Use Case

Zero-Based Budgeting

Put Your Money Where
Your Strategy Is

Host Analytics Planning is the connected financial, budgeting and forecasting application that can drive your organization to adopt zero-based budgeting.

Zero-Based Budgeting (ZBB) is a budgeting methodology. Its primary purpose is to align organizational spending with the organization’s overall strategic vision. A ZBB approach requires organizations to build their budget from zero each period, validate all components in the budget are necessary and aligned to the organization’s strategic goals. Implemented correctly, a ZBB culture should have budget owners justifying which expenses to keep, versus traditional budgeting, where budget owners are justifying the expenses to cut.

Why Zero-Based Budgeting?

In a traditional budget process (where the next period’s budget is based on prior-period actuals), a complacent culture can be created. Budget owners look at what budget they can cut, not the budget they need to complete company initiatives. ZBB is powerful because it creates an environment where budget owners are always evaluating if the budget they are requesting is aligned with their strategic goals.

What Took So Long and Why Now?

The origin of ZBB can be traced back to the 1970s. Spreadsheets alone weren’t enough to support the speed and agility that planning processes require in a ZBB culture. Over the last few years, ZBB has experienced a comeback, primarily due to advancements in enterprise performance management (EPM) technologies. Now the technology exists to support the speed and agility that ZBB requires.

Implementing a zero-based budgeting culture as well as an EPM solution will provide your organizations several benefits:

  • Alignment of organizational spend with key strategic initiatives
  • Increased accountability for budget owners and their spend
  • Creation of a corporate culture that fosters responsible and accurate budgeting
  • Increased collaboration between the Finance Office and business operations

Related Resources

On the Blog
Is Zero-Based Budgeting Back in Vogue?

Over the past few years, the zero-based budgeting (ZBB) approach has gained renewed interest and is being adopted by a growing number of organizations.

On the Blog
What is ZBB and Is It Right for Your Business?

There are a variety of different budgeting techniques that businesses can utilize to allocate capital across departments.

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With Host Analytics Planning, you can automate your financial planning, budgeting, and forecasting processes.