Zero-based budgeting (ZBB), a budgeting model where finance develops a budget from a zero base, offers companies a unique opportunity to avoid the limitations of historical targets and assumptions to identify significant inefficiencies and waste, streamline processes and right-size head count.
However, almost 50% of companies are failing to achieve cost reductions or margin improvements from ZBB. And while 34% of companies believe they’re using ZBB, only 20% are actually implementing it. To realize the full benefits of zero-based budgeting, finance must shift its focus away from ZBB being a budgeting exercise and adopt a year-round cost-optimization approach — or “zero-based spending” — in order to deliver the ongoing accountability for spending decisions required to drive meaningful results.
Download this new insight to understand how zero-based spending is helping leading companies to maximize cost reductions from ZBB using three key steps:
- Creating shared cost ownership between budget and package owners to increase spend accountability.
- Promote strategic decision-making for resource allocation by focussing on higher-impact budget trade-offs instead of granular budget line items.
- Emphasizing ZBB as a value-adding — not cost-reducing — exercise to increase engagement and buy-in from the business.