How Manageable is your Budgeting and Planning Solution?

When I started working in the Performance Management software industry in 1996, most companies were relying on spreadsheets to support their budgeting and planning processes.Besides the many individual advantages spreadsheet tools offer, for a collaborative process like budgeting and planning several difficulties were experienced, such as the lack of security, limited process control and collaboration, formula errors and versioning.

 

My first experience with a specific tool for budgeting and planning was Hyperion Pillar. In this tool many of the disadvantages of spreadsheets could be avoided by working with a centralized data model, centrally defined calculations and a distributed data collection process. Hyperion Pillar was successful in small to medium size companies, but could not handle very well complex modelling requirements and large data volumes.

 

In 2002 I joined a software company called Adaytum, later acquired by Cognos and better known as Cognos planning. Despite the introduction of more planning tools on the market, the spreadsheet was by far the most used technology for budgeting and planning. At Adaytum we were targeting larger organizations, of which one called their budgeting process “the million spreadsheet march” after counting all the spreadsheets used across the corporation.

 

At Adaytum we promoted the usage of a budgeting and planning tool beyond the Office of Finance. By involving different responsibility areas with business unit managers (who have a deep knowledge about their specific business process), more accurate budgets can be produced. By so called driver based budget models, the business users only needs to plan on measures they can influence (like volumes sold, units produced, new hires needed etc.). The budget is then mainly a result of driver based calculations, allowing also faster revisions of the budget.

 

Now we are in 2016 and a recent survey by the American Productivity and Quality Center (APQC) shows that the majority of businesses (even larger enterprises) still use spreadsheets for budgeting. Two thirds of respondents reported more than $1B in annual revenue and 56% said they still used spreadsheets in combination with technology for budgeting and planning. Thirty-nine percent still use spreadsheets alone. In addition a majority stated that these spreadsheets had no documented governance or control processes, increasing the risk of errors.

 

My personal analysis after implementing budgeting and planning solutions for 20 years is that in most organizations there is no integrated approach to budgeting and planning processes defined by the top management. My observation is that budgeting applications and models are mainly focused on separate organizational areas (like sales, operations and finance), and there are no corporate guidelines which technology to use to create the individual budgets and plans.

 

Budgeting and Planning Model 

In my opinion, an integrated and enterprise wide approach on budgeting and planning could bring several benefits:

  • Better alignment of the company’s business processes; by integrating all business area’s on a single budgeting and planning platform, more consistency between the strategic, financial and operational plans can be realized.
  • More efficient process; instead of having many spreadsheet models (often created and maintained by specialized spreadsheet gurus) and sending and collecting files while keeping different versions, a single centralized platform can drastically reduce the amount of manual work for maintaining and collecting the spreadsheets thus allowing more time for analysis of the numbers.
  • Reducing cost; many large companies have purchased multiple planning tools (by lack of central guidelines). By standardizing on a single budgeting and planning platform IT costs for software and hardware can be reduced and knowledge can be shared by a limited group of users maintaining the models; end users need be trained only on one tool.

 

At Tagetik, we have understood the need for an integrated planning process. Visit our website and find useful information and upcoming events on:

  • How to make your planning process faster 
  • How to improve an inaccurate or disjointed budgeting system
  • How to have a collaborative workflow with full audit trail
  • How to integrate your planning and reporting processes on a single platform
Tagetik for Budgeting & Planning

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