When Should You Invest In A New Budgeting and Forecasting System?

Posted by Deborah Jelley

Aug 8, 2014 10:54:20 AM

Upgrade Your Budgeting and Forecasting System

Budgeting and forecasting allow a business to plan accurately for its fiscal year. In a 2016 survey by Radius Global Research, it showed 57 percent of respondents were still relying on Excel for their budgeting—either standalone or with other systems. A budgeting and forecasting system (or process) that is manual is ineffective and inefficient. 

Is it time for a new budgeting and forecasting system?

Have you delayed your decision to invest in a new forecasting and budgeting system thinking that your existing Excel models are sufficient to the task, and that you have the right financial analyst to manage them? But what happens if your company is acquired by another company or you have launched a new product line? Well... it means your finance team has to pull together and assimilate new data into their reports. They scramble to respond, but how long will it take them? Perhaps while your team hustles around, you are missing out on ways to change business direction to take advantage of new sales opportunities and revenue growth. Then your rockstar financial analyst turns in her resignation... It’s a fine line between control and chaos.

Finance teams and their leaders face the same issues as their companies grow and expand: How to effectively and efficiently provide meaningful analytics without over-burdening their Finance and IT departments. 

Whatever the reason for the delay before, it is now time to invest in that new budgeting and forecasting system, but you’ll want to both quantify and qualify your decision.  We have some decision points and tips for you to consider below.

What are the trigger points to make the investment decision for a larger scale forecast and budgeting application?

To begin to make a business case for this investment, you will need to examine the do-nothing (do-not-invest) scenario first.  Some considerations on the “do-not-invest” scenario include:

Do not invest:

  1. You’re a small to medium-sized company with limited growth prospects such as:
    • Niche service organization
    • Small retail opportunity
    • Small manufacturing or production outfit

  2. If the growth of your company is at a stand-still or declining, and hiring is halted. Unless, of course, an application can help pinpoint problems to address.

  3. If standard financial reporting is all that is necessary for your company to make smart operational decisions, then Excel can most likely meet that need a while longer.

  4. If your company simply cannot afford the outlay of funds after you prepare your Total Cost of Ownership (TCO). NOTE: In some cases, you can shelve the analysis until a later point.  Most costs and benefits will be about the same a year or even two years from now.

Now consider the triggers to go ahead and make the investment.  Below are some triggers we have encountered or experienced with our clients prior to an investment decision:


  • If/when your company is International and needs both accurate currency translation and a web option for budgeting and forecasting by your international finance teams.

  • If/when your company is growing at a fast rate and a forecast of costs becomes equally as important as revenue forecasting.

  • If/ when your company requires modular forecasting around revenue, personnel, operating expense, etc. to permit detailed or root cause analytics.

  • If/when your company requires their allocation methodology to be automated in order to quickly create meaningful subsidiary P&Ls.

  • If/when your company needs to include operational people in the process because Excel can be difficult for them to use to capture assumptions detail on budget build-up.

  • If/when your company wants driver based forecasting that can be more easily maintained.

Finally, you will need to determine what benefits a forecasting and budgeting system would ultimately provide to your company that a TCO analysis would not effectively illustrate.

What would a forecast and budgeting system do for your company and finance organization?

Keep in mind that a typical Return on Investment (ROI) calculation may not necessarily support an investment in a budgeting and forecasting system.  You will have to consider business benefits in context.  Some specific benefits we have seen after we’ve implemented one of these applications, such as Hyperion Planning or Oracle PBCS, include:


  • Better control and management of financial and operational data
  • Faster generation of forecasted financial statements
  • Better drill-down to detail if you build the system using a modular approach such as revenue forecasting, operating expense, personnel module, etc. 
  • Ability to use variable driver-based forecasting
  • Ability to allocate forecasted amounts to pre-defined accounts
  • Direct links to existing accounting system
  • Reporting readily available with minimal effort

The triggers or acknowledgement that your planning and budgeting process could use some help will lead you to prepare your business case to invest, and after buying and implementing your new finance system, it may take a couple years before you truly gain all of the benefits you’ve included in your business case. 

Further, as mentioned above, the benefits listed above cannot be justified or easily quantified by relying on a Total Cost of Ownership (TCO) analysis, or an ROI calculation alone.  However, those benefits can lead to qualitative improvements such as increased sales revenues, faster information access, improved operational capability, improved competitiveness, or improved product quality.  

It can be a difficult decision to make, but if you have experienced any of the situations we’ve listed, it’s time to open a fresh Excel spreadsheet and get to work on your comprehensive cost-benefit analysis. 

If you'd like some help building a roadmap and managing your implementation, give us a call at (603) 434-2550. With over a decade of experience implementation robust finance solutions, Strafford has the technical and finance-forward expertise to bring your project in on-time and on-budget.

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Topics: Consolidation and Close, Budgeting and Forecasting, Financial Reporting