Enterprise investment management simplified: Budget efficiencies

With a finite budget, resources, and capacity for change, your enterprise is challenged with how to effectively manage budgets. Prioritization within the enterprise portfolio is key to optimizing the right spend for the right initiatives. Using key prioritization data for the portfolio helps with determining what to focus on.

In Harvard Business Review, a leading business strategist, Michael Porter, highlights the three principles of strategy as differentiation, organizational fit, and trade-offs. Making trade-offs is paramount for prioritization and shifting spend and other resources to the top priorities. With finite budgets challenges, find key areas, or budget efficiency levers, defined at ways to to find efficiencies and reduce spend. Pulling these levers will be key to scale the enterprise. Table 1 showcases example budget efficiencies levers.

Table 1

There are three categories of budget efficiencies, defined in table 1:

1. Cost savings
2. Cost avoidances
3. Efficiency gains

Cost savings are the ways that actually reduce tangible spending. Cost avoidances are ways that postpone spending to later time-periods or avoid future potential costs. Efficiency gains are ways to leverage resources more effectively.

To optimize budgets, work on better alignment of spend to the right priorities, making the right trade-offs, and finding ways to reduce spend to allocate to strategic initiatives.

Other Posts in the Series

1. Enterprise investment management simplified: Business case
2. Enterprise investment management simplified: Prioritization
3. Enterprise investment management simplified: Budget efficiencies