Functional gaps in old budgeting systems become bigger over time, leaving organizations without the tools necessary to ensure success now and in the future.
Most organizations are hesitant to make changes to their processes and systems. The change seems daunting and if things seem to be working, why bother?
The challenge is making the old systems deliver the needs of your current and future budgeting. As your organization evolves, functional gaps occur and only become bigger as time goes on. Leave these gaps too long and your budgeting processes are no longer delivering what you need – an accurate budget created within a reasonable amount of time and effort.
As daunting as it is, sometimes the only solution is to review your current budgeting methods and tools and make the changes necessary to ensure success now and in the future. We’ll begin by taking a look at typical budget solutions such as Excel and Access that fall flat come budget season, Then we’ll end by highlighting the types of budget planning software and some key consideration to look for when implementing.
Budgeting with Excel
Over the years many organizations have relied on Excel spreadsheets to create and track their budgets. The tool was simple and straightforward. However, as the budgeting requirements of many public sector organizations have evolved, the long-term limitations of spreadsheets have become too great to ignore and the tool is being increasingly phased out.
Housing budget data in spreadsheets creates many issues that inhibit the very nature of collaborative budgeting. It is difficult to ensure a standardized approach and format with so many departments creating and managing their own versions of the budget. Because there is a lack of communication and collaboration, it leads to inefficiencies and uncertainty with the decisions being made.
This departmental silo budgeting process in turn creates more problems. Here are just a few more problems we’ve found with the practice of using Excel:
- The responsibility to manage standardization often falls to one person, usually a senior Finance resource, which then pulls them away from higher level work they should be focusing on.
- Version control is near impossible with such an unstructured work-flow process. Approval of changes gets lost as time passes and the history behind budget decisions is lost.
- Reports with different layouts and formats float around, and without any consistency between them, it can be difficult to understand the data being illustrated.
- With no way to automatically track the actual costs as they occur, it is very difficult to provide meaningful or timely variance reporting.
- Heavy reliance on manual entry both in budget preparation and compilation, the door is left wide open to incorrect entries, broken links and a lack of historical data.
Excel clearly has its limitations. However, another budget solution is for organizations turn to Access databases as an alternative to spreadsheets, but this too, as expected, comes with limitations.
Budgeting with Access
Formatting, mapping, reporting, security, and other functionality are possible, but require a great investment of time, resources, and knowledge. These systems don’t tend to result in cost savings, and require a dedicated resource available to perform maintenance and upgrades. These systems are simply not scale-able, and as data volumes increase, the performance of these applications is severely affected. With organizations continuing to expand the requirements of their budgeting systems, Access applications are simply not robust enough.
So, what’s the solution?
With a web-based database application, not only are the issues we mentioned above resolved, but the extended functionality and benefits make the decision to move away from spreadsheets an obvious one.
Budget Planning and Forecasting (BP&F) tools are powerful solutions designed to deliver seamless integration with an organization’s financial system. The two-way transfer of data to and from the General Ledger, and Payroll/HR, provides an easy flow of information throughout the system.
Collaboration and communication is an inherent part of the web-based budgeting system. Budgets created in a web-based application are accessible from any computer with internet access and provide automatic tracking through creation, approval, post budget adoption changes and tracking. Additionally, security features are established to control who can access and edit the budget data at every stage. The budget is housed in a database providing complex search, sort and analysis capabilities.
True web-based budgeting tools capture not only the original budget, but also the prior history and supporting data for the adopted budget and any budget to actual variances.
Features such as “what-if” functionality, unlimited forecasting, and automatic updates of actuals further extend the benefits of a BP&F tool.
Horizontal vs. niche solutions
So, you’ve decided it’s time to move away from Excel or Access and to look for alternative solutions. Initial investigations indicate that there are many options out there. However, be careful – most solutions have been created to meet the needs of the masses. They want to be the solution of choice for everyone and the result is a generic application that falls short of many of the requirements specific to public sector organizations.
Some BP&F companies recognize this gap and have created their solutions specifically to answer the needs of the public sector market. They know the industry well and choose not to be the “every person” solution, but rather have tailor-built their solution for the public sector.
Powerful features of these solutions include performance measurement, priority-based budgeting, zero-based budgeting, and interdepartmental transfer/allocations. These tools were designed to process data with a focus on budgeting, mapping financial data to the appropriate budget target (Division, Department/Cost Centre/ Project, etc.).
Additionally, the costs and complexities of salaries-budgeting demand a solution with the ability to handle salary costs, benefits, union negotiations, scenarios, and forecasting. Features such as Allocations allow managers to split salary/benefits & other personnel costs across multiple units, based on any number of weighting calculations. This provides an accurate account of each department’s true labor costs.
Finally, BP&F tools come with a number of predesigned standard reports and the ability for users to create additional reports using an ad-hoc reporting tool. Find a solution where the reports exist or can be easily created, to present your information in a manner that is relevant to your needs.
Finding the right company
Focusing on BP&F tools designed specifically for the public sector narrows down the field significantly. However, differentiating between them may seem difficult, so be sure to also consider the strengths and stability of the software vendor itself.
What is the breadth and depth of their experience?
The best companies have thorough knowledge of your industry, and this knowledge only comes with hands on experience working with customers of all sizes and complexity. Experience integrating with the various financial and other systems also provides these companies with increased insight into the needs of the customer.
What is the vision of the company?
It’s great if a company has a solution that meets your needs now, but do they understand your industry enough to anticipate your needs tomorrow? Solid companies are constantly investing in the future, adding to the core product in anticipation of changes to the overall product suite as well as the changing marketplace.
Is their product built using the latest flexible technologies such as full browser capabilities and the option to operate in the cloud?
Look at their customer base – are they winning new business?
Some companies have been able to deliver a product that met a specific need in the past, gaining them some new customers for a limited time. However, the true sign of a successful company is one that has a constantly and consistently growing client base. With the collaborative nature of the public sector, a solid reputation will ensure a company will continue to grow.
Now that you’ve narrowed down your list to only those companies that:
- Have a truly web-based application that will integrate with your current/future financial system
- Are focused solely on the public sector and are able to meet your specific functional requirements
- Have experience with an organization of your size and complexity
- Are focused on constantly providing the best solution on the market – both now and in the future
- Have an ever growing client base which will ensure they are always being vetted by other organizations like yourself
A clear vision
With a better understanding of the gaps between your budgeting abilities and requirements now and in the future, you are able to make decisions that will lead to long term success.
Questica makes budgeting easier for the public sector
Questica’s budget management products integrate with more than 25 enterprise resource planning (ERP) systems, ensuring the platform can access all the information it needs to track and evaluate set metrics and provide custom reports. Questica Budget Operating and Questica Budget Capital ensure public sector entities have a clear view into both their operational and capital expenditures, and Questica Performance enables organizations to look at non-financial measures. Additionally, Questica’s easy-to-use OpenBook provide a clear visual representation of the information contained in these solutions. To learn more about Questica and how our software can help your public sector organization, visit our website and check out one of our whitepapers.