Key finance personnel know budgeting in Excel is inefficient and fraught with risk. How does your organisation rank on these key indicators?
- Lots of budget contributors. If you are undertaking the whole planning cycle within finance, you can most likely oversee the process to ensure integrity. However as soon as planning involves other departments such as salespeople or cost centre managers, control is lost.
- Large number of cost centres/locations. If your organisational chart is simple, great. But if your budget models suffer from mega-sized workbooks with 6 or more worksheets and linked workbooks, then you are already exceeding the limits of what is easily manageable in Excel. We have seen Excel workbooks with over 150 sheets, all consolidating to a master sheet – what a nightmare.
- Multiple budget iterations. Your board approves the first budget and it is happy days. Not likely. We know budgets typically go through multiple cycles – the more versions you have to do, the greater the pain. Integrated security and auditability become paramount, so you know what has changed from one version to the next and by who.
- The need to re-forecast. You have locked in your budget so that’s it for 12 months – hardly. Most organisations will do at least a quarterly re-forecast, whilst others will continually be hijacked by the monthly rolling forecast. If you are planning more frequently, then the ROI for a fit for purpose solution is more clear-cut.
- Complexity of revenue modelling beyond top line sales. If you budget down to customer groups or product groups (or both) across multiple locations, you will soon hit the limits of Excel.
- Bottom up budgeting is a curse. Top down budgeting quite often is more suitable and ‘does the job’ in a fraction of the time, but Excel can only go bottom up.
- Balance sheet and Cash flow budgeting. You would like these to simply ‘fall out’ of the P&L budget, but it becomes yet another arduous step in the process.
Where do you start?
Very likely, you would find that your organisation meets the above indicators and are looking for a way to move away from budgeting in Excel. If you decide on a fit-for-purpose Budgeting and Planning solution, where do you start?
The Corporate Performance Management market has seen a steady increase in solution providers over last few years. Among them are market leading platforms Adaptive Insights for cloud and IBM Planning Analytics (TM1) for cloud or on-premise. Both platforms have their strengths and weakness (no software tool is perfect), but in the main, they do a great job in taking the best features of Excel and leaving the problems behind.
Letting go of Excel
You have spent months building your Excel budget model and debugging it over the years. Like your own baby, with all the care and attention you have invested, you can’t give it up.
This is a common reaction to the prospect of moving from Excel. After all, accountants love Excel – it makes us feel like creative geniuses in an otherwise (sometimes) repetitive monthly routine.
No fret, tools such as Adaptive Insights allow you to build your own models – if you are an Excel expert, Adaptive Insights is a breeze.
Adaptive Insights was founded by an ex-CFO and it really does takes the best bits of Excel (its look and feel) and combines it with a solid platform supporting multi-users, workflow, auditability, and security. With a few hours training, you’re up and running and you (and your business) will never look back.
If you’re interested in exploring corporate Budgeting and Planning tools for your organisation, we can help. Our consultants have been in finance roles and can appreciate the pains and pressures of budgeting and forecasting using Excel. QMetrix has successfully implemented solutions for many businesses across industries, and can make a recommendation for a planning tool that suits your unique organisation. Let’s chat.
This post was originally published on 24 May 2015 and updated since.