Just-In-Time Budgets: Perfect for Volatile Environments


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In the past, organizations have been operating in times of steady upward growth, making budget planning reasonably straight forward. Now, markets have become unpredictable with downward trends and extreme swings. This has made long term budget planning nearly impossible and a counterproductive use of managers' time. By implementing the Just-In-Time (JIT) process, IT managers will be able to use budgets that can be altered quickly in response to negative changes in the external environment.

A JIT Budget Complements an Annual Budget

Annual budgets are typically created using a lengthy process and then approved with the intention of not being changed. The error with this technique is that it assumes the estimates will be close enough to reality. When financial targets are not met, the company is slow to respond because of the time consuming process required to deviate from the original plan. This leaves opportunities on the table for other more agile companies to exploit.

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Search Code: 6880
Published: June 23, 2009
Last Revised: June 23, 2009

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