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Fixes for the Top 5 Planning & Budgeting Issues

Posted by Jamie Carpentier

Feb 21, 2017 12:35:35 PM

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Fixes for the Top 5 Planning & Budgeting Issues

Your top priority in Finance is margin and earnings performance. The Finance team must prepare for organizational challenges that could occur at any time by focusing on working capital management.

There are many issues that prevent Finance from efficiently organizing and securing the vast amounts of data required for metrics that are used in strategic decision-making.

Let’s deal with some of them head on!

 

 

1. Issue: Outdated Financial Planning & Analysis tools and processes.

If you’re stuck in the process of spreadsheets, data collection, and collating, then you’re probably concerned about your organization’s ability to maneuver past unforeseen business obstacles. Everyone, in and out of Finance, is looking for more precision in budgeting and cash forecasting activities. Many organizations spend way too much time every year in their annual budgeting process, only to find that the forecast and budget are outdated as soon as they are published.

Management wants to use the budget and forecast as tools to track strategic initiatives. The length of budget cycles, the difficulty of manual consolidation, an inability to confirm that data is up to date, and inefficient reporting and access to data, are among the primary challenges to the mandate that Finance faces by relying on spreadsheets.

Fix: Applying technology to manual tasks like budgeting and forecasting provides efficiencies simply by automating processes and consolidation data and providing one common repository for planners and managers to retrieve data. But simply reproducing budget and forecast spreadsheets is only half of the equation. By identifying critical drivers that can be used to derive key accounts such as revenue, COGS and SG&A, the power of the process is placed in the hands of the stakeholders. By taking the time to understand what truly drives decisions and the business, stakeholders can create an environment where they get the benefits of a system that consolidates data and provides a common repository. This also provides high-level top-down budgeting and what-if scenarios based on base-level budgets and data that allow management to react quickly.

2.Issue: Business processes that are anything but streamlined.

How to enter data, how it flows, how to pull reports. Who controls the schedule? For example, using a continuous, rolling budget approach might be a better option for CFO’s than the traditional (but time-consuming) annual budget process.

If your organization has an ERP system, a planning and budgeting process, other dashboard applications, and more, there is unlikely to be much “flow” to the data. Problems loading and refreshing data, long update cycle refresh times and lack of “one version of the truth” in the data present big challenges for Finance.

Fix: Once an organization has invested in an EPM solution, it is essential that there is a parallel initiative to address business processes for this change to fully take advantage of the effort and investment. When business processes don’t align or grow with these investments, organizations may not truly realize the benefits. Data flows that cause data to move through outside systems, data integrity issues in the source systems, lack of data governance policies and inefficient processes can be more exposed once an organization implements EPM. Processes should be proactive so data can be loaded, available to the users and accurate in as close to real time as possible. EPM systems don’t fix inefficiencies in business process. It is critical to address them as part of the implementation to avoid frustration by user expectations for access to timely, accurate data.

3. Issue: Planning and budgeting are disconnected from strategy.

The role of Finance is changing, as management looks to Finance as business advisors, supporting decision-making in addition to traditional finance and accounting roles. So CFO’s have to do more with the financial and operations data at hand to help top management make critical decisions. And the fact that annual budgeting processes spend so much time looking backward, has led to the growth of forecasting as a critical component of financial planning.

Fix: Forecasting has become the driving source of managing future business decisions. Annual budgeting has become a tool to use for benchmarking, but quickly becomes outdated. While the budget process provides an outlook to plan the upcoming year, it is slow and does not provide information that can be used to make quick changes for unexpected trends or economic swings. By using a rolling forecast merged with actual data and updated on a regular basis, management can get a true view of current market trends and changes. This outlook allows management to adjust assumptions and decisions in a more proactive and timely way with current data. 

4. Issue: Worries around migrating to the Cloud.

Finance has significant concerns regarding the security of financial information, including the financial impact of the security of all data, when it is outside the organization’s data center. And there are increasing burdens on Finance to ensure they are in compliance with new regulations and requirements concerning information security and data management.

Fix: The cloud allows an organization to offload application administration and support expertise to specialists. Cloud applications now offer full audit traceability and compliance as well as full control of daily administration of the application. Industries will the highest level of compliance requirements, such as banking, government and publicly traded companies, are shifting to the cloud with confidence as cloud solutions offer complete data security that complies with all of their regulation requirements.

5. Issue: Limited resources to implement best practices.

There are always resource constraints in any organization – never enough time, never enough budget, never enough people. Finance executives need help with research into best industry practices. When considering financial applications that will meet current and future needs, they must look for the best fit – what users, what data, what time.  And as applications grow over time, they have to review for similar features and redundancies, while ensuring there are ways to access data across the organization.

Fix: Best practices are not a list of policies and procedures that can be applied to every organization. Companies like Strafford, that have broad experience with organizations of different sizes and a variety of industries, can provide best practices as they apply to a specific organization. Best practices are applied to a single organization based on how they function on a daily basis. While some processes and policies work across industry and organization size, the most effective best practices are those that fit the culture and process of the specific organization. It is critical to understand an organization’s structure and functions before trying to implement best practices. One size does not fit all!

Do these issues sound familiar?

At Strafford, we have deep experience with Hyperion Planning and the Cloud. Our consultants have all held Finance positions, so they know your pain, and they understand how the right Planning and Budgeting application can make things better. We are ready to help you with roadmaps, implementation, training, and knowledge transfer.

 

 

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Topics: budgeting, financial reporting, epm, Cloud Hosting, Hyperion, oracle, Hyperion Planning, EPM in the Cloud