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Bottom line: most mid-market finance teams should not run full zero-based budgeting. ZBB multiplies the two costs teams already name as the worst part of budget season — consolidating data and chasing inputs — and 58% already spend half or more of the season on busywork. The version that works is targeted ZBB: zero-base the discretionary pools on a rotating cycle and rebuild payroll driver-based.
No tool in this category is really ZBB-specific. What matters is line-item granularity, stored versions and workflow routing. The figures below come from our August 2026 survey of 273 finance leaders, all Director level or above at companies from 101 to 5,000+ employees.
What is zero-based budgeting?
Zero-based budgeting builds each period's budget from zero, requiring every line to be justified on its own merits rather than inherited from last year and adjusted. Incremental budgeting does the opposite: it starts from the prior year and moves it.
The appeal is obvious. Costs accumulate quietly, and an incremental process never forces anyone to ask whether a line still earns its place. ZBB forces exactly that question. The cost is equally obvious once you have run one: every line now needs an owner, a justification and a review. It is distinct from driver-based budgeting, which changes how a number is calculated rather than whether it is justified — and the two combine well.
Should a mid-market company use zero-based budgeting?
Usually not in its full form, and the survey data is the reason. ZBB's mechanism multiplies input volume and review rounds, and teams have no headroom for either:
- 57.5% already spend half or more of budget season on busywork rather than strategic work
- The most painful part of the season is consolidating data and wrangling versions (37.4%), with chasing inputs second at 29.7% — precisely the two costs ZBB multiplies
- 78.4% already need three or more revisions, and 74.8% already work six or more extra hours a week at peak
- 88.3% already face collaboration challenges at least sometimes
Adding a justification requirement to every line, on top of that, is how a three-month cycle becomes a five-month one. And longer cycles correlate with more revisions and more burnout, not fewer.
The honest recommendation is targeted rather than doctrinal: rotate zero-basing through the discretionary pools over two or three years, and leave the committed and people costs on a driver-based rebuild.
Where zero-based budgeting genuinely earns its cost
There are cases where full ZBB is the right call, and it is worth naming them rather than dismissing the method.
After an acquisition. Two cost bases need reconciling and neither inherited structure is authoritative, so starting from zero is less work than merging two histories.
Under a real cost-reduction mandate. If the board has asked for a specific percentage out, incremental trimming distributes pain evenly and finds less. ZBB surfaces the lines nobody will defend.
When nobody has questioned the cost base in years. If your budget has been rolling forward with a percentage on top since before the current team arrived, one full pass is worth the disruption.
Outside those, targeted beats full. We wrote about the resurgence of the method and what makes it workable now in how modern FP&A software is fuelling a comeback in zero-based budgeting.
Zero-based budgeting software compared
Be sceptical of anything marketed as a ZBB tool. Almost nothing in this category is built specifically for it; what actually matters is whether the platform can hold line-item detail, keep versions, and route a justification to an owner.
Pricing is indicative as of August 2026; confirm with any vendor. For a broader shortlist see budgeting software for mid-market companies.
What a tool needs to support ZBB
Four capabilities are non-negotiable, and the first is the one teams discover too late.
- Current baseline spend at line-item granularity, automatically. Every justification round needs to start from what is actually being spent. If that arrives by manual export, ZBB is unmanageable before you begin.
- Stored versions. You need the pre-ZBB baseline preserved to show what the exercise actually saved.
- Owner-level routing. Justifications come from budget owners, so they need a surface to submit in and finance needs to see who has not.
- A drill path. When an owner claims a line is committed, you need to check that against the ledger rather than take it.
And keep the contributor burden in mind. Whatever you choose has to work with a spreadsheet, because 97.4% of finance leaders use one — see budgeting software for companies outgrowing spreadsheets. Also worth reading: five budget pitfalls and budget ownership. For external grounding on how many plan versions a healthy process produces, APQC's benchmarking on the number of budget versions is the standard reference.
How to run a targeted cycle
A rotating discretionary-pool cycle is manageable inside a normal budget season. Full ZBB generally is not.
- Pick two or three pools for this year from the discretionary list, rotating so each gets zero-based every two to three years.
- Pull current baseline spend at line-item level before you ask anyone anything. Owners justify against actuals, not against last year's budget.
- Set the bar explicitly. What counts as justification — a business outcome, a contractual obligation, a compliance requirement. Without this you get paragraphs instead of decisions.
- Give owners a two-week window and a short template. The same input discipline that governs a normal cycle applies here, just with a justification column.
- Keep the pre-ZBB baseline so you can show what the exercise found. An unmeasured ZBB pass will not be repeated.
What ZBB actually finds
Set expectations before you start, because the savings are real but concentrated in predictable places rather than spread evenly.
Software and vendor spend is where most teams find the most, because renewals auto-process and nobody owns the cumulative total. Overlapping tools, seats for people who left, and pilots that quietly became line items are the recurring findings.
Professional services is second. Engagements often continue past the need that created them, and nobody wants to be the person who ends a relationship.
Where it finds little: anything already under a driver, anything contractual, and anything a previous cost exercise touched in the last two years. That last point is the argument for rotation rather than annual repetition — the same pool zero-based two years running yields almost nothing the second time.
ZBB and driver-based budgeting together
These get discussed as alternatives and they are not. They answer different questions: ZBB asks whether a cost is justified, driver-based asks how a cost is calculated. Most mid-market budgets want both, applied to different parts.
The pattern that works: zero-base the discretionary pools to decide what stays, then rebuild the people and volume-linked costs driver-based so the surviving budget recalculates when assumptions change. Doing only the first leaves you with a justified budget that goes stale by March. Doing only the second leaves you with a responsive model built on costs nobody has questioned. See driver-based budgeting software for the other half.
Run a targeted ZBB cycle in Aleph
Aleph gives the baseline the exercise depends on: current spend at GL line-item detail, refreshed from the ERP, with a drill path from any figure to the transactions behind it. Owners work in Excel or Google Sheets on connected templates, and versions are stored so the pre- and post-ZBB budgets sit side by side.
See budget planning, or the annual budgeting process guide for sequencing.
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