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10 Must Have Features of a Budgeting & BI Solution

June 13, 2014
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I work with companies of various sizes and in diverse industries who have all implemented computerized accounting or ERP software. Some have integrated CRM, supply chain management, MRP or other software to address requirements peculiar to their industry or even their unique operation. One thing they all share in common is the need to maintain periodic budgeting and able to monitor their actual results from operations so they can compare it with the pre-defined budget, make adjustments to that budget (re-forecast) or make adjustments to operations based on the actual results and the intelligence gained from monitoring the budget process throughout the fiscal year.Do all companies adhere to these budgeting and performance monitoring principals?My experience shows that all companies have at least a rudimentary system where income and expense items are budgeted and fundamental results, such as profit and loss are forecasted and then compared with actual financial results from the accounting system.Some companies have committed additional resources and effort to implement a more “purpose built” system with greater security and other enterprise level characteristics, such as multi-user, multi-entity capability and additional features that cannot easily be accomplished with a basic, usually spreadsheet based, solution.There are many solutions available today including several in the small to medium size market (SMB). These systems fulfill some of the basic requirements but the majority of them fall short of providing their users with the most important tools and capabilities. Others require extensive user programming or relying on outside consultants to build and maintain these systems. Through experience gained from implementing budgeting systems and from actually using and evaluating various software solutions I’ve compiled a list of high level features and benefits that a budgeting, forecasting and business intelligence application should have.Any company looking to implement a complete solution should be concerned with these top 10:

1. Must be delivered as a database application for better control and management.

2. Should have a system-generated integrated set of forecasted financial statements.

3. Must have a modular approach with a complete array of functions such as: revenue forecasting module with cost; operating expense module; personnel module; fixed assets module; loans and other debt module.

4. Must have driver-based forecasting, which is the ability to work with unlimited and varied types of drivers.

5. Must have the ability to allocate forecasted amounts to pre-defined accounts.

6. Its business intelligence and rules must be built-in and available to users to choose from and with no user programming required (formulas, links, etc.).

7. The application chosen must allow users to set up a chart of accounts representing the actual accounting system’s chart of accounts (or mirroring it).

8. There should be either a direct link or simple interface to the accounting or ERP software’s general ledger, where actual data can easily be populated in the budgeting software and immediately used in the analysis process, following the accounting period close.

9. Reports—both visual and alpha numeric—must be readily available and with minimal effort. All budgeted financial statements (with a minimum of Income Statement, Balance Sheet and Statement of Cash Flows) should mimic their actual financial statements produced by the actual accounting software.

10. The budgeting, forecasting and business intelligence software application needs to act as an extension of the accounting software or ERP system’s actual financial data.

These 10 “Must Have” features are especially important in smaller or medium sized organizations where resources are limited, yet business intelligence is critical and the decision making process must rely on solid and reliable tools.When looking to implement a budgeting, forecasting and business intelligence solution make sure you carefully evaluate each software application and verify it includes these 10 critical features.The benefits from having these features cannot be overemphasized. While some of these features are fundamental and expected, others are less common and will make the difference between properly performing the budgeting and analysis process or just getting through the process without really using the system for its true intended purpose.Those who implement the right system know that their organization’s future financial health can greatly benefit from having these 10 features.

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