Is your budgeting, planning, and forecasting process no longer useful to your organization? Does it take too long, involve cumbersome spreadsheets, and result in obsolete information? You're not alone. Many of our clients came to us with these same complaints. In fact, we work with a hospital in New Jersey that used to collect 200 spreadsheets at the beginning of every budget cycle, then ended up with multiple versions of each spreadsheet by the end of the process...though now that I think about it, I'm not sure their budget cycle ever actually ended. It just merged into next year's!
That is an obvious example of a company that had outgrown its budgeting and planning process. But some situations aren't so obvious. You know you and your planners suffer at the end of every fiscal year, but is it so much that you should consider graduating to the next level of planning?
Here's 5 ways to know if you're ready to move on to a more sophisticated method of budgeting and planning:
1) You're beyond the 6/6 spreadsheet rule.
Spreadsheets are excellent tools for individual tasks and ad-hoc reporting, but are poorly suited to repetitive, collaborative, enterprise-wide functions such as budgeting and planning. One rule of thumb that says, "If more than 6 people will use it more than 6 times, you should consider an alternative."
2) Time constraints are limiting the amount of re-planning you can accomplish.
The best time to gain an advantage in the market is during a downturn. While your competitors may have been cutting costs during the recent economic crisis, if you had more agile planning processes in place, you would have anticipated change better and been more nimble in adjusting your business.
3) You want to spend more time on the "analysis" part of your job.
Pulling together budget submissions and compiling spreadsheets is time-consuming and purely mechanical. Technology solutions can speed up data collection and leave you more time for strategic decision making.
4) Management is clamoring for more accurate and timely budgets and forecasts.
If budgets and plans are obsolete as soon as they're "finished," there's no value to them. Monthly re-forecasting, rolling forecasts, and what-if analyses allow you to make better business decisions armed with insight into trends and multiple variables and add visible value to your budgeting and planning process.
5) You need to plan for various scenarios in minutes, not months.
"What ifs," "best case," and "worst case" scenarios allow you to be more forward-thinking – probably something you're not able to be with your current process.
The good news is that there are budgeting tools out there for small businesses and large enterprises alike that adapt to your process – not the other way around. We've worked with enough organizations to know that your budgeting and planning steps work for your particular organization and that you may just need some help automating parts of the process.
Want to learn more or have a question for us? Leave us a comment!