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Thank you for your interest in BBRT. Welcome to the BBRT global newsletter, which is designed to keep you informed of developments in Beyond Budgeting and the BBRT. For further information visit our web site at www.bbrt.org.
Table of contents
8 July 2008, BBRT Public Sector Interest Group
Royal Institute of British Architects, London, England
13-14 August 2008, BBRT Healthcare Special Interest Group Meeting
Sponsored & hosted by Honour Healthcare
201 17th St 9th Floor, Atlanta, GA, USA
17-18 September 2008, 2008 Lean Accounting Summit
Red Rock Resort, Las Vegas, NV, USA
27-28 October 2008,BBRT North America Fall Members' Meeting/6th Annual BPM Summit
Greenwich, CT, USA
6 November 2008, BBRT Europe Members' meeting
12 November 2008, BBRT Conference
Basel, Switzerland
BBRT North America annual Conference, 23-25 April 2008
THANK YOU! The BBRT staff would like to thank all the sponsors, partners, and supporters that made the BBRT 7th Annual Conference possible. The conference was a success and provided an excellent forum for learning and sharing information among our extend network. Audio CDs are still available from the conference with recorded presentations by all the speakers, including the keynote by the former U.S. Comptroller General, David Walker. If you'd like to order a cd, please contact Kisty Fairchild at kisty@theplayergroup.com
New Members
Baycare Health Systems has joined BBRT and the Healthcare Interest Group
Interest Group Updates
BBRT INSIGHTS research series
Two papers have been circulated to BBRT members in May and June:
How you should improve the system before making IT decisions
Abstract: Even some of the best managed companies on the planet struggle to mange IT costs satisfactorily. Certainly, the one lesson they have all learned is to only invest in IT once the problem has been correctly diagnosed and the process under the spotlight has been improved in other ways (e.g., through better design). This lesson was ignored in the scramble to implement most ERP systems. This paper takes a look at some of these issues and how a few organizations are beginning to get more control over IT costs.
How to avoid the pitfalls of ERP systems
Abstract: ERP systems have cost large organizations huge sums of money over recent years. But few have delivered the promised benefits. Some of this is down to over hyped expectations and some is down to poor implementation. But the main problem is that too few leaders have spent time getting their organizations ready for these systems in terms of moving to a process-driven structure. Consequently, many ERP systems have simply automated the old hierarchical reporting systems. This paper looks at how some leading-edge companies have derived more value from their ERP investments and what lessons can be learned from them. It also looks at how the “push” model inherent in ERP can clash with the “pull” model of lean in the delivery processes.
The BBRT INSIGHTS research papers are delivered to BBRT members on a regular basis. BBRT members can download the full papers from the BBRT Private Forum.
Mastering Forecasting: Towards Adaptive Performance Management – A Practical Methodology for Forecasting in the 21st Century
By Steve Morlidge and Steve Player
BBRT White Paper Excerpt
The following excerpt was contributed by Steve Morlidge and Steve Player. Steve Morlidge is the former leader for the Dynamic Performance Management Project at Unilever. Morlidge's DPM project was a major change project for the Finance Function in Unilever, which brought the principles of Beyond Budgeting into mainstream practice within Unilever. It was this project that led Morlidge and Unilever to the BBRT in Europe as one of its founding members; in 2001 Morlidge became the BBRT chairman. Morlidge left Unilever at the beginning of 2006 to work as an independent consultant and author, in addition to working on the development of tools to help companies work in a budget-free way. Steve Player, program director for BBRT North America and founder of TPG Consulting, LLC, founded TPG Consulting to help clients improve cost and productivity management. Steve has over 20 years experience in implementing performance management, strategic planning and process improvements. He is the founder of the Activity-Based Management Advanced Implementation Group (ABM AIG) and is the co-author/editor of four books on Activity-Based Management. He is also a columnist for Business Finance Magazine focusing on CFO interviews with some of the nation's most innovative executive leaders. Previously, Steve was the managing partner of Arthur Andersen's Advanced Cost Management Team.
Excerpt: One of the few things which management commentators agree upon is that the world in which we now live is much more uncertain and unpredictable than it used to be. We face obvious new large scale perils such as terrorist attacks and global warming. But putting these to one side; is it conceivable in any other age of humanity that an organization can rise from nowhere to become one of the world's richest companies in little over ten years in the way Google has done? Today's global economy and interconnected consumers mean that enterprises cannot hope to prosper, or perhaps even survive, by simply managing their current business efficiently. They need to try to anticipate what the future holds and build the capacity to respond flexibly to this unfolding reality.
The trouble is that today's managers are using processes and tools which excel at dealing with the challenges of the mid-twentieth century. They enabled them, with the use of rudimentary communications technology, to command and control the affairs of large organizations, squeeze economies of scale from large scale manufacturing operations, and meet the insatiable demands of the post war consumers. But times have changed and you don't have to be a management or Beyond Budgeting revolutionary to recognize that the way we manage our organizations also needs to change. Organizations need to develop new skills such as the ability to look ahead, think, plan and act with speed and dexterity that was simply not possible with the ponderous, backward looking tools that served managers well in the industrial age.
It is in this context that, in recent years, we have witnessed an upsurge of interest in business forecasting in general and in finance in particular. Clearly, and with good reason, forecasting is now seen as an essential tool for helping management deal with the uncertainty and turbulence which they now face. It is not difficult, however, to detect a powerful sense of frustration which accompanies the upsurge of such interest. There are two main reasons for this.
First, it is clear that there is a strong sense of dissatisfaction in the quality of forecasting. Indeed, most forecasts are perceived to be inaccurate and unreliable, and the process of producing them excessively laborious and costly. The reality for many companies may be even worse as David Axson observes: "typically the sales forecast is extracted under duress form the sales organization. This forecast is then second guessed by marketing; production and finance with the result that eventually sales throw their hands up in frustration and simply say 'just tell me the number you want'.1
Clearly the process is broken.
The second source of frustration is that there is a sense that "it shouldn't be like this." After all we have had nearly a century of experience with budgeting and how different is budgeting to forecasting? In our private lives, don't we forecast without any apparent difficulty when we set out on business trips or when managing our domestic finances? How difficult can it be? Isn't it just common sense? Don't we just have to drive out the bad practices including the dishonesty that "infects" the practice? Wouldn't that solve the problem?
While there is a lot of sandbagging, dissimulation, trickery and sharp practice that goes on in and around forecasting in business, this is more the result of a faulty approach to forecasting than the cause of the problems. The fact is that we don't really know what we are doing! We get confused between forecasting, budgeting and planning. We mistakenly believe that forecasting in business is like crystal ball gazing or weather forecasting - an exercise in attempting to predict the future. And we have very little idea what it takes to build a forecast process that is capable of serving our real business needs.
But salvation is at hand! With some basic principles it is possible for any business to specify, design and build a forecasting process that works. While I call them scientific principles, you might call them "common sense" since they are principles that we put into practice every day outside of work, without realizing it.
As Kurt Lewin said, "there is nothing as practical as a good theory."
Mastering Forecasting - Introducing the Six Principles
Beyond Budgeting says that we should make action planning a "continuous and inclusive process" and it isn't difficult to buy in to the idea that forecasting should be "fast and light touch." In addition in many businesses, forecasting plays an important role in another of the six Beyond Budgeting process principles: the one which advocates: "coordinating cross-company actions according to prevailing customer demand." Fine words, as we all know, but how do we actually do all this?
Success depends on managers' mastering (understanding well enough to be able to apply practically) six principles:
This is an excerpt of the original. The full article is accessible to BBRT members on the BBRT Private Member Forum on the BBRT website (www.bbrt.org). If you have trouble accessing the full article on the member forum, please email Peter Bunce or Kisty Fairchild
1 David Axson Best Practices in Planning and Management Reporting John Wiley, New Jersey. 2003, 195
BBRT is an independent international shared learning network for all organizations that seek to improve their performance management through sharing information, past successes and implementation experiences. Our purpose is to help organizations introduce a new management model for the innovation age.
For more information, please visit www.bbrt.org, email Peter Bunce, or call +44 1590 679803
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