Business Budget:
Today's Superior Budgeting and Forecasting Tools

The benefits of great business budget planning are obvious - better use of capital, more efficient operations and many other. But achieving those benefits using traditional budgeting, forecasting and reporting tools and techniques is very difficult. Without reliable data, even the most experienced and capable management team will make sub-optimal business budget decisions.

This paper looks at the shortcomings of traditional budgeting tools and their impact on business budget planning and performance. The advantages of newer, more advanced budgeting, forecasting and reporting tools will also be discussed.

Business planning is behind the times
What's the current state of budgeting and forecasting? For most organizations, producing accurate and timely financial information is a major challenge. Here's why:

• Traditional budgeting is handled almost entirely by the finance department.
  Traditional budgeting tools and forecasting software tools - generally spreadsheet-based - are complex, non-intuitive and prone to error. As a result, almost 100% of the planning and forecasting process is conducted within the CFO's organization. Field and operational managers, the individuals best acquainted with day-to-day operations, are largely left out of the process.
  
  
• Finance personnel continually struggle to complete budgets, leaving little time for analysis.
  The traditional technology requires an enormous amount of time to collect data from tens or even hundreds of reporting entities. When multiple data sources are used, extensive data conversion may be required. Missing or broken links between spreadsheets lead to time-consuming fixes. The result: most finance departments find themselves struggling to meet deadlines for presentation and approval of periodic budgets and forecasts. That leaves little or no time to perform important in-depth data analysis.
  
  
• Budget data quickly loses its significance.
  Because of the difficulty in compiling accurate and timely financial data, budget often become detached from realistic operational results. Managers ignore the data, and the entire process becomes an annual formality, a routine that does little to advance the performance of the organization. In addition, when business conditions change, spreadsheet-based budget that are difficult to update become obsolete.
  
  
• Analyzing actual-to-budget variances is time-consuming and burdensome.
  Carefully looking at the variances between actual and forecast data is crucial for smart business planning, but is extremely difficult for organizations that use spreadsheets because the data are rarely available in the same formats.