Most corporations today are still a long way from from Strategic Enterprise Management excellence – a capability which will differentiate successful and unsuccessful enterprises in the future. Management processes are not very well structured, they are too inflexible and not market and stakeholder focused enough.

One area in which many companies are now challenged to improve in the short term is enterprise planning. The process is too inflexible, too time consuming and is not linked with strategy planning.

The reason is that the planning and budgeting process in the enterprise today generally follows a fixed procedure. This does not allow for any adjustments during the procedure, and typically lasts for several months.

After the strategic objectives are determined by upper management, a draft budget is produced. In a second step this draft is broken down into budget targets for the individual business units in the group structure.

The top-down draft is then reviewed bottom-up by the business units and the final result is the budget for the business units for the planning time period.

The comparison of the actual figures with the budget is a criterion for success. This is one of the measures used to assess the performance of the managers at business unit level.

The business unit management, therefore, will typically focus on achieving the targets for the planning time period. This has important disadvantages. Apart from the fact that a budget, by definition, is inflexible, it is frequently the case that a budget that has been laboriously put together is already out-of-date by the time the budget period begins. It has been overtaken by events.

Another disadvantage of the traditional approach is the concentration on profit as a target figure. In order to maintain the long-term profitability of an enterprise, it is becoming increasingly important to include other target figures such as the cost of capital employed and 'leading indicators' from the areas of sales, human resources, and of internal activity processes.

The flexibility (as described above) required during any particular planning time period, and the efficient implementation of the enterprise strategy while considering the interests of shareholders and other stakeholders cannot be successfully achieved using traditional procedures.