How To Cultivate a New Culture

* Explain why the budget is being changed -- e.g., to better support goals, objectives, plans or performance metrics.

* Form a cross-functional team of people who will define the key strategies, tactics and metrics that the new budgeting process will support. People who are included in the creation of a new budgeting system are more likely to use it when it is introduced.

* Buy e-budgeting software that includes planning capabilities. Some analytics applications offer no such feature, giving managers little reason to engage in forecasting.

* Explain to employees how the new system will help them do their jobs by giving them data they need to make informed budgeting decisions.

* Train middle managers in the basics of accounting and finance. They will need this knowledge to generate their own forecasts.

* Tie compensation to achievement of performance targets, not budgeted thresholds.

* Pilot the software system within one department or division first, and communicate early successes. Attempting to implement a budgeting system companywide without testing it thoroughly is prohibitively risky.

* Wean managers off of spreadsheets by explaining how the new system can improve their planning accuracy.

* Make sure data entered into the budgeting application is checked for accuracy and consistency. If the software cranks out inaccurate numbers due to data-entry mistakes, its credibility may suffer irreparable damage.

* Instill a new mind-set within the company, shifting away from concerns about "how much does it cost?" to analyses of "how much value will it generate?" Best-practice companies focus on risk-adjusted return on capital and establish cost parameters based on cost benchmarking information.

See the full article from Business Finance Magazine