Thursday, October 14, 2010

Before making any decisions



Set system goals of management status

A Holdings Co., Ltd. (referred to as "A Company") is a large state-owned assets XXX City management company. The company's "15" period to complete the overall transformation, the establishment of a competitive advantage. "Eleventh Five-Year" period, A company plans to introduce strategic investors, the implementation of joint-stock reform, industrial restructuring efforts, focus on key industry advantages in natural resources, timely withdrawal does not have the market competitiveness of the industry, so that there is, do certain things. However, with competition growing and constantly expanding business scale, A company's existing budget management system to meet internal management and control, response to market competition stretched. Management recognized that to achieve the "Eleventh Five-Year" strategic planning vision, improve the management level, the establishment of a "tailored" the comprehensive budget management system is urgent. In this situation, the first management company, analyzed the current situation:

1. 2 architecture, multi-level management of the organizational model

"15" period, A company's successful restructuring of equity stripping and secondary industry, and gradually formed a two-stage architecture, multi-level management and organization. That is based on the two subsidiary strategy, large amounts of direct investment and financing decision-making management and operational analysis through regular meetings will be two operating subsidiaries, to guide and control. Two subsidiary responsible for themselves and their subordinate units in operation and management. This relationship led to the budget shares organizational system can not reflect the company's industry A section on development.

2. Decentralized accounting and reporting system

A company by the affiliated companies to submit financial statements required by headquarters on a regular basis, then by the accounting entity accounting separately in the same industry, different entities of the accounting system and information system was not uniform.

3. Budget management system can not meet the requirements of the development strategy

Before the project, A company has not yet formed a standardized budget management system. According to the requirements of the SAC the city, A company organized in the various subsidiary companies budgetary planning and reporting, however, this budget is mainly applied to outside investors, the lack of internal management and decision support and operational guidance. Performance appraisal objectives and the implementation of the management responsibilities to operations subject to the book, the budget goal-oriented control weakened.

4. The lack of an effective budget tool

A company's original budget using EXCEL, a spreadsheet as a tool for budget analysis and its access control function is weak, there is the following defects or deficiencies: (1) difficult to effectively coordinate and manage the budget for the unit to participate in the budget; (2) can not be a matter of control; (3) the workload budget; (4) difficulties in multi-angle, flexible, three-dimensional reflect the data; (5) formula set complex, error-prone, confusing sets of data.

In the current situation based on the analysis, combined with "Eleventh Five-Year Plan" Vision, A comprehensive budget management system for companies to implement the objectives were set:

? Improve the corporate governance structure;

? For centralized financial management, accounting system to promote the unity and perfection;

? A management control system, an important part;

? Implementation of the budget software, to achieve seamless integration of information systems and improve data efficiency.

Implementation of targeted ideas

As both a comprehensive budget management planning, coordination, motivation, evaluation, organizational learning and other functions, and thus become a modern enterprise management and control of the main methods. However, within the company, a comprehensive budget management system of secret key management is not a panacea, it should be with the company's strategic planning, performance management systems to form an organic interaction. To this end, A comprehensive budget management system in the design process, adhere to and reflect the following design ideas:

1. Strategic planning, comprehensive budget and performance management, management of closed-loop interact

In business management, strategic planning, comprehensive budget and performance management are inseparable organic whole, the three form a closed loop (see Figure 1). Only three of the efficient interaction of the enterprise to achieve the strategic objectives, the budget played an important role in connecting link.






Figure 1, strategic planning, overall budget, to form a closed-loop performance management

2. And the control group pattern matching, a comprehensive budget management model developed in two phases

Combined with the company's development strategy, A company is the investment management structure to manage both operations management and operation features of the hybrid structure development. Group on the control plates of different industries to varying degrees: the implementation of priority development of industry and close control of the operation managed with strong features; on nurturing the development of industry, appropriate and timely development of industries out of industries, the operation managed more prominent features. Therefore, in mixed mode to fully consider the future development trend, so that the comprehensive budget management system has good continuity and scalability based on, A company that at the present stage can be used wholly and holding subsidiary classification management (operations management) control mode, with the company's organizational model A development and management tools to gradually mature, and then gradually transition to the close management of hierarchical management and the combination of hybrid control mode.

(1) in the current period, A company should adopt a comprehensive budget management at different levels (see Figure 2).

Group holding company headquarters is responsible for overall strategic planning, strategic objectives and the determination of the annual operating plan; two units of a major investment and financing the budget approval and the balance of key indicators, the Group summary of the budget, direction and supervision of two corporate budget management; approval major budget adjustment applications.

Two companies under the Group's overall strategic guidance to determine the strategic action plan and annual operating plans; issued under the Group's strategy to target the specific preparation of operating budget; implementation of the Group's budget approval; mandate in the group to process budget adjustments; accepted in the Budget Management Group guidance.

(2) In the next 2-5 years, the gradual transition to management at different levels and close management of mixed-mode combination.

In the mixed management model, A corporate headquarters priority to the development industry to gradually strengthen the management, production, sales and other business activities related to major decision-making into the group control area and formed a management mode; still used in other industries management at different levels, to form the hierarchical management and close management of the combination of hybrid management model.






Figure 2 A comprehensive budget classification management company

3. Through a comprehensive budget management system to Advance Financial Management Group, a comprehensive upgrade

Comprehensive budget management to group strategy-oriented, can unify the two holding subsidiaries Part and financial management objectives, to promote the group in coordination; overall budget of the co-ordination of resources can be deployed, Ping Heng internal investment and financing plans to ensure the Group Finance healthy development; the same time, to ensure that resources allocated to the best priority in creating value for shareholders, increasing return on investment. Headquarters and the focus of two holding companies of the full budget in a unified platform for the preparation of information systems, and promote the Group's internal financial accounting and reporting system of unity.

4. To establish a system by the combination of budget information system

A decision of the company's two-tier management strategic decision-making at headquarters and subsidiaries operating decision-making in detail information needed to the degree and angle differences. Therefore, the budget system should not only be from the industry, product categories, customers and suppliers by providing a summary of the budget of different data management to meet the information needs of the Group headquarters, but also to combine the sales of various subsidiaries of different policies, supply chain management, cost accounting requirements, to meet the subsidiary departments of the budget preparation and analysis needs. At the same time, the system needs to have good scalability to meet the company's management development. To improve the efficiency of budget preparation and analysis, to reduce duplication, the budget system but also with other information systems (ERP or financial system) to achieve seamless integration, to maximize information sharing.

Implementation of Budget Management Information

In the established ideas, we first budget A's organization and processes necessary to sort out and adjust, set up to build a budget from the target, then budget control and analysis of the budget system. On this basis, for the implementation of information technology.






Figure 3 A company's overall budget management system

1. Budget management organization and processes comb

A company's budget management system, including budget preparation, implementation and feedback on the three main parts. Which, by the establishment of budget targets, business plans and budgeting constitute the three links; budget monitoring and budget execution in parallel; through budget analysis and reporting of budget performance feedback information for the revised budget targets, business plans and management methods. Budget preparation, implementation and feedback form a mutually reinforcing closed loop (see Figure 3).

Budgeting to strategic planning to guide the group. Before you start the budget-setting, coping strategies, planning and implementation of the strategy is reviewed and adjusted to ensure that strategic objectives, plans and budgeting and the basis for correct guidance.






Figure 4, the budget development process

Budget development is a key part of overall budget management, including the establishment of goals, develop operating plans and budget of three activities. There is interdependence among the three, the relationship between interaction, and sometimes need to repeatedly cycle through (see Figure 4). Figure 5 reflects the budget statements of the subsidiaries and group relations system.






Figure 5 Group budget report system

A holding company headquarters and two subsidiaries of control in different ways. A corporate headquarters of major projects focused on pre-approval, post hoc analysis, control and audit monitoring. The two subsidiaries of the things in the budget implementation monitoring.

The basic range of budget analysis of the contents of the budget report. A company has confirmed the importance of differences in standards, the importance of standards to the content focus of the budget report. Meanwhile, the budget also clearly involved in the various departments of internal and external information gathering and budget analysis functions. Through several levels, from top to bottom as the way to ensure that all levels of managers to obtain the needed information.

Budget analysis report is a summary of budget implementation, but also to adjust the budget, operating plans or make proposals for action to improve the program. In the budget analysis report will be the main responsibility for overall implementation of the budget, significant differences, differences in the causes and improving the proposals in detail.

Budget adjustments into the budget adjustments and budget adjustment of goals. A target company's strict control on the budget adjustments. As a result of changes in the business environment is really necessary adjustments must meet strict approval procedures. Scroll through the preparation of the budget the budget adjustment manner. Quarterly rolling budget preparation, to increase the budget guide to action.

Overall budget target identification, implementation and performance evaluation and control measures need to combine in order to give full play to its goals the role of management and process control. On the other hand, the budget also provides for the performance evaluation based on measurable. Therefore, the budget targets is an important part of performance appraisal. Meanwhile, the budget is also a group of performance management performance assessment need to focus on one aspect.

2. Selection and Design

Combined with the needs of budget management system, A software company on the budget functions were clear:

? Multi-angle, flexible display data;

? Rigorous, flexible access control so that the effective participation of the entire organization's budget management platform;

? Powerful model of financial intelligence and analysis, simple set formula;

? Flexibility to create management reports;

? Able to achieve the financial or business system interfaces;

? Support flexible budgets, rolling budgeting.

Comprehensive budget management application system design brings a complete, practical, stable, scalable, secure, advanced, open economy, the overall design principles. Control system with the company match, the project team designed a two-tier management, multiple sets of application software application model. Two sets of application mode design allows A corporate headquarters and subsidiaries and between subsidiaries have maintained the relative independence of the budget to meet the needs of different individuals, but also to build a unified platform that enables a consistent budget management nature, the units can be standardized and unified under the guidance of full participation in budget management.

3. Configuration

A subsidiary of the company headquarters and the system configuration is based on the program, give full consideration to the individual company's business, it is necessary to meet the budget of each subsidiary based on the standard requirements (ie, the basis of the budget report submitted to the request), also To meet the needs of its subsidiaries in the sales policy, the production cycle, scheduling methods, cost accounting, supply chain management, investment and financing decision-making, and many other operating characteristics. A whole group of companies established headquarters not only meet the standard requirements, but also guide the budget of each subsidiary of specific operating system.

Another feature is the configuration of all points, the classification of subsidiaries aggregated budget data. Sub, a subsidiary of data through tools into the budget A software company's headquarters in order to achieve the Group's integration of data between headquarters and subsidiaries, what they want the budget management objectives. Therefore, the application of a unified budget for the software, A corporate headquarters can not only view the aggregate data, you can also separately view a specific budget for each unit of data to understand the specific business trends, obtain specific decision support information.

4. Integration

HAL software tool that comes with the completion of the budget system and other information systems integration. The tool has an intuitive graphical user interface, just a simple drag and drop, can be the butt of data. At present, the docking has been achieved not only the actual accounting system UFIDA, Kingdee, gold abacus and other mainstream software, including A self-developed corporate ERP and MRPII systems.

HAL tool interface program can generate executable file. Adoption of the budget custom software menu interface program articulated in the budget for the software menu. End-users can automatically access the menu by clicking the actual data can also be set cycle automatically by the system on a regular basis to obtain the data. Budget system and the actual operating system, seamless integration, data collection efficiency greatly improved.

5. System Development

A model taking into account the future development of company management, A company's budget system has flexible scalability. In the Group will gradually change management model both operational management and operation of the management features of a hybrid mode, the group can be incorporated into the management of enterprise level close the budget model, and the headquarters of the budget into the application system, and thus more timely and detailed grasp of the budget preparation and implementation, to improve decision-making efficiency.

Case Reference

As a diversified development of large enterprise groups, A company has extensive experience in budget management reference.

First, the complexity of enterprise groups, forms of organization, budget management system design requires a full analysis based on group strategy, combined with group organization model. To give full play to the role of information systems to deal with the current organizational structure and process necessary adjustments.

Secondly, the need to consider the information needs of different management levels. System by the combination of the budget model will ensure the unity of the Group on the budget requirements and specifications to meet the information requirements of strategic decision-making; and retain the subsidiary's individual budget model designed to meet the operational management needs.

Third, the overall budget management system requires both the development consistent with the Group management situation and the need to guide management improvement. Budget reporting and analysis system design, one need to consider management's current management needs and means, on the other hand also need to give full play to the budget system as a management control tool, lead management improved.

Fourth, the system selection needs to take into account the difference subsidiary of applications, select the versatile, easy to integrate with different systems, with flexible information extraction and query capabilities of the software. Meanwhile, with the excavation depth analysis of the data management requirements of the enhanced choice of software should be in data analysis, display and warning has scalability or match, mature analysis tools can be necessary to achieve timely development and upgrade.







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