Why technology must play a larger role in creating an agile budgeting process
We are in the middle of the planning season for 2021 and uncertainty has never been greater. It is almost obscure to think that we can plan for how next year will turn out. Yet, most company procedures dictate that you must prepare a budget to be approved by the board and which you can operate by next year.
Hence, you must tackle the challenge of planning for 2021 and get the most out of the situation.
Let us discuss ways you can do that.
We must prepare ourselves for a very iterative process where plans and numbers will change frequently. Some would say that this is no different from normal, however, this time around it should be more natural, and we can adjust our mindset going into the process. In addition, Finance must transcend the normal role of simply taking the plan that management has come up with and translating it into numbers. Finance must become the drivers of making the right strategic choices in the company.
The challenge that most finance functions face though is a heavy reliance on Excel templates or inflexible systems. This means that creating and updating numbers will take up most of the time, and thereby take time away from Finance to make a critical assessment of the plan and actions to take.
How technology will enable a more agile budgeting process and support faster strategic decision-making
From input through consolidation to output technology must play a larger enabling role in creating an agile budgeting process.
Here are 3 ways that better tools can enable a more agile process:
– Assumptions: They are typically discussed between business leaders and the strategy team and then distributed via Excel templates for the individual entities and units to use. However, imagine a simple change where they were simply inputted into a system and cascaded automatically to all users. This would help them build dynamic formulas linking them to their own unique business drivers. Moreover, it would enable management to see the impact of assumption changes with the click of a button.
– Business modeling: Very often you see business leaders creating separate models in Excel where they can model their business. They do this to come up with the input that needs to go into the system. However, this could easily go into a tool where each unit or entity would build their distinct business model linked to the financial drivers needed for budgeting.
– Self-service reporting: Each time management decides on making changes to assumptions or just the numbers in general this can easily be a lengthy process. The information is cascaded to units or entities to make the changes, consolidation needs to happen, and IT needs to run some jobs to get the data into the reporting system. Imagine if this instead was fully integrated. In this way, management could simply make the changes they were discussing themselves and see the impact right away.
The potential seems obvious yet to many companies this remains a pipe dream!
However, Cloud is making more tools easily available even to small- and mid-sized companies. You may need to connect several tools to make this work, but it would still be obvious to start exploring the opportunities.
Break your habits and the barriers that act as obstacles to agile processes
Despite the obvious challenges many companies continue to use the same planning process they have been using for years. They fail to explore the potential technology solutions in the market that can give them capabilities they could only dream about before. This is a clear mistake as a significant amount of corporate resources are wasted in a process that rarely produces any useful outcomes.
Hence, it is time to try something different.
TRY DESIGNING THE ULTIMATE PLANNING PROCESS AND START EXPLORING HOW TO MAKE IT HAPPEN.
YOU WILL LIKELY FIND THAT THERE ARE MANY TOOLS AVAILABLE THAT CAN HELP YOU EXECUTE THIS NEW PROCESS
– How are you approaching the ongoing planning process?
– Are you doing what you have always done or are you exploring new ways?
– What tools are you deploying into the process and when was the last time you changed any of those tools?
You must resolve the paradox of huge uncertainty and decade-old planning processes.
Start exploring new ways today and your planning process will start to produce much better outcomes!
It will also enable Finance to drive the right strategic choices rather than just producing numbers.
Authors:
Claus Finderup Grove, CEO at Konsolidator
