Budgeting, planning and forecasting is a challenging ordeal. For large, dynamic enterprises, it can be incredibly difficult to accurately forecast and allocate budgets across departments.

budgeting

Traditional spreadsheet-based budgeting and forecasting has numerous limitations and is often prone to error. In a recent webinar sponsored by Host Analytics entitled “Best Practices in Planning and Forecasting,” Rick Odom, Senior Manager and FP&A of Welch Allyn, and Ben Tang, Senior Director and FP&A at Host Analytics, weighed in on this very issue.

Planning and Forecasting with Enterprise Performance Mana Budget cyclegement (EPM)

Dynamic businesses need to streamline the budget cycle, while improving accuracy.

EPM software solutions help businesses link together all of the processes in their management cycle, creating more seamless execution. The primary steps include:

  • Modeling
  • Planning
  • Closing
  • Reporting
  • Analyzing

EPM software can improve the efficiency of the process, while minimizing errors and increasing the accuracy of forecasts.

Why Are Businesses Moving Away from Excel?

Excel has long been the go-to approach for planning and reporting. It’s comfortable and familiar to financial teams, which has led many businesses to cling to that model longer than necessary. However, Excel is prone to error, and it doesn’t provide the same level of agility and advanced modeling as EPM software can provide. It also leads to multiple versions of the truth, as well as errors in reporting and forecasting, so businesses can’t be confident in their numbers.

Moving Away from Excel for More Accurate and Efficient Planning

In the webinar, a poll was taken regarding the current method most enterprises are utilizing for their planning and forecasting. Nearly 49 percent said they relied exclusively on Excel, while 38 percent were using a combination of Excel and an additional software application. As a result, many of these businesses are failing to conquer budgeting tasks with the efficiency and accuracy that’s achieved through alternate budgeting approaches.

Many organizations are still utilizing an annual budget, which is tedious and often inaccurate. Tang says that at Host Analytics they utilize a rolling forecast approach, which allows them to update their budget more regularly, stay on top of finances, and achieve greater accuracy from their forecasts. He says his EPM system can help bring all of the numbers together so they have a better view of where they currently are compared to their targets.

How Do Businesses Shorten the Budget Cycle?

As businesses strive for efficiency in budgeting, they need to find ways to streamline their approach. Odom says with his business, they had about 700 different cost centers and 700 different accounts, and preparing a separate budget for each account was needlessly time-consuming and convoluted.

Instead, they began grouping accounts together and created budgets for the groups of accounts, rather than each individual account, which has greatly improved productivity, while providing the same level of accuracy. At Tang’s company, he’s discovered that an EPM system can greatly improve accuracy by providing a single source of truth, while connecting all aspects of the budget cycle together to optimize efficiency.

Adopting Rolling Forecasts

As businesses focus on improving the efficiency and accuracy of budgeting and planning, rolling forecasts are rapidly enhancing the traditional annual budget. Odom says that his business now does quarterly forecasting, while laying out an 18-month plan. With the 18-month plan, his business is thinking beyond the current year, while still having the flexibility to regularly update the budget as needed.

Are There Benefits to a Cloud-Based Software Solution?

With cloud-based EPM software, businesses can leverage the data-sharing qualities of the cloud, while making it easier and more cost-effective to manage and organize financial data. Odom says his company outsources their IT to IBM, and utilizing a cloud-based technology allows them to easily reach remote and outsourced workers, while saving time on upgrades.

Budget cycle

The cloud eliminates on-premises systems and makes it easier to connect with remote workers.

Tang says the biggest advantage of cloud-based EPM software is avoiding the installation and maintenance costs associated with on-premises software. Host Analytics Cloud-Based EPM Suite also provides a spreadsheet experience in the cloud. Since many finance employees are familiar with Excel, having a spreadsheet interface in the cloud provides a sense of familiarity, allowing employees to master the technology more quickly.

As businesses become more dynamic, spreadsheets are no longer effective in and of themselves, when used to support a corporate process. Businesses need to be turning toward new software to streamline the budgeting cycle and improve the accuracy of forecasting. With cloud-based EPM software, businesses can manage their budgets and plans in the cloud while accessing a variety of tools to enhance analysis. They can also create rolling forecasts easily, which is ideal for rapidly changing businesses.

To learn more, read our free white paper, Best Practices in Rolling Forecasts.

Get the Rolling Forecast White Paper

2 responses to “Improving the Budgeting, Planning and Forecasting Process”

  1. Mervat Mahmoud says:

    Insightful and very promising and good article

  2. Benjie says:

    Great article. It was very informative. Thanks for sharing. Read related blog posts – http://www.performancecanvas.com/resources/blog/

As Vice President of Demand Generation, Nick provides digital marketing and demand generation leadership to Host Analytics, the leader in cloud-based financial applications including planning, close, reporting and analytics. Nick has held marketing, business development, and consulting roles in companies like HBO, Nuance, Equilar, and Aspect Communications. Nick holds a Bachelor of Science in Communications from Ohio University, Athens, Ohio.

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