Why every company can and should use these applications
I’ve run into many companies over the years who have invested considerable amounts and effort into implementing sophisticated ERP or accounting software, some with integrated CRM and other functions that are designed to increase automation, productivity, accuracy and everything else associated with relegating mundane tasks and complex data processing to an automated system.
In fact, you’d be hard-pressed to find a business that doesn’t employ information technology products, both hardware and software, in their daily operations. Even the smallest of the smallest companies rely on computer and software applications. Gone are the days of typewriters, inventory card files, post binder ledgers and other tools so common in the workplace prior to the computer revolution.
Of all the many business software categories, Planning, Budgeting and Business Intelligence software deserves special attention.
I can’t imagine a business owner, corporate manager, board of directors member or anyone who directly influences business decisions agreeing that planning, budgeting and then analysis of data from both actual operations and plan is a bad idea and therefore does not belong in their organization.
What I do see is that the majority of organizations, including many small businesses do have some kind of a planning process where a budget is formed, usually once a year, then maintained by some companies throughout the year with or without analysis of actual results as time goes by.
What differentiates a great planning, budgeting and BI process from one that is mediocre or worse is both the attitude toward this process while understanding the clear benefits, and the level of sophistication of the tools used in the process and its associated tasks.
Those who employ a common, but clearly deficient method of using spreadsheets or even purpose designed applications mimicking spreadsheets with all their shortcomings, are simply unable to fully achieve what the process was intended for, which is:
1) Create a comprehensive plan, custom tailored to the organization with pre-defined business rules and drivers, and the ability to easily maintain and update this plan.
2) Obtain accurate and complete forecasted financial statements, including a balance sheet and statement of cash flows, as well as a meaningful set of KPIs and Financial Ratios.
3) Allow management to completely and accurately see and understand the forecasted future financial health of the organization, which will lead to making reasonable and error-free decisions.
Companies using a deficient process and set of tools may be able to forecast their income statement and especially the revenue and expense components of the income statement, but nothing else with any degree of accuracy or completeness.
On the other hand, organizations who implement more progressive methods and tools to perform the planning, budgeting and gathering and analysis of business intelligence, and who continually monitor their actual results against their plan data, continually reap the many benefits associated with using these tools and methods.
Even if you are a small or medium size company there are affordable technology tools to assist you with this important process. The answer to the question whether planning, budgeting and business intelligence is right for you is a resounding yes.
Applications such as Budget Maestro with Analytics Maestro, which I have mentioned many times in this blog, were designed exactly to answer the question used in the title of this article, to be practically adopted by a large variety of organizations and industries and to go to work for them within days or weeks, not months or years.
As for the attitude component I mentioned above, it is my hope that more company managements will be willing to make the commitment to such technology and especially its continual use throughout the budget year. Those who do will never regret it.