Budget Fudget

In our regular daily read of various articles in the world of telephony we came across in interesting article that prompted some discussion with a few colleagues. The news article at TelephonyOnline titled “Ciena CEO: top carriers now budgeting “monthly”” caused us no end of banter. Many of us had worked in carriers who generally had tight controls on spending and significant pressure on managing within a designated budget.

The article was pointing out the lament from Ciena, a network gear supplier, that carriers were running their business (and ultimately making their decisions) on a month to month basis. In the article Ciena while justifying it’s current fiscal challenges, seemed to imply that this was not good (certainly not good if you were a supplier with a history of relying on massive carrier contracts—ed.). In this day and age, if a carrier is NOT budgeting monthly, and making decision on that budget, you can be assured that they will soon be out of business or at least become insolvent rather quickly.

Budget process

No matter how big or how small you are, if you do not have an ingrained process that does the following;

  1. Create a budget at least two months prior to the start of your fiscal year,
  2. Develop budgets down to the most relevant decision making unit,
  3. Manage your day-to-day operations based upon your budget
  4. Report on your monthly performance within 20 calendar days of month end,
  5. Review variances to that budget (estimate to actual) monthly, and
  6. Act on your reviews quickly…

You will not survive long.

Reward on Results

With this regained fiscal prudence it may come back into vogue to reward managers who actually manage to live within a defined budget. While the whole notion of budgeting and fiscal accountability seemed to have taken a back seat to unrestrained and freewheeling practices in some companies, we think the most successful will bring back some of the important aspects of fiscal planning and measurement as key factors of success.

How does your company shape up?

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