Top Down Budgeting Made Easier with Data Analytics

What is Top Down Budgeting?

Top down budgeting is as intuitive as it sounds: it starts at the top with senior management preparing a high-level budget for the enterprise. This budget is based on the company’s objectives, and once it’s prepared, it trickles down to department managers for implementation.

Senior management is concerned with the overall growth of the company and top down budgeting allows them to allocate the proper resources to departments in an effort to effectively grow the company. Instead of each department crafting separate budgets and later reconvening to combine them, they can refine their respective budgets based on the objectives set by the original one from management. The work of the department manager is to develop a budget that demonstrates how the department will spend the apportioned funds to produce expected revenues. By crafting one overarching budget for the whole organization, senior management affords lower-level managers and departments the time and money to focus elsewhere and boost productivity.

How does Data Analytics make it easier?

The common concern with top down budgeting is that senior management is far removed from the day-to-day operations of individual departments, thus ill-equipped to set realistic expectations of expenses and revenue for each department. Department managers are then held to these standards with little influence on the budget process or only a single iteration of defining their own budgets. However, Data41 uses data analytics to ensure that such budgets are designed accurately and conscientiously. The department managers are important constituents in this process. Through analytics and automation, the process also becomes more iterative, allowing greater influence from the department managers most familiar with daily operations. We enable effective decision making through analytics.

Data41 helps companies automate their top down budgeting process by implementing advanced analytics delivered by industry leading solutions like IBM Planning Analytics. This combination of software and service supplies you with a planning, forecasting, and analysis tool that offers accurate insights into your organization’s historical patterns, current demand, and future trends. Further, scenario analysis and sandboxing capabilities are an inherent advantage of this technology. All constituents in the budget process have the opportunity to define then refine their budgets to establish baseline parameters then optimize the outcome through real-time scenario analysis. More complexity delivers more impactful outcomes. The system, through automation, does the heavy lifting. Thus, the top down budgeting solution brings you real-time financial insights, thereby enhancing your ability to sustainably plan for the future with the guidance and input of each budgetary stakeholder.

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