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John O'Rourke | Nov 02, 2017

5 Tips for Surviving Annual Budgeting Season

Well, it’s the middle of 4th quarter, and many organizations are knee-deep in budgeting for 2018. How’s the budgeting process going in your organization? Is it running smoothly? Or are you held back by the limitations of spreadsheets and email or legacy applications that are no longer handling your requirements?

You’re not alone. Many organizations using spreadsheets and email struggle through the annual budgeting ritual. They are bogged down with manual data collection, identifying and fixing errors and omissions, consolidating multiple spreadsheets and trying to maintain version control.

Organizations using legacy applications often struggle with long budget iterations, lack of sufficient supporting detail, and limited reporting capabilities.

All of this results in excessive time and effort, and costs, spent on annual budgeting – only to arrive at an approved budget that’s obsolete shortly after its completed. There has got to be a better way, right?

5 Tips for Surviving Annual Budgeting Season

So what’s the alternative? What can a large, complex organization do to alleviate the pains and streamline the annual budgeting cycle? Here are some tips based on best practices I’ve observed in many organizations in recent years.

  1. Use the right tool for the job. Forward-thinking organizations are adopting modern planning software solutions that are better suited to the task. Today’s packaged budgeting, planning, and forecasting applications provide more flexibility, dimensionality, process control, collaboration capabilities, and scalability than those from 20 years ago. Many of these solutions support Excel as a front-end for data entry, reporting and analysis, and can be deployed on-premise or in the cloud.  And some of these solutions are part of a unified solution that aligns budgeting and planning with financial consolidation and reporting.  This yields several benefits, including the ability to quickly seed forecasts with completed actuals and seeding the budget with prior year actuals.
  1. Don’t get hung up on the details. Many organizations have realized that it’s not worth the time and effort to perform detailed budgeting for hundreds of line items. Forward-thinking organizations are focusing on the key drivers of their business – the material line items that truly drive the business.  Then they are using driver-based planning techniques to calculate supporting line items.  These techniques are often applied in areas such as call center staffing, sales forecasting, calculating travel and other employee costs.  And if business units need to budget and forecast at a more granular level than corporate, look for a planning application with extensible dimensionality that supports varying levels of detail across the enterprise.
  1. Adopt agile planning techniques. Managing a business based on detailed, static budgets, that are obsolete soon after approval is not the best approach in fast-changing markets. An emerging best practice being embraced by many organizations is to use the annual budgeting process to set initial targets, then update budget assumptions on a period basis to re-forecast full year-results, and make mid-course corrections in resource allocations as required to achieve financial goals. Key to this technique of “continuous planning” is the growing adoption of rolling forecasts, which extend 4 to 6 quarters into the future, and provide visibility into periods that are beyond the end of the fiscal year. This technique enables more frequent and accurate forecasting and provides a head-start on the next year’s budget.
  1. Automate data collection. As mentioned earlier, one of the biggest pitfalls of using spreadsheets and email for budgeting is the amount of time and effort spent on data collection and consolidation. Today’s modern budgeting and planning applications enable a variety of internal systems including GL/ERP, HCM, CRM and others. This approach can save time and effort and improves accuracy when it comes to seeding the annual budget with prior year actual results. It can also help speed the reporting and comparison of the latest actuals with the original budget, or the latest forecast. Unified software packages that align budgeting and planning with financial consolidation and reporting provide further efficiencies and consistency between financial and management reporting.
  1. Integrate operational plans. While many organizations may have adopted packaged applications to support operating expense (OpEx) budgeting, they often continue to rely on spreadsheet-based processes for managing workforce planning, capital expense (CapEx) planning, project planning, sales planning, and cash flow planning. Some of today’s modern budgeting and planning applications include purpose built-modules to support these specialized planning processes, capturing all the supporting detail, and integrating them seamlessly with financial budgeting.

Go from Surviving to Thriving

Adopting these best practices is critical to surviving the annual budgeting cycle. But moreover, it’s essential to maximizing business performance and thriving in today’s volatile global economy. Adopting these best practices is nearly impossible with spreadsheets and email or legacy applications.

For example, if an iteration of your budget data collection, consolidation, and reporting process takes 3 weeks or more to complete, then executing a rolling forecast cycle monthly will be a futile effort that yields little benefit. Modern budgeting and planning applications provide the integration, automation, flexibility and control required to adopt more agile and dynamic planning techniques required for today’s volatile markets.

Organizations that have implemented modern budgeting and planning solutions, and adopted the best practices highlighted above, have seen significant business benefits.

  • Streamline and reduce pain of annual budgeting by 50 – 75%
  • Better align finance and operations and improve forecast accuracy to 5% or less
  • Increase business agility, reduce operating costs and increase revenue
  • Free up more finance staff time for value-added analysis

Learn how the OneStream XF SmartCPMTM platform unifies budgeting, planning, consolidation, reporting and data quality and supports more agile business processes.

– John O’Rourke

John O’Rourke is Vice President of Product Marketing at OneStream Software. With a background in accounting and finance, John has over 30 years of experience in the software industry, including 20 years of experience in product marketing at Hyperion Solutions, Oracle and Host Analytics. He has worked with many customers and partners on financial reporting and planning initiatives and has spoken and written on many topics in corporate performance management. John has also held positions in strategic marketing and product marketing at Dun & Bradstreet Software, Kenan Systems and Decisyon. 


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