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THE JOURNEY SO FAR
1
2009Large budget variances
CFO initated a Rolling Forecast project
CPA looked into options
Stumpled upon Beynd Budgeting
2010Presented the vision to the executive management team
Created a cross functional implementation team and formalized a plan
Not good understanding of the BB principles within the team and in some cases opposition to the change
Did not manage to implement RF process before budget season kicked in
Decided to do a budget for 2011 and pick up the RF project by start of 2011
BEYOND BUDGETINGAT ÖSSUR
LESS ConferenceTallinn November 2012Axel Úlfarsson
ABOUT ÖSSUR
ABOUT ÖSSUR
HeadquartersReykjavik,
Iceland
Össur Asia Shanghai,China
Össur Americas
California, USA
Össur EMEAEindhoven, Netherlands
• A global orthopaedic company
• Headquarters in Iceland
• Founded in 1971 by Mr. Össur Kristinsson
• Develop, produce and sell non-invasive
orthopaedics
• Listed on the OMX Copenhagen stock
exchange
• 15 Locations
• 1850 employees
• 400 million USD annual turnover
OUR BEYOND BUDGETING JOURNEY
BEFORE BEYOND BUDGETING
• Long and painful budget process
• Every department with detailed budgets
• Complex planning system
• Started preparation in May
• Heavy process during autumn
• Ended in December with a report for BOD and Executive team
• Value in the report not balanced with the effort in creating it
• Focus on actual vs. budget
OUR BEYOND BUDGETING JOURNEY
HOW IT STARTED
• CFO initiated Rolling Forecast project
• Searched for improved ways to do financial forecasts
• Did some research
• Introduced to Beyond Budgeting
• BBRT conferences
• Presented the vision in 2010
OUR BEYOND BUDGETING JOURNEY
IMPLEMENTING
• Simplified the budget process
• Pull tactic
• Shifted focus from budget to YoY improvements
• Spread the BB “gospel”
• The pull came in 2011
• First high level, 5 quarter rolling forecast in February 2012
• Cost control now with relative KPIs and trend lines
• CEO decides to abandon the budget by 2013
OUR BEYOND BUDGETING JOURNEY
2013…..
• Evaluate and improve
• Target setting processes
• Cost control
• Planning process
• Align the organization on Beyond Budgeting
WHAT HAS CHANGED
2009
2012
WHAT HAS CHANGED
FOCUS ON THE FUTURE
• More trend lines vs. static view
• Planning process on a higher level with
focus on main KPIs
• Shifting management´s focus from the past
and to the future
• Cost control with relative KPIs and trend
lines
19.3%
21.0% 21.0%
20.0%
21.0%
20.0%
19.0%
20.0%
18.0%
19.0%
18.0%
19%
21%
15.0%
16.0%
17.0%
18.0%
19.0%
20.0%
21.0%
22.0%
Q1 ´11 Q2 ´11 Q3 ´11 Q4 ´11 Q1 ´12 Q2 ´12 Q3 ´12 Q4 ´12 Q1 ´13 Q2 ´13 Q3 ´13 Q4 ´13 Goal
Adj. EBITDA %
Adj. EBITDA margin 12M Average
5.0% 5.0%
4.0%
3.0% 3.0%
4.0%
3.0% 3.0% 3.0%
4.0%
3.0%
4.0%
5.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Q1 ´11 Q2 ´11 Q3 ´11 Q4 ´11 Q1 ´12 Q2 ´12 Q3 ´12 Q4 ´12 Q1 ´13 Q2 ´13 Q3 ´13 Q4 ´13 Goal
Organic Sales Growth
Organic Sales Growth 12M Average
CURRENT FORECAST PROCESS
• Used to support decision making
• Consolidated high level forecast
• Down to main locations
• Supporting tools variable based on each location´s needs
• 5 Quarter view
• Updated quarterly with exceptions if needed
• Ownership of numbers with local management (MDs and
department heads)
• Ownership of process with financial controllers
TIME WELL SPENT
• Executive sponsorship
• Communication
• Face to face meetings
• Workshops
• Training
• BBRT
CHALLENGES
• Rewards/Bonus structure
• Target setting
• Braking old habbits
• Forecast reliability
• Information on external peers
Thank you
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