At most companies, the annual planning and budgeting process is an exercise in artificial precision. CFOs and finance teams spend weeks and sometimes months assembling a highly detailed budget for the coming year. The numbers all look reassuringly specific—but they start to come apart after the inevitable first disruption.

Planning processes were more straightforward a decade or so ago, when the business environment was more predictable. A CFO could look at last year’s numbers, add 3%, and call it a day. Today, new technology, changing customer behavior, geopolitical tensions, and supply-chain disruptions can all throw off even the most carefully thought-out budget. As a result, annual budget forecasts are less helpful to business leaders than they could be.

How to improve? Based on our experience working with CFOs and finance functions across industries and geographic markets, we think companies should focus on five actions.

Plan less. It sounds sacrilegious, but companies can often achieve more by planning less. That means less detail—fewer P&L lines, product lines, and geographic markets that are actively planned. It also means shortening the planning cycle, starting later in the year and spending less time on the overall process.

Use technology to build and refine budgets. Leading companies now use “dynamic steering”—combining AI and ML algorithms, data automation, and driver-based calculation models to help them build budgets, forecasts, and steer the business. In our experience, when companies incorporate advanced tools and AI, planning cycles are 30% faster, forecasts are 20% to 40% more accurate, and overall productivity in finance increases 20% to 30%. Equally important, the technology can remove some of the grunt work from planning and budgeting, creating a better employee experience and freeing CFOs and finance teams up to generate insights and support business leaders.

Be pragmatic. Planning should be directional and flexible. The 80-20 principle applies—roughly 80% of consequences come from 20% of causes. Focus on the biggest change drivers, be comfortable with some degree of imprecision, and expect to make frequent, ongoing adjustments over time.

Expect the unexpected. Budgets are going to change, sometimes radically, as events unfold over the coming year. In response, some companies are moving “beyond budgeting.” They no longer think in terms of an annual budget and instead create a rough view of what the upcoming year or two will look like—and then systematically generate rolling forecasts based on a snapshot of the business’s position at a given point in time. In that way, planning isn’t limited to a single year-end exercise; it’s an ongoing process that relies heavily on scenario modeling. And, critically, it focuses less on predicting what’s going to happen 12 months from now and more on helping business leaders make smart decisions today.

Segment your approach. At a time of inflation in many markets and price-sensitive customers, companies are working hard to reduce costs. That’s an understandable impulse. Most organizations can and should seek out opportunities to reduce redundancy, increase efficiency, and become more productive. But CFOs should avoid making across-the-board cuts and instead take a segmented approach to budgeting. In some cases, boosting productivity and tapping into new growth opportunities will require an investment—not a reduction—in key functions, business units, and technologies. The goal is not to spend less but to spend smart, in ways that help the company thrive and grow

Leading organizations are already putting these five recommendations into practice. For example, BCG worked with the CFO of a global health care company to redesign its planning process, as well as implement broader changes to the agile operating model and organization design. As a result, finance teams became more flexible and efficient, freeing up 20% to 30% of their capacity.

Similarly, a fashion and luxury retail brand transformed its planning, forecasting, and business intelligence capabilities with greater data automation, and streamlined planning and forecasting processes. That process gave finance and business leaders more real-time visibility into the drivers of performance. It also freed up 30% to 40% of the financial planning and analysis teams’ capacity, which enabled them to provide better advice and support to business units.

By following these five recommendations, CFOs and finance teams can get more out of the annual planning and budgeting process. They can give themselves a good-enough view of what’s coming, refine the outlook over time based on new inputs, and rely on technology to generate faster and more accurate forecasts. More importantly, they can ensure that the plan warrants the time, energy, and effort spent on it.