Zero based budgeting | KPMG | GLOBAL
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The fall and rise of zero basing

Zero based budgeting

Rapidly changing business models demand increasingly agile responses, as resources shift to support strategic objectives.

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Initially introduced over 40 years ago, zero based cost management fell out of favor with leadership teams, being seen as unwieldy, labor intensive, highly disruptive and ultimately not delivering to the bottom line. We believe the recent resurgence of this potentially valuable way of thinking about trade-offs between risk and value stands the greatest likelihood of being successfully applied in today’s business environment if organizations:

  • prioritize human factors over a technical process
  • focus ruthlessly on value creation
  • inject tension into the system
  • tackle attitudes to risk head on
  • focus attention on driving long-term value from zero basing.

Specifically, our approach builds on the principles of how private equity organizations create value, with a focus on evidence based decision making to build consensus, deal quality analytics to remove emotion and the highest standards of rigor and governance. In short, getting leadership to rethink their business through the eyes of an external investor.

Rapidly changing business models demand increasingly agile responses, as resources shift to support strategic objectives. In focusing on these critical conditions for success we believe organizations are best placed to achieve this by continually challenging themselves to direct resources to the point of greatest strategic worth.

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