How Do You Know You have Outgrown Excel for Your Budgeting Process?

Adapt or die. Charles Darwin is best known for his contributions to the science of evolution and even though his most coveted piece of work On the Origin of Species was published over 150 years ago, the hypothesis is still very much relevant in today’s fast-paced economy.

In order to survive today, organisations must react quickly to a raft of rapidly changing market dynamics as well as staying ahead of the increasing pace of digital and technological transformation.

For the CFO and finance team, this has far-reaching implications, particularly in terms of delivery of quality and timely decision support information in response to changing market conditions. The fundamental requirement of the contemporary Finance department is very much about looking forward and delivering value-add service to the organisation. In order to keep up, the decision support tools employed on a day-to-day basis need to be flexible and dynamic.

Many organisations have invested substantial time and effort into building rock solid Excel budgeting models and generally these serve the business needs well. But do they provide the agility needed to deliver market leading Finance capability when both your business environment and your organization are continually changing around you. Knowing exactly when is the right time to roll with change is a vexed question. Your response to the following five common challenges may help you to decide when it's time for you.

1. GENERATING QUICK BUDGET ITERATIONS WITH CONFIDENCE

Budgets are rarely approved on the first attempt and usually multiple iterations are required until sign off is obtained. What is your process for making these changes – is it fast, flexible, reliable and are you confident in your management of multiple budget versions. Using bespoke budgeting software facilitates speedy creation and maintenance of multiple budget versions autonomously.

With each starting with the same set of drivers and assumptions, changes can be rapidly flowed through and compared to the baseline. This allows operations users and finance personnel to spend much more time focusing on quality of data and improved business outcomes and less on management of tools.

2. MULTIPLE USERS

A typical organisation will have multiple users needing to work on the budget model. We may all know the frustration of having to wait half a day for someone else to finish updating the budget file. Apart from the valuable time wasted, this greatly increases the risk that in the heat of battle, the wrong version of the file may be used if updated files are not saved in time. Having the confidence to know that all users can make updates autonomously, supported by an audit trail tracking these changes delivers significant time savings plus added confidence in the output to be presented to management.

3. LOOKING FORWARD – QUICK, MEANINGFUL FORECASTS

So, you've built the budget and now we know the target we are aiming towards in the year ahead. But if you are a value-add manager, then you not only want to know how you are tracking towards this target, but you also want to ensure that the business is responding to changes (speedbumps) as we go. Therefore, the production of regular, timely forecasts is not just a nice to have, it should be a key expectation of the contemporary Finance department.

Unfortunately, it is not always easy to import actuals to create these forecasts and to make adjustments for anticipated assumption changes. A major advantage of using contemporary software is that it helps automating the delivery of forecasts and revising forecasts is simpler.

4. VALUE ADD – DELIVERING TIMELY, POWERFUL REPORTS

Budget practitioners are often required to generate quick reports both during budget development and post-budget approval. They may also be called on to slice and dice information while still trusting the validity of their reports. In putting together a slide deck for potential investors, the CFO may want to prepare a year-on-year comparison of the budget results of prior years and work on commentary or storylines.

5. PROVIDING QUICK UPDATES TO STAKEHOLDERS

It is not uncommon for investors or financiers to call for an updated forecast and they may also ask for it in their own particular format. Where a portion of the business is financed by bankers, there may also be certain covenants to address which may not be required with the reporting to the executive team. Or perhaps a merger or an acquisition is being considered and you are required to assess the impact to the bottom line. In a fluid environment, it be possible to re-run these forecasts and produce scenarios in quick time. Sadly, it can take two or more weeks using Excel, much to everyone's frustration.

CONCLUSION

If one or more of these issues exist in your business, you may well benefit from the deployment of a more flexible planning solution. As the saying goes, it is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change. Just how important is flexibility to you?

In order to survive today, organisations must react quickly to changing market dynamics as well as keep in line with the pace of digital and technological transformation. Achieving such insight and agility with budgeting and forecasting activities can be extremely challenging if it is managed on an Excel platform.

Ramesys Global

Ramesys is an all-in-one budgeting, forecasting and reporting platform, purpose-built for the mining industry, that offers complete cost visibility across the entire organisation. 

Our goal is to make it easier for mining companies to achieve a transparent understanding of their cost performance, develop a cost-conscious culture and create a single source of truth that helps key stakeholders make better decisions, faster.

Read more about our easy-to-use budgeting & forecasting software...