Who doesn’t want to make their lives easier? I think that’s why life hacks are so popular. Budgeting is critical for staying in alignment with our strategic objectives but that doesn’t mean that there aren’t ways to make it easier and better.
Don’t worry about whether you’re using a modern budgeting solution or if you haven’t migrated to one yet from Excel, either way, the elements of an OLAP cube (online analytical processes) are a great way of assessing whether you’ve considered everything you’ve needed to or if you’ve got a bit more work to do. When you go through them, you’ll be well on your way to producing a budget that contains a full scope of variables and assumptions that will serve you well.
Creating and utilizing a perpetual budget using cube structures as your guide gives you a solid base for your overall budget as well as for revisiting when you’ve got what-if scenarios to run. Here’s a link to an article I wrote for the annual Financial Executives International magazine that explains it in a lot more detail if you’d like to check it out.
Ban the Vacuum
Get comfortable with the fact that your budget won’t be created or used in a vacuum. Reality will come at it from every direction. Consider your data – all the facts, assumptions, timing, risks, and alternatives – as part of your data warehouse.
Your KPIs, their dependencies and variables are on sliding tracks, just like the adjustment filters on an equalizer. You’re able to move the elements separately of or in conjunction with one another. Nothing happens in isolation and there’s always a consequence to any movement.
Cube Structures
Each of these cube elements need to be considered as you preparing your annual budget, make adjustments or create what-if scenarios.
- Fact Tables – processes or events
- Dimension Tables – the who or when
- Dimensions – used independently, multiple times within a table, or in multiple tables
- Attributes – characteristics that describe something
- Schemas – where attributes intersect between tables
- Relationships – hierarchies and exceptions
- Measures – the numbers (i.e. quantities, prices, and sales). They associate the dimensions with one another.
- KPIs – leading indicators move the needle, lagging indicators record the outcomes
- The cube – the output that you use for evaluation; such as balance sheet, P&L, and cash flow reports
Scenario Planning
Most financial professional can easily accept that things are going to happen. Life rarely plays out exactly as we’ve planned. Options are all around us. Choices need to be made.
Extend the OLAP cube concept to your scenario planning as you encounter these decisions that need to be made. Using the cube elements doesn’t change your planning, it just makes it easier. There’s no need to start from scratch each time an opportunity or challenge presents itself, just use the elements as your guide to ensure that you’ve considered everything you need to and the outcomes that you expect would be produced.
Manage by Exceptions
How long would it take you to review every line item on your financial statements each month?
Answer: More time than you have.
To understand the impact of the budgets and what-if scenarios you create you need to manage by exception, just as you do with your financial statements each month. Watch your ratios, volumes, and the dollars that fall out of line with your expectation.
Perpetual Budgeting
It may seem like it’s an ominous chore but perpetual budgeting lets you relax and continually keep your budget in line with your strategic plan.
Rather than the several-months-long process that budgeting usually takes, it’s easier stay on top of your strategic goals, evaluate progress, and make needed adjustments when your budget is truly a forecast; a dynamic document that includes your assumptions, comparisons with reality, and can easily be utilized for what-if scenario planning.
How can you apply the cube elements to a decision you need to make? Use these budgeting hacks to make your life easier.
Businesses of every description rely on the Budget Maestro™ family of software solutions by Centage Corporation to improve the efficiency and effectiveness of their business budgeting and planning, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.
