Introduction of process-oriented budgeting in a global organization

As part of a consulting project spanning several months, we supported a global project-driven organization in developing a concept for process-oriented budgeting.
Holistic process management was already an integral part of the company’s strategy. Process-oriented budgeting plays a key role in active process management, helping to assign clear responsibilities, enable plan–actual comparisons, and generally increase process efficiency.

The starting point for the change was management’s realization that the previous, strongly department-driven budgeting approach did not adequately reflect the actual value chains or the growing complexity of internal processes. The result was unclear responsibilities, inefficient resource allocation, and limited controllability of business processes.

Project goal and approach

The aim of the project was to design a budgeting model that was no longer based exclusively on organizational units but on the organization’s end-to-end business processes. The central question was: Which resources are required at which points in the process—regardless of traditional departmental boundaries?

To answer this, a structured process analysis was carried out. In several workshops with employees from different areas, sample processes were identified and documented. At the same time, the existing budgeting mechanisms were analyzed.

A number of factors ultimately determine how quickly the transition to process-oriented budgeting can take place. It is considerably easier if a basic process-oriented mindset is already in place—for example, through active process management, a role concept, a process map, or similar structures. The extent to which performance recording, such as working time documentation, is already established also plays a significant role, as does the availability of suitable IT systems.

From departmental thinking to a process perspective

One of the biggest challenges is usually fostering a shift in mindset: away from thinking in terms of “cost centers” and toward a view focused on end-to-end processes. The goal is to map all value-adding processes and relevant interfaces to support processes in order to identify clearly defined process steps and the associated resource requirements.

Since process-oriented budgeting links budget planning directly to process performance, budgets are no longer based solely on department size or historical values, but on forecast process volumes and key figures (e.g., throughput times, order quantities, utilization rates). On this basis, resources can be planned more precisely, bottlenecks can be identified early, and control measures can be initiated more effectively.

As a result, the principle of causality is fulfilled far better than with a department-oriented approach: costs are allocated directly to the processes that cause them. This increases transparency in cost allocation and provides a stronger foundation for decision-making in process optimization along the value chain. In contrast, a department-driven approach often results in less transparent cost structures, as overhead costs remain hidden within departments.

A process-oriented approach also enables more accurate costing and, in turn, more reliable sales price determination. It becomes significantly easier to calculate realistic prices based on precise process cost allocation rather than relying on average values and surcharge rates.

Sustainability and compliance topics can also be presented far more transparently by measuring resource efficiency along processes, helping to meet legal requirements or internal compliance guidelines.

Finally, the groundwork is laid for process optimization, including the introduction of process mining. This allows optimization potential to be identified along the entire value chain rather than in isolated departments.

Involvement of specialist departments and change management

The transition to a more process-oriented organization usually affects all employees, from clerks to management. A key success factor is therefore the close involvement of the specialist departments throughout the development process. Instead of a purely top-down introduction, an iterative approach should be taken, involving employees in the budgeting process and providing regular training. This strengthens both understanding of the new system and acceptance of the cultural shift. The additional effort associated with expanding performance allocation through time recording is crucial for broad acceptance. However, time recording is essential; without it, consistent, comprehensive performance allocation is not possible, and actual process costs can hardly be evaluated.

Another very important measure is the support provided by IT systems. The IT-supported budgeting process must be designed, continuously enhanced, and tested, as only system-based process budgets can be planned and controlled efficiently and effectively.

Results and outlook

Initial successes became apparent in the first planning cycle following the introduction of process-oriented budgeting: budget planning became more structured and fact-based, transparency regarding resource utilization across processes increased significantly, and first efficiency gains in internal coordination emerged. In addition, cross-departmental collaboration improved as all participants became more focused on shared process goals.

Looking ahead, the organization plans to expand the system by incorporating elements of rolling planning, closer integration with a process management tool, and consistent controlling supported by process KPIs, enabling even quicker responses to change.