1. Beyond Budgeting ARAY Julia NAUMOVA Anna Rogoza Olesya I. Baranov

2. Beyond budgeting is….a positive idea that uses the abandonment of budgeting as a trigger for improving the entire management control process. Extract from the Foreword by Dr. Charles T.Homgren, Professor of Accounting, Stanford University.

3. So-called model Beyond Budgeting Model has been developed by the organization with same name Beyond Budgeting Roundtable, abbr. BBRT, based the Great Britain in 1998. It includes 60 companies from the Great Britain, the Europe and the USA.

4. The Beyond Budgeting Model is designed to: overcome traditional barriers create a flexible, adaptable organization That gives to local managers the self- confidence and freedom to think differently, make decisions rapidly, and collaborate on innovative projects with colleagues in multifunctional teams both within company and across its borders.

5. Twelve principles of BB

6. The Beyond Budgeting Model is a new approach to budgeting, and also a holistic approach to strategy management, business planning, target setting, rolling and event- driven forecasting, and business- performance management based on financial and non-financial key performance indicators.

7. Traditional versus Beyond Budgeting

8. Traditional Budgeting Pro: Part of control system Fixed financial targets Financial incentives Annual plans- the best ways to max market opportunities Leaders are the best placed in resource allocation Contra: Budgets lack sufficient strategic orientation Budgets ignore the turbulence of markets Budgets lead to inappropriate (unethical) management behavior

9. Relations among different budgeting concepts Beyond Budgeting Advanced Budgeting Better Budgeting Traditional Budgeting Increasing radical changes Potential number of users

10. Beyond budgeting Pro: Faster response Innovative strategies Lower costs More loyal customers Contra: Problems relating to its small circle of potential users The difficulty of managing without budgets Not justify the associated high costs Fear of Change The lack of empirical evidence concerning its use

11. Robin Fraser, Jeremy Hope. Beyond Budgeting(Hardcover, 2003) Beyonв Budgeting: boon or boondoggle?, Robert C. Rickards Investment Management and Financial Innovations, Volume 3, Issue 2, 2006 62 Beyond Budgeting or Better Budgeting?, Bytheresalibby, Ca. and R. Murraylindsay, Strategic Finance, 2007 Beyond Budgeting: questions and answers, Jeremy Hope, Robin Fraser, 2001 www.bbrt.org References

12. To make planning a constant and overall process Constant adaptive process To coordinate actions according to the demand √ to base goals on the EXTERNAL performance indicators; √ to set HEIGHTENED goals To coordinate reward with the RETROSPECTIVE evaluation To base control on the effective managerial principles and a set of the performance indicators To provide an accessibility of the resources needed

13. Svenska Hendelsbanken Deutsche Bank Southwest airlines Borealis Ahlsell Rhodia Toyota Volvo IKEA

14. goals key performance indicators in comparison with the market indicators disposal of the influence of the uncontrollable input factors measurement of the managerial improvements Managers: - reward is based on KPI; - more freedom in actions (and more responsibilities)

15. Enterprise Resource Planning: fluent reaction to the demand (the center – operations, not departments & functions) Forecasts: - are made according to the results of previous quarters - separated from the evaluation of efficiency and control - based on the moving average Cost center Current month The same month last year Cumulative total for the current year Moving average for 12 months % changes of the moving average for the last year Internal reporting of Borealis