We’ve just published our latest podcast episode which takes a look at Zero-Based Budgeting (ZBB). This approach is making a comeback, and our interviewees enlighten us as to why that is and share tips on how organizations, especially Holding companies and SMEs, can successfully implement ZBB.
Our interviewees are Fatih İnanç, Deputy General Manager of Sales at Detaysoft, an SAP Platinum Partner and the United VARs implementation member for Turkey, and Ercan Balkoç who is a Partner at McKinsey & Company in Istanbul, and a subject matter expert on Zero-Based Budgeting and cost transformation. Below are some excerpts from the discussion:
United VARs: What is Zero-Based Budgeting?
Ercan (McKinsey): It’s sustainable cost management and resource allocation. What you typically do is create the budget from zero every year and build the key cost drivers onto it. So each year you re-evaluate the cost. The critical part is you bring full transparency to the company. And also all the budget owners are fully part of the process. It's not a finance-driven approach. Everybody's part of the process.
United VARs: Why do you think this approach is making a comeback?
Ercan (McKinsey): There are several trends that drive this comeback. The new world that we are in is quite volatile and this volatility requires a clear approach to forecasting by doing scenarios on the budgets throughout the years. So the budget becomes a tool that you track monthly. Zero-Based Budgeting is not a new concept. It has been applied over the course of the last 30 years but with the new tools, it's now much easier to benefit from this approach.
United VARs: What's the best way to implement a Zero-Based Budgeting approach?
Fatih (Detaysoft): Everything begins with cultural transformation, which means an organizational change. Technology is next, which can include flexible planning platforms like Excel-based planning, which our clients are really fond of and very familiar with.
We helped some of the biggest holding companies in Turkey with the Zero-Based Budgeting approach. They really benefitted from learning from every country and each company. Once you complete the template that you are going to work on, it's easy to roll out the new budgeting approach across your subsidiaries.
Ercan (McKinsey): With international corporations, it gives the opportunity to phase your implementation. So you do a pilot in one country where you feel much more comfortable and then you can roll out in different phases. You also have internal benchmarks within several countries that you can use while you are deciding the cost levels and targets for the next year's budget.
United VARs: Detaysoft has developed a solution for implementing ZBB on SAP Analytics Cloud. Could you tell us a little about it?
After we’d implemented many ZBB projects, we decided to create a package for those who would like to implement this approach as soon as possible. Our approach is to use templates that can be adjusted to fit the needs of the organization. We have input screens, dashboards and processes ready. Z+Pack is a package that we implement in nine weeks. It can be adjusted very quickly and easily for their needs. It works on the SAP Analytics Cloud platform which is used for planning, visualizing and reporting.
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