Thanksgiving turkey, breakfast with Santa, holiday party invitations, budget requests…wait, budget requests? Oh no, it is the end of the year again! If your fiscal year end is 12/31, it is time for the CFO to lay down the law and issue the budget for 2014. As all executives know, making decisions about which ideas to fund can be easier said than done. In the midst of all the hustle and bustle of the holidays, CFOs all over the world have the added pressure of making incredibly important decisions influencing the direction of their companies for the next year and beyond.
If your organization is like mine, there is no shortage of amazing, creative, innovative ideas on how to spend discretionary dollars in the next year. But, as decision makers and leaders, CFOs need more information. Not only do we need an understanding of the costs, but it is crucial to integrate the benefits that will be achieved, the resources required, the timelines and the impacts. We need an understanding of how each budget request aligns with our corporate strategy and how it will bring the company to the next level. These decisions cannot be made in a vacuum – first in, first out does not apply to year end budgeting! We want to understand the entire portfolio, not just one request at a time. We want to visualize option A compared to option B and optimize the benefits we will achieve. We want to invest in force multipliers and continue to build a bigger and better business.
Project portfolio management (PPM) to the rescue! PPM provides the construct for the CFO to obtain valuable performance and metric information, such as:
- return on investment analysis;
- project performance information;
- risk management; and
- resource utilization.
PPM provides the framework for balancing and optimizing a portfolio, assessing and selecting budget requests, and evaluating and reporting on those requests that become projects. It provides the visualization needed for true prioritization, side-by-side comparisons, and recommended portfolio composition, thereby ensuring that the RIGHT requests are selected and authorized.
The information that the Portfolio Management Office has access to through PPM software is incredibly valuable in the budgeting process. PPM takes the dollars and cents of budget requests and turns them into multi-dimensional components. PPM provides the construct to bridge the gap between the CFO’s decision process and the boots on the ground execution, typically managed by the PMO. CFOs can look to the PMO for decision making tools, processes and portfolio options. PPM, facilitated by the PMO, breaks down the silos of data across organizations. The PMO’s portfolio management processes provide the CFO with the side by side comparisons – enabling them to select the best ideas that will build the optimal portfolio. The CFO becomes a true financial planner for the organization with the knowledge provided by the PPM stewards. It is when the CFO and PMO works together, that PPM drives the creation of better budgets – budgets that help you plan faster, manage smarter, execute better, workforward® in 2014 and beyond.
Want to know how I create Métier’s budget using PPM? Join me for a free consultation to learn more about how to make smart budget decisions. In the meantime, I invite you to request an online demonstration of PPM Central here.