Zero-Based Budgeting (ZBB)

Zero-Based Budgeting, often abbreviated as ZBB, is a budgeting method in which all expenses must be justified for each new period, starting from a “zero base.” Instead of just tweaking last year’s budget and adding a bit more for inflation or expected growth, ZBB requires each cost to be approved, and nothing is automatically carried over. It’s like emptying your backpack at the end of the school year and carefully deciding what deserves to go back in for the new year.

In the context of business intelligence, ZBB helps companies really think about how they’re spending their money. It encourages managers to scrutinize all spending, making sure each dollar aligns with company goals. This can lead to more efficient allocation of resources, cutting out unnecessary expenses, and channeling funds into more productive areas.

Zero-Based Budgeting can be a powerful strategy for businesses looking to optimize their operations. It can foster a culture of cost management and responsibility, as every team must justify the need for their spending. While it’s more time-consuming than traditional budgeting methods, ZBB can lead to significant cost savings and a deeper understanding of what drives business success.