Why ZBB Now

Tom Trachtman, Senior Consultant

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In the most recent Twelve Consulting Group blog post we outlined why zero-based-budgeting (ZBB) is a challenge. The idea of budgeting from the ground up, across an organization is daunting. Though ZBB may be laborious there is no better time than now to implement zero based budgeting. Why?

The scrutiny of public companies by investors is at an all time high.

Ever since the 2008 financial crisis there has been increasing pressure to return cash to shareholders. This scrutiny is exemplified by a different news story each day regarding investors taking an activist role in public companies. Activist investors can be a costly distraction to companies (It is estimated the P&G spent $35M in a 2016 proxy fight with activists WSJ), and the best way to keep investors at bay is an efficient cost structure enabling strong shareholder returns and visibility.  To that end, companies are constantly seeking how to better manage their costs and eliminate unproductive spend for which there is no better tool than zero based budgeting.

Your competition has implemented zero based budgeting and seen dramatic results.

Companies large and small have implemented zero based budgeting and are recognizing annual savings as a result. For example, it is estimated that Kraft Heinz is saving $280M annually through their ZBB initiative WSJ 2. No business wants to be the laggard of their industry. As more and more companies implement zero based budgeting, and reap the year over year cost savings, a traditional “annual inflation” budgeting process is not only an obsolete practice, but also detrimental to your success.  

New Technologies are eliminating the historical pains for zero-based budgeting.

The concept of zero based budgeting is intimidating, as it requires a large number of stakeholders navigating the organizational matrix etc. Recognizing these obstacles, leading technology companies, such as Anaplan, are making the process easier than ever before. Cloud based platforms can enable real time consolidation, eliminate off-line reconciliation and allow a wide user base to operate in the system concurrently.  The ZBB accelerator developed by Twelve Consulting Group leverages Anaplan’s cloud based platform to create a seamless and turnkey process for every budgeting cycle and tracking variances to actual spend throughout the year.

The time to implement zero based budgeting is now. To learn more about how Twelve Consulting Group and Anaplan can help you build a zero based budgeting tool in as little as 90 days, please contact Austin Pittman (Austin@twelvecg.com) or schedule time with our team at www.twelvecg.com.