An organization’s annual business plan consists of several components, not just budgets. The purpose of a business plan is to set out goals and objectives—with great focus on financial targets the organization hopes to achieve in the coming year. Typical practice is to begin working on next year’s business plan and budget in the midto late third quarter of the fiscal year. For organizations operating concurrent fiscal and calendar years, school, and budgeting start around the same time. Usually the business plan and budget goes to the board or owner in December. Well-laid plans get approved; lousy plans become the root of contention and revision during the holiday season. Most organizations don’t enter a new fiscal year without a board-approved operating plan for the next year.
Communications budgeting and planning involves only the expense and asset accounts in the system. This is the time and place to get new inputs into budgeting and operating practices, as well as organize new parameters in operating and capital expenditures. Regardless of reporting structure, it is strongly recommended that communications cost management be accounted for as a departmental peer to other operating functions such as sales, marketing, accounting, management information systems/information technology (MIS/IT), etc. Alternatively, it can be part of MIS/IT if all subaccounts are properly structured and their entries classified appropriately. But care must be taken to keep the two separated and well defined, because of the potential for, and sometimes outright, duplication of resources or empire building. Missing an opportunity to acquire a new operational capability is also possible as well. This is the syndrome known as the left hand not knowing what the right hand is doing.
Good budgeting and planning practice uses previous years’ actual results as a foundation on which to build the next year’s plan. Overall, the process involves studying and understanding previous years’ history, followed by development and analysis of alternative scenarios. Reports of actual expenditures by category, department, and location covering the past year are the critical starting point. These reports should come from accounting on a regular monthly basis.
Excellence in budgeting and planning practice dovetails with and leverages successful long-range business and strategic planning. Gaining a detailed understanding of the content of goods and services making up the numbers may require examination and study of the invoices and contracts that caused the numbers. This is the area where communications subject matter expertise can greatly enhance clarity and meaning with respect to cause and effect of capital and operating expenditures, really purchasing decisions, on individual departments as well as the overall operations of the enterprise. It is important to determine the value of each and every spending transaction. What is the result of providing every single employee with a telephone? What would happen if they didn’t have a telephone, or if they had to share a telephone with another person? Managers in all departments with responsibility need to evaluate and consider the work content of each and every employee. What is their input and output; how much is dependent on 24/7 availability of a telephone for incoming and outgoing calls? The same questions should be asked about their computers, LAN usage, pagers, mobile phones, and other gadgets. Not that they aren’t valuable, but it’s a simple matter of understanding how valuable. And if the value is real, is it being applied to, or used by, all appropriate headcount?
Capital spending should be scrutinized as well. Look at the previous 2 or 3 years of capital spending. What was the cost of each component in the spending package? What was the expected result? Capital spending should either result in savings or profitable revenue growth, preferably both if possible. What was the promised return compared to reality today? Get numbers, because you will (or should be) asked. If you’re not asked, then you should update your resume and watch for an opportunity to move to a job where management asks before you’re forced to because the management you work for might not get supervised by the bank or board before the business isn’t a business any longer.
The budget is only one part of an overall communications plan. Depending on the way the enterprise is organized and conducts its accounting practices, communications budgets, and operating activities may be centralized or decentralized. They may be wholly an internal function or completely outsourced. In reality, it’s highly likely somewhere in between the two extremes and a mix of both. Other key parts of the plan include people and vendor or supplier resources. Communications expense and capital expenditures are significant dollar amounts. We know from experience that opportunities for significant one-time and ongoing savings exist. It is not unusual to realize 8% to 10%, or even 15%, favorable impact on pre-tax profit. Budgeting and financial planning time is the time to create a plan to realize those savings.
In addition to impacting the cost of communications directly, budgeting and financial planning provide opportunities to impact the organizations overall growth rate and the competitive and strategic position in the marketplace. Creation of a website with adequate, but not oversized communications network access and just the right amount of advertising and promotion can be just the ticket for a newly created product or service offering. Expansion of customer support with a new call center located in an area where labor cost is lower is a no-brainer. But structuring the design of the communications network and system required to support scalable growth over a 2-, 3-, or 5-year period requires knowledge of communications technology and commercial products and services to design, build, and operate in a way that enables and does not constrain growth. Competent communications budgeting and planning supports the department with direct responsibility to determine and plan the website. The responsible department describes what they want in the way of capabilities and results; communications management designs the facility and prepares a detailed operating and capital project plan, including budgets for both.
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