high quality data.

Hiring new people at Alfa Laval (both for new positions as well as replacements) follows a stringent and centralised pro-cess: the manager who requests the new employee must first write an application for the new resource(s). The request must be approved by the most senior executive in the relevant region; typically a member of Group Management. The approved ap-plication is hereafter forwarded to the Re-cruitment Board for final approval.

The Recruitment Board, which meets eve-ry six weeks for 1½ hour, is made up of members of Group Management. The pur-pose of these meetings is to monitor and develop the group’s pool of resources. The

before mentioned employee database is a valuable tool for the Recruitment Board. By having frequent meetings Alfa Laval ensures that changes to the organisation are made up of many small adjustments rather than few large changes. As part of its mandate, the Recruitment Board re-views and considers all incoming applica-tions for new resources. Before accepting to look for external resources, internal candidates are always considered first; the latter is much preferred especially when openings represent a development oppor-tunity for existing employees.

What can other industrial companies learn from Alfa Laval?It is important to recognise that different companies have different requirements for reporting and planning (depending on maturity, industry, etc.) and that the ne-eds change over time. Accordingly, each company must find and/or develop the tools most appropriate for its situation. There is no “one size fits all”.

Having said this, we hope that some of the examples from Alfa Laval can be of inspi-ration to the readers of this paper.

We (Basico) were most impressed by how effectively Alfa Laval has implemented what we call a “no-nonsense” model for financial management: strong focus on and control of the “big issues”, don’t wa-ste time on immaterial issues, don’t micro manage, develop the organisation through regular reviews, and continuously strive for improvements.

Having abandoned the traditional annual budget and introduced rolling financial forecasts, Alfa Laval lives up to the fa-mous John Maynard Keynes quote: “It is better to be roughly right than precisely wrong”.

Next stepIf you are looking for inspiration for how to improve the financial planning at your company or if you want to share your ex-periences, please do not hesitate to contact Anders Olesen from Basico: [email protected] / +45 25 10 22 00.

Basico surveys and experiences In 2005 and 2010 Basico Consulting performed budget surveys among the 1.000 largest companies in Denmark. To receive copies of the reports or to hear more about Basicos experiences within budgeting and planning please contact Trine Krarup: [email protected]

Trends inden for budget- og planlægningsprocessen

Basico Consulting




6 Steps to Improving the Budgeting and Planning Process It’s that time of year again. Review the ac-tuals, add 4%, and look at it bottoms-up, top-down, and in regard to operations vs. capital spend. Build some assumptions, work in a few numbers, consider what a reorg would do, and run some ”what if” models. That’s right, annual planning is upon us!

Budgeting and planning lay the foundati-on for continuous improvement of an orga-nization’s fiscal health. Nailing down the future state early on drives efficiency, im-proves planning and creates a shared vi-sion for success. It is a critical component to transforming any finance organization, making the best use of critical data to in-form key decisions and strategies.

Remember how you told yourself to set aside time after last year’s cycle to fix the process and streamline activities so it would be bet-ter the next time around? Did you do it? Most organizations did not. Don’t make the same mistake again, or you’ll be reading this ar-ticle next year as you pore over spreadsheets and forecasts at the holiday table.

While many organizations missed the boat on making wholesale improvements to their budgeting processes ahead of this year’s cycle, there are still steps that can be taken this year to make a difference. Consider these six tips:

1. Automate. Are you getting the most out

of your current tools? What are your cur-rent tools? In most organizations, they are spreadsheets, and the majority of Excel users take advantage of less than 5% of the package’s features. It is worthwhile to sit down with an ”Excel wizard” to walk through your budgeting and forecasting spreadsheets. Small changes can make a big difference in usability, accuracy and speed. Excel, Access and other end-user applications are powerful tools when used correctly and with the appropriate con-trols. Workflow, thresholding and data management tools can improve consisten-cy and highlight focus areas for additional attention, but most organizations fail to use them effectively. Devote some time to improving templates, and consider every user receiving the benefits. Data is king when it comes to budgeting, but it is not an end goal in itself. Do not spend your time pulling together data and reconciling it -- spend your time building plans from it.

2. Focus on material items. Sure, it’s fun to count paper clips, laptops and data plan costs at the employee level, but in the grand scheme of the enterprise bud-get, counting these items is a waste of time and unlikely to drive great improvement in business results. Instead, utilize driver-based metrics wherever you can in these areas (e.g., budget laptops based on emplo-yee counts rather than calculating them separately). Driver-based metrics are fa-ster, more consistent and easier, plus they

6 Steps 1. Automate

2. Focus on material items

3. Be honest

4. Make time to do it right

5. Iterate

6. Review and improve




allow you to focus on areas where insight can truly improve business performance. That is the point of budgeting, after all.

3. Be honest. Many organizations budget at the department and line item levels, rolling up forecasts into summary reports and presenting them to management, only to be told that budgets have already been set and plans need to ”deliver” certain con-tributions, regardless of the bottoms-up analysis. This is not to say that department heads should ”Occupy Budget Street” in protest, but rather that both groups should consider the end product and needs from the outset and tailor the approach and wor-kload to the reality that exists. Communi-cation around expectations and end pro-ducts will save time and effort, and result in happier budgeters all around.

4. Make time to do it right. Budgeting and setting plans -- and, most important, thin-king about budget decisions and future direction -- is incredibly valuable if it is done right. If you are on the hook to budget for your department, sector, or business unit, block your calendar, close your door and think about what you are doing. Busi-ness planning is difficult to accomplish in fits and spurts. It is necessary to build a mental picture of how you see the busi-ness playing out, and then talk to others to get the full picture. For example, if the sales department assumes 20% growth in new revenue but does not share that goal, IT cannot envision or deliver the required systems.

5. Iterate. Budgets are often thrown to-gether in the eleventh hour to meet artifi-

cial deadlines. No one likes this approach, and it does not achieve much in the end. An ideal budgeting process narrows broad goals into specific business plans and me-trics through iterative group discussion, but only after initial metrics and numbers are generated by the groups responsible for each area. In a transformed organiza-tion, continually rolling forecasts update with actuals as the business proceeds against plan. In many successful organi-zations, initial budgets are reviewed du-ring retreats or other gatherings, promo-ting dialogue and thinking, and providing a narrative to support the numbers. Three individuals will think three different things when viewing the same spreads-heet, so why not talk about it?

6. Review and improve. Set the meeting now to scrutinize this year’s process and think through improvements for next year while the current pain points are fresh in your mind. Include reviews of both the process and enabling technology. Long term, consider upgrading to an enterprise-grade system with automated workflow and built-in controls

Placing focus on planning and budgeting activities is a critical part of keeping fi-nancial processes healthy as businesses evolve. Finance transformation is best completed as a series of small steps, and this is one step that you can take now. In addition to making small but key chan-ges to this year’s process using the tips outlined above, open your calendar now and book time in January to stop, think and improve. The budget process does not have to be an annual pain point. Fix it.

”Fra 22 regneark til ét skærmbillede”Læs mere på www.infosuite.dk

- Beslutningsstøtte, der virker!

· Business Intelligence· Budgettering

· Likviditetsstyring




Interview med Jeremy HopeQ: Hvordan kommer man fra perfor-mance i organisationen til performan-ce på medarbejderniveau?

Det er et meget centralt spørgsmål, som ledere i økonomiafdelingen ikke er til-strækkeligt opmærksomme på. Jeg vil give et eksempel. Jeg har netop talt med en lang række CFO’s, og størstedelen af problemet ser ud til at stamme fra integration af IT servicesystemer. Hvis man går lidt dybere, har de fleste af dem medført indførelse af et nyt IT-system - for eksempel SAP - til erstatning for de gamle regnskabssyste-mer. Men de har ikke ændret organisa-tionen. De er gået glip af muligheden for virkelig at nå til bunds i processen, for at få det horisontale overblik, så de kan iden-tificere nøgleteams og processer og deref-ter forbinde dem. Nogle af dem indser det, men ofte er det for sent.

Den virkelige udfordring, de står overfor, er at forenkle organisationen, før de indfø-rer nye IT-systemer. Det handler alt sam-men om folks roller, ansvar og processer og team, der kender strategien og formålet med processen. Hvis man har formålet for øje, så ved man, hvad man kan måle på, og det kan være meget enkelt, kun tre eller fire KPI’s, og så ved vi, hvor vi skal sætte ind for at forbedre situationen.

Det er et godt spørgsmål, fordi jeg hele tiden møder problemet. Det er for nemt at bringe et konsulentfirma ind, købe et

balanced scorecard, et CRM-system eller et ERP-system, og pludselig er det ét stort rod, og man kæmper for at implementere det. Har man ikke det grundlæggende i orden først, er det et stort problem.

Q: Hvordan bedømmer du vigtighed-en af CFO’ens rolle i dag set i forhold til om ti eller tyve år? Hvordan ser du udviklingen?

Der to typer CFO’er. Lad os kalde den ene old school-typen, som er vokset op med grundlæggende regnskabslære og har gået på de rigtige uddannelser. De er forvaltere af aktionærernes penge. Et andet ord for dette er controller. Det betyder reelt en enevældig, en barriere eller et problem. Og en old school-CFO bliver nødt til at kæmpe for sin rolle i fremtiden, fordi rollen bliver mere og mere automatiseret. Vi ved, at systemer overtager arbejdet i transaktionsprocesserne. I dag kan man outsource det hele, hvis det ikke fungerer. Man har en række alternativer, så den grundlæggende regnskabsfunktion bliver automatiseret. Når man fjerner alt det, så drejer CFO’ens rolle sig om strategi og værdier - hvordan tilfører de organisatio-nen værdi? Bare at stille det spørgsmål til mange old school-CFO’er er ret skræm-mende. Så hvordan gør vi det? Er det virkelig min rolle? Ja, det er din rolle, hvis du vil eksistere i fremtiden, for det er den eneste rolle, du kan få.

Jeremy Hope 1948-2011Stifteren af Beyond Budgeting, Jeremy Hope, døde i september sidste år. Økonomiforum lavede i forbindelse med bogen ”Reiniventing the CFO” dette interview med Jeremy Hope.

... Den virkelige udfordring, de står overfor, er at forenkle organisationen, før de indfø-rer nye IT-systemer.




Men der er nye CFO’er på vej, og de kom-mer ikke altid via regnskabsuddannelser. GE Capitals CFO er ikke revisor, men har lært om regnskab i virksomheden. Han er MBA, og der er mange MBA’er på vej ind i finanssektoren. For den nye CFO drejer det sig om at forstå balancen mel-lem kontrol og nøjagtighed på den ene side og at tilføre værdi på den anden side. Udfordringen her er at finde nøgletema-erne i virksomheden.

Det kan lyde ligetil, men at tage de rigtige spørgsmål om værditilførsel op er ikke altid så ligetil. Hvad er det, der virkelig betyder noget i denne virksomhed, hvad er vores nøglevædier, hvad har jeg vir-kelig behov for for at kunne måle, om vi forbedrer os? Hvor bliver værdierne skabt og ødelagt? Og meget bliver ødelagt. Det er det berømte 20-80 forhold: 80 procent af ordrerne kommer fra 20 procent af ser-vicemedarbejderne. 20 procent af forret-ningen og kunderne tilfører 80 procent af værdien. Problemet er, at i regnskabs-systemer kan man ikke se, hvilken del der er de 80 procent, og hvilken del er de 20 procent.

Men vi er nødt til at forstå det. Vi er nødt til at forstå den intellektuelle kapital, når vi taler om key drivers. Der er meget, vi

gerne vil vide, men vi har hverken tid eller talent i virksomheden til at besvare disse meget vigtige spørgsmål.

Q: I Danmark er en hel del CFO’er blevet udnævnt CEO’er. Er det en udvik-ling, du også ser i Storbritannien?

Hvis jeg så en CFO blive udnævnt til CEO, ville jeg ikke investere i den virksomhed! Det er lidt en joke, men det ville skræmme mig.

Der er ikke noget i vejen med at skabe shareholder value, det er det, vi alle sam-men gerne vil, men det er måden, de gør det på. Jeg har set alt for mange eksempler, for eksempel Enron i USA eller Marconi, Storbritanniens største elektronikvirksom-hed, som ikke eksisterer mere, men som nu er ejet af Ericsson. Og i disse tilfælde så CFO’en det som sin rolle at skabe sharehol-der value. Og hvad betyder det? Det betyder at se sin virksomhed som en portefølje af aktiver, som man kan købe sig ind i, trække kapital ud af, forandre, flytte rundt på. Og man mister fokus på, hvad virksomheden egentlig drejer sig om, nemlig at tilfreds-stille kunderne på en profitabel måde.

Så jeg bliver ofte bekymret, når jeg ser en CFO i toppen, fordi de ser alting som tal, som værdier, som spreadsheets.

It-løsninger til effektiv regnskabs- og ledelsesrapporteringFå styr på processerne omkring finansiel konsoli-dering, budgettering og økonomisk rapportering

Med de rigtige værktøjer fra Solitwork får du styr på alt fra Performance Management til budgetlægning, løbende håndtering af budgetter og prognoser samt økonomi-rapportering og controlling.

Hos Solitwork kan du for eksempel få løsninger, der fuldautomatiserer processen lige fra posteringer i jeres bagvedliggende it-systemer og frem til den endelige rapportering og analyse.

Vi har hjulpet mange virksomheder med at reducere deres tidsforbrug til finansiel konsolidering fra flere dage til kun få timer.

Læs mere om vores løsninger på www.solitwork.com, eller ring på telefon 31430280.

... For den nye CFO drejer det sig om at forstå balancen mellem kontrol og nøjagtighed på den ene side og at tilføre værdi på den anden side.




Q: Vil investorerne ikke se det som en stærk person?

Det vil de gøre på kort sigt, men de vil komme til at fortryde det. Hvis man ser 30 eller 40 år tilbage i tiden var de fleste virksomheder ledet af marketingfolk, der forstod sig på produkter og brands, eller af ingeniører med en god idé, som for eksempel Hewlett-Packard og de fleste af hightech-virksomhederne. De ved noget om maskiner, de kan reparere og opfinde løsninger.

Nu er der revisorer og advokater i topledel-serne. Det siger meget om, hvad der sker med virksomhederne. Resultatet er, at de ofte bliver solgt til den højestbydende. I løbet af de seneste 12 måneder har Storbritannien solgt virksomheder som British Airport Authority, der ejer Heathrow og Gatwick lufthavne, til et spansk selskab. P&O, lan-dets største havneoperatør, er solgt til et selskab fra Dubai og så videre. Det ser ud, som om ejerskab ikke længere spiller nogen rolle, og det er et CFO-synspunkt: det dre-jer sig kun om at skabe shareholder value.

Men ejerskab betyder noget. Hvis et selskab er i problemer, flytter det måske ejerskabet ud af landet. Dét betyder noget for medar-bejderne og i sidste ende betyder det også noget for aktionærerne, så jeg er bekymret.

Q: Så en CFO skal blive ved med at være CFO og ikke lede virksomheden?

Jeg synes, at et partnerskab mellem en CFO og en CEO er virkelig godt og stærkt, de kan balancere hinanden. En CEO skal se fremad, hvordan man kan få virksom-

heden til at vokse og udstikke de lang-trækkende planer, og en CFO skal være en modpol, der udfordrer, stiller spørgsmål eller støtter, når det er nødvendigt. CFO skal være djævelens advokat og stille spørgsmål ved risici. Hvis de begge to er på samme niveau, er det en stor fare. Det var det, der skete i Marconi og flere andre steder. Vi er nødt til at se en CFO som en modvægt, en der holder igen, ikke i nega-tiv forstand, men en positiv modvægt, der er uafhængig og stærk.

Q: Hvordan starter man et Beyond Budgeting projekt, hvis man ønsker at arbejde med fleksible målemetoder?

Jeg giver nødig en helt præcis opskrift på dagsordenen, fordi alle virksomheder er forskellige. Men jeg har set det fungere. Vi har brug for at fremlægge et veldokumen-teret oplæg til forandring for bestyrelsen.

Jeg ved, det lyder som det, enhver konsulent vil sige det: men man begynder med pro-blemerne, og så udarbejder man en vision for, hvor vil vi gerne være om fem år, og hvordan kommer vi derhen? Hvordan skal vores vejkort se ud? Og den meget vitale beslutning: hvad skal vi lave i år ét?

Desuden er det er meget vigtigt at få nøgle-personerne i organisationen på din side. Det er ikke nødvendigvis personer fra bestyrel-sen, men personer, som andre respekterer og lytter til, for det kan overtale flere til at gå ind for sagen. Det gælder altså om at sælge ideen til de rigtige personer, eller at bygge en coalition, som det hedder i change management. Dét er det springende punkt: at sælge visionen og få bestyrelsen til at

Reinventing the CFO How Financial Managers Can Reinvent Their Roles and Add Greater Value

By Jeremy HopeHarvard Business School Press, 2006258 sider




støtte den. Den behøver ikke nødvendigvis at være rullet ud fra ledelsen.

Der er en ting, vi alle sammen har lært i de seneste 10-15 år, nemlig at man ikke kan presse forandringer ned over medar-bejderne. Man skal have dem med sig. Så den store konsulentrapport, godkendt af bestyrelsen og derefter rullet ud, fungerer ikke særlig godt. Men det virker stærkt at få bestyrelsen bag beslutningen. Så kan man få folk med og de lytter til dig. Det er en lang proces. Man skal sige ”Vi prøver at finde en stimulerende rolle til dig, hvad synes du om forandringen?” De bedste ideer opstår ofte i hovedet på de mennesker, der udfører arbejdet, men de er ofte bange for at være ærlige, fordi de tror, at de kan miste jobbet, så man skal have et tillidsfuldt miljø, for at det kan lade sig gøre.

Q: Kan man begynde processen uden at tage fat i finansafdelingen, eller kan man nøjes med at udføre nogle af processerne?

Der er nogle ting, man kan begynde med uden at gå op til et højere niveau. Men når vi taler om at ændre budgetter og mål, kan man ikke gøre det, især når der er bonusordninger involveret. Så skal man straks videre til bestyrelsen, det er et meget følsomt emne at ændre bonussystemer. Det skal godkendes af ledelsen, det går ikke, at der er for mange små projekter, der ikke er forbundet med hinanden.

Q: Du er i gang med at skrive på din næste bog, kan du fortælle noget om den?

Den handler om at forbinde de enkelte ele-menter. Der er tre kerneniveauer i enhver organisation.

Der er bestyrelsen, der er performance management - der blandt andet omfatter finansafdelingen - og så er der det operatio-nelle niveau, der ved, hvad der sker i front-linien, i processerne, i salget og produk-tionen. Alle forandringer skal koordineres mellem de tre niveauer.

Lad mig komme med et eksempel. Det nyt-ter ikke at komme med en rolling forecast, hvis man har top down-targets, fordi der indgår uægte informationer. For eksempel når medarbejderne ikke vil fortælle de dårlige nyheder, fordi de får tæsk, så de

gemmer dem til senere og kommer med dem i sidste øjeblik. Og de vil heller ikke fortælle dig de gode nyheder, for så vil du sandsynligvis ændre deres mål. Det handler om joined-up management. Der er et andet varmt emne, jeg skriver om, nem-lig at kunne trække den øverste linie. Der tales i øjeblikket meget om, om hvordan vi vokser organisk. Vi har været gennem nedskæringer, vi har været gennem fusio-ner og overtagelser for at få plads til vækst, og det er svært og fungerer ikke særligt godt. Så hvordan får vi plads til vækst, hvordan får vi vækst, der er to gange så hurtig som GDP, der er GE’s mål?

Det er meget svært, og fokus i det, jeg arbejder med, er, at vore systemer ikke fremelsker den udvikling. Vore systemer er sat op til effektivitet, ikke til innova-tion. Så hvordan ændrer vi vores model, så vi fremmer innovationen? Igen er det de emner, jeg har talt om. At gå væk fra målene som sådan. Det handler om at minimere, gradvist forandre mål og bud-getter og at afskaffe det, helt enkelt. Vi skal måle og belønne de rigtige ting. Vi skal skabe plads til nye virksomheder. Hvordan skaber man ny virksomhed inde-fra i organisationerne? Det er meget svært. Enten bliver man omklamret til døde af de eksisterende systemer, eller også står man helt alene i en prekær situation. Så hvor-dan får man den balance korrekt?

Q: Så du siger, at organisationer skal vokse organisk, og de skal også kun-ne operere organisk?

Ja, de skal være støttende og de skal have et ledelsessystem, der gør dem i stand til det, ellers er det som en skjult forhin-dring. Jeg tror ikke, de ser problemet. Det er som en rumfærge, der brænder op på turen ned gennem atmosfæren. Og vækst kan ikke drives fra centrum, du kan ikke lovgive om det, der skal være det rigtige miljø. Folk er kreative eller ikke krea-tive, de foretager et valg, når de tager på arbejde hver dag. Så der er mange af disse bløde emner i ledelse, vi kæmper med, og vi skal have en bedre forståelse af mange af dem.

... Der er en ting, vi alle sammen har lært i de seneste 10-15 år, nemlig at man ikke kan presse forandringer ned over medarbejderne.




Du er hvad du gør og ikke hvad du planlæggerMichael Coveney var tidligere ansat som performance management ansvarlig i en stor international virksomhed. Han hu-sker særligt et år, hvor han tre måneder før et nyt regnskabsår som vanligt sad på sit kontor og ventede på at næste års budget skulle dukke op. Men ingenting kom, og Michael Coveney tænkte, at regnskabsaf-delingen nok var forsinket, så han ventede endnu en måned.

Efter endnu en måneds ventetid var der stadig intet budget i indbakken. Nu var der blot en måned til det ny år, og han havde stadig ikke set skyggen af et budget. Da virksomheden forlod det gamle år og påbe-gyndte sine aktiviteter i det nye, havde Mi-chael Coveney stadig ikke modtaget et bud-get. ”Forfærdeligt” tænke han, ”hvad skal vi dog gøre, og hvordan skal vi planlægge?”

Tre måneder inde i året var budgettet sta-dig ikke dukket op. Efter seks måneder uden et budget viste det sig, at virksom-heden alligevel havde klaret sig godt og brugt sine ressourcer på en relativt fornuf-tig måde. Alt burde således tilsyneladen-de være godt, men den lange budgetløse periode bragte dog Michael Coveney på sporet af, at virksomheden grundlæggen-de havde et problem i forhold til planlæg-ning og budgettering. Han begyndte derfor at spørge sine medansatte, om de vidste, hvordan deres dispositioner hang sammen med virksomhedens målsætninger. Måske var der noget galt med den måde, virksom-

Virksomhedens aktiviteter burde være udtrykt i budgettet. Men

i mange virksomheder er budgettet blot indholdsløse tal, der

hverken har sammenhæng med strategi eller aktiviteter. Mange

glemmer, at ”du er hvad du gør og ikke, hvad du planlægger”.

heden planlagde på, siden det manglende budget hverken havde betydning for hvor-dan virksomheden allokerede ressourcer til specifikke aktiviteter og til virksom-hedens gennerelle performance.

I følge Michael Coveney gennemføres mange budgetprocesser i dag på en ulogisk måde. Mange ledere kigger ikke på strategi og målsætning først, men på ressourcen, som man så fordeler efter gætteleg, histo-rik eller mavefornemmelse.

”Jeg indleder ofte et rådgiverbesøg med at vise de ledende medarbejdere en kopi af virksomhedens egne værdier eller mål-sætninger, som jeg henter fra deres web-side. 9 ud af 10 gange kan selv nøglemed-arbejdere ikke genkende virksomhedens egne værdierog målsætninger, fordi de er for generelle og ligner alle andre virksom-heders målsætninger om at være bedst, størst eller hurtigst.

Det er et kolossalt problem for hele virk-somhedens planlægningsproces”. Derfor mener Michael Coveney, at det vigtigste i relation til planlægning, prognoser og bud-getter er at finde ud af, hvad der virkelig er vigtigt for virksomheden. Enhver virksom-hed må være i stand til at etablere de fem eller syv vigtigste målsætninger, der vel at mærke er et særkende for netop denne virk-somhed. Først når virksomheden har arbej-det grundigt med strategi og målsætninger, vil den være i stand til sikre en planlæg-

”Mange ledere kigger ikke på strategi og målsætning først, men på ressourcen, som man så fordeler efter gætteleg, historik eller ma-vefornemmelse”.




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ningsproces, som kan levere den rette in-formation inden for de strategiske områder. Ifølge Michael Coveney er det helt centralt, at der er sammenhæng mellem de strategi-ske målsætninger og rapporteringsleveran-cerne internt i virksomheden. Er der ikke det, opstår dette ”strategy gap”, som ofte viser sig at være den primære årsag til en dårlig og uhensigtsmæssig planlægnings-proces. Det er helt centralt, at planlæg-ningsprocessen er styret af virksomhedens overordnede målsætning og ikke af indivi-duelle ønsker og behov eller af ”det har vi altid gjort”- argumentet.

Det lyder enkelt, men ifølge Michael Cove-ney er budgetbaseret planlægning i mange virksomheder en så etableret metode, at en overgang til strategibaseret planlægning kan virke som en uoverstigelig forhin-dring. Der er da også nogle faktorer at være opmærksom på:

”Når sammenhængen med strategi er etab-leret, skal planlægningsprocessen desig-nes, så den leverer den rette information. Det gøres ved at uddelegere ansvaret for aktiviteter og at honorere dette ansvar.” ”For det andet skal virksomheden sørge for, at teknologien i virksomheden er til stede. Ofte findes den i virksomheden, men benyttes forkert. Det betyder, at tek-nologien understøtter budgetplanlæg-ningen og medarbejdernes handlinger. Dermed fastholdes virksomheden i en ”planlægningskultur”, der aldrig måler på strategi og målsætninger.”

God virksomhedsplanlægning kan kom-primeres til to punkter: Først lægger man en plan. Derefter lægger man en plan for, hvad planen kommer til at koste. Dermed, siger Michael Coveney, at er virksomhe-den hvad den gør, og ikke hvad den plan-lægger.

”Først når virksomhe-den har arbejdet grun-digt med strategi og målsætninger, vil den være i stand til sikre en planlægningspro-ces, som kan levere den rette information inden for de strategi-ske områder”.

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Resumé:The Leader’s Dilemma

Jeremy Hope, Peter Bunce og Franz Röös-li har deres fødder dybt plantet i Beyond Budgeting-tankegangen (både Hope, som desværre døde i efteråret 2011, og Bunce er blandt grundlæggerne af Beyond Budge-ting Round Table - BBRT), og i denne bog demonstrerer de, hvordan ledere med suc-ces kan videreudvikle forretningen. Bogen er målrettet de ledere, som ønsker at ar-bejde med ledelseskulturen for at tilpasse virksomheden til fremtidens udfordringer.

Sund fornuftBogen indledes med en lille kernefortæl-ling: Et år klagede Albert Einsteins elever over, at eksamensspørgsmålene var de samme som året før. ”Ja”, sagde Einstein, ”spørgsmålene var de samme. Men det, eleverne skulle forstå, var, at det var sva-rene, der havde ændret sig.” Hvis eksa-mensspørgsmålet om nutidens ledelse var: ”Hvordan skal den måde, vi leder på, æn-dres for at klare nutidens udfordringer?”, så måtte svarene absolut være anderledes end de svar, eleverne ville have givet et par år tidligere.

Læseren bliver taget i hånden fra første side, hvor nøgleord og begreber bliver defi-neret og dermed sætter rammerne for læs-ningen (på letforståeligt engelsk), fx bliver ”budgeting” sat lig med ”commando and

How to Build an Empowered and Adaptive Organization Without Losing Control

control”; et begreb, de fleste efterhånden er enige om, har overskredet sin salgsdato. For de tre forfattere er det indlysende, at det er medarbejderne, som skal være i fo-kus, hvis virksomheden fortsat skal være effektiv og øge omsætningen. På fornem vis viser de, hvordan forretningen og med-arbejderne sammen vokser, så virksomhe-den udvikles.

Spændende casesHvert kapitel indledes med et citat og en spændende case svarende til indholdet af kapitlet og sluttes med den læring, der er i casen, retningslinjer til implementering og kapitlets nøglepunkter. Bogen bærer ty-deligt præg af, at forfatterne har været vidt omkring i deres research på virksomheds-cases, og læseren møder virksomheder som Southwest Airlines, Leyland Trucks, Citigroup, HSBC, BP, Lehman Brothers, UBS, Roche, Whole Foods Marked, Ame-rican Express og mange flere.

Hope, Bunce og Röösli demonstrerer en imponerende viden og et veldokumenteret grundlag fra mange forskellige brancher i deres analyser. De binder deres modeller, figurer og holdninger fint sammen med både ”virkeligheden” i de selskaber, som de behandler i deres cases, forskellige akade-miske synspunkter og politiske realiteter.

”The best organizations are adaptive systems that continuously learn, adapt and improve.”

”… not about implementing new regulations or tools to fix a few broken parts. It is about unleashing huge amounts of ambi-tion, courage, creativity and collaboration within your organization.”

Denne artikel udgives i samarbejde med Basico Consulting




The Leader’s DilemmaHow to Build an Empowered and Adaptive Organization Without Losing Control

By Jeremy Hope, Peter Bunce, Franz RöösliJohn Wiley & Sons, Ltd., 2011344 sider

Forfatternes udgangspunkt er fire princip-per, der danner basis for deres ledelsesmo-del:

1. Virksomheder er hele systemer.2. Virksomheder er et net af relationer,

der ikke kan forudses.3. Virksomheder organiserer og justerer

sig selv.4. Forandring skal integreres og tilpasses

og ikke ses som afsluttede projekter

De 12 Beyond Budgeting-principper I 2003 udviklede Jeremy Hope og Robin Fraser 12 ledelsesprincipper, som denne bogs forfattere her har givet yderligere dyb-de og beskriver med hjælp fra cases i store, kendte virksomheder. De 12 principper bygger på de fire ovennævnte antagelser.

Ledelse og gennemsigtighed1. VærdierFå medarbejderne til at samles om en fæl-les sag; ikke en central plan.

2. LedelseLed gennem fælles værdier og sund døm-mekraft; ikke detaljerede regler og ret-ningslinjer.

3. GennemsigtighedInformér åbent og med gennemsigtighed; undgå restriktioner og kontrol.

Ansvarlige teams4. TeamsOrganisér fleksible og ansvarlige teams; undgå centrale funktioner.

5. TillidHav tillid til, at teams selv kan justere de-res præstationer; undgå styrende og kon-trollerende ledelse.

6. AnsvarlighedBasér ansvarligheden på holistiske krite-rier og ligestillede relationer; ikke på hie-rarkiske relationer.

Mål og belønninger7. MålOpmuntr teams til at sætte ambitiøse mål; undgå at låse mål fast i stive aftaler.

8. BelønningerBasér belønninger på præstationer; ikke på fastlåste mål.

Planer og kontrol9. PlanlægningGør planlægning til en fortløbende og inkluderende proces; ikke en årlig ”top-down”-event.

10. KoordineringKoordinér samarbejde dynamisk; ikke gennem årlige budgetter.

11. RessourcerSørg for, at ressourcer er tilgængelige ”just-in-time”; ikke ”just-in-case”.

12. KontrolBasér kontrol på hurtig, hyppig feedback; ikke budget-ændringer.

Hvert af de 12 punkter udgør et uddyben-

”Transforming your ma-nagement model is pro-bably the greatest service you can provide to your organization. It will pro-vide a platform for future growth and renewal.”

”The problem is that if people follow written rules rather than inviolate values, there is always a temptation to work around problems rather than make a fast and firm decision …”




de kapitel i bogen, og gennem dem giver forfatterne opskriften på, hvordan ledere kan etablere et tillidsforhold til medarbej-derne i en levende organisation og stadig bevare kontrollen med forretningens ud-vikling.

Jeremy Hope, Peter Bunce og Franz Röösli har udviklet en ledelsesmodel, der sætter rammerne for en succesfuld og justerbar model, der tager udgangspunkt i sund fornuft og menneskelig adfærd - og de ud-fordrer på en fin måde eventuel modstand mod nødvendige forandringer.

Kom godt i gangSom der står et sted i bogen: ”The only way is to go for it”. Det er ikke nødvendigt med planer for alle virksomhedens områ-der, inden denne udvikling søsættes, og

selv små justeringer i hverdagen kan være et skridt i den rigtige retning. Et af de utal-lige eksempler på gode råd og sund fornuft er, at takkekort for veludført arbejde og fødselsdagskort på medarbejdernes fød-selsdage har langt større effekt end den tid og de omkostninger, indsatsen kræver.

Opsummering”The Leader’s Dilemma: How to Build an Empowered and Adaptive Organization Without Losing Control” giver inspireren-de eksempler i konkrete cases på, hvordan ledelsen kan videreudvikle forretningen. Med udgangspunkt i disse cases viser Je-remy Hope, Peter Bunce og Franz Röösli, hvordan deres 12 Beyond Budgeting-principper danner grundlag for, hvordan virksomhederne kan ruste sig til at møde fremtidens udfordringer.

”The lesson is that if leaders are prepared to trust their people with information and invite them into the problem-solving and decision-making process, then amazing things can happen.”

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Budget, Forecasting and Planning

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