It may be clear to you that your company's budget process needs improving, but where do you begin? Are you are seeking improvements in the process's cycle time, the quality of information that the process produces or trying to lower existing production costs? In any case, you will need to analyze your budget process before you can begin improving it.

Analyzing a business process helps us to understand its key elements. In the budget process, the strategic and operational planners' primary concern is to develop a realistic plan that can be used to chart and measure the business's progress. The sources of this information form one of the budget process's key elements.

In many organizations the most important information resources are the organization's management personnel. Historical data that is accumulated in the organization's accounting systems' databases is another. By clearly identifying the sources of budget information we can begin to understand how changes and improvements to developing and processing the information can be implemented.

The methods and systems used in collecting information from the organization's resources are key elements of the budget process. How the information is collected by the organization's planners may determine the degree to which it can be subsequently processed. The collection methods may also determine how well the collected information's integrity can be maintained. By examining the information collection methods, we can better understand how to prevent a 'ripple' effect of bad information from occurring throughout the process.

The methods used to assemble information collected during the budget process should be examined carefully. These methods may afford an organization the greatest opportunities for process improvement. A well-designed process should incorporate methods that allow budget information to be compiled quickly without limiting the information's potential for re-use in analytical or research procedures.

In addition to an analysis of the organization's resources, its collection and compilation methods, an examination should study the budget process's information flow. Do mid-level managers have an opportunity to interact with upper management in developing budget information? Is the process completed in iterations where budgets are submitted to management for review then approved or returned for additional revisions and eventual resubmission? Organizations that are considering implementing process change should review the flow of information. Changes to the flow can impact mid-level managers' support for the budget process and how much the managers buy in to the process's final results.

Effective communication during the budget process can be critical. Management of the process should include the means for both upstream and downstream communications to take place. Improvements to the process can be created by implementing mechanisms that will facilitate good communication.

Another key element that needs to be examined is the reporting function. Information that is developed during the budget process must be disseminated to the organization's decision makers and managers. The process by which budget information is distributed should ensure that the information is timely and relevant. The distribution methods should also consider adequate security measures in order to protect strategic and confidential information from unauthorized access.

Technology is another key component of the budget process. While it is difficult to predict the life cycles of technologies, a review of the technologies used in the process is important. A comprehensive review should identify the key technologies involved in developing the budget. A review will support better management of the organization's investments in technology and help to develop a better understanding of how technology can be utilized throughout the process.

After the budget process elements have been identified and analyzed, management can begin developing a plan to restructure the process. Management should recognize that change is often challenged by personnel who have grown accustomed to routine processes and procedures. Conflict resolution should be given a high priority during the implementation phase. Implementing the new process successfully will depend greatly upon upper management's support.