Tempted to abandon budgeting altogether, companies have instead taken it to a new level.

"When you realize that the net you're building is 20 yards behind you, it becomes a lot easier to decide to fly without it."

So says Kurt Kuehn, CFO of shipping giant UPS. He's describing the company's new view of budgeting, planning, and forecasting. "Normally, we are very obsessive about building good and accurate plans," he says, but as the recession dragged on, "we realized that trying to build a forecast was almost a waste of time. We didn't have enough precedent or trends to do anything viable."

he past two years have turned budgeting inside out at most companies. As sales fell and markets dried up, spending levels had to be continuously revised, and visibility was almost nonexistent. Companies tried all manner of workarounds and improvisation, and most came away with the same conclusion: it was time to rethink the whole thing. How could budgets be made more flexible? Who should be involved? What could be included or left out? And how often should the effort be undertaken or revisited? Now, with the recovery under way, many finance executives say the changes they made to their budgeting-and-planning processes out of desperation are here to stay. (...)

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