Overcoming the Challenges of Your Annual Budgeting Process
By: Kim Fisher
Summers are a daunting time in the world of finance, particularly for those organizations closing out their fiscal year. Whenever something culminates, it presents an opportunity for reflection. What went well? What challenges did we have to overcome? What would we like to do differently the next go-around?
Ideally, reflection leads to positive change somewhere on the spectrum of people, processes and technology.
This article will examine the vulnerabilities, challenges and opportunities facing public sector financial institutions as they reflect on a complex budgeting process … and offer solutions on how you can streamline these efforts to impact change.
Vulnerabilities of budget development/finalization
You understand that budgeting processes are about gathering more than financial data; in the education world, you need to understand and anticipate enrollment, particularly in regards to future terms within the fiscal year.
How many students is your institution expected to house?
What are we looking at in terms of expenses and operational costs?
Public sector industries – whether we’re talking about educational institutions or government operations – traditionally deal with budget forecasting using predictive models that are actually more reactive than proactive.
For organizations racing to finalize a budget, cross-departmental communication is key to coalescing all of the relevant information. Many times, mission-critical data is still being gathered at the 11th hour, meaning that a clear picture of your future may not crystalize until it’s too late to make any necessary changes.
This reactive approach to budgeting doesn’t mean that your departmental workforce isn’t good at what they do. Oftentimes, they’re masters of their proverbial data silos, and can provide a level of detail and nuance to their Excel spreadsheets or software predictive models.
But can they effectively inform based on the needs and requirements of your other departments? To illustrate the point, a business with a sales department is exclusively focused on revenue generation. An accounting department is primarily focused on controlling the margins of an organization, mitigating expenses that the sales department may not see or even care about. As a decision maker, you’re equally invested in the projected budgets for both departments.
How much easier would your life be if these departments used the same integrated platform to build a forecast that is updated in real-time? Imagine a budgeting architecture that could instantly process all of the important variables, leveraging artificial intelligence (AI) technology and an easy-to-use interface.
Believe it or not, this solution exists.
Before we detail how it can impact your annual budgeting process, ask yourself the following question:
Do your current systems have all of the critical data available in one centralized platform?
The challenges of accurate data forecasting
Let’s turn a critical lens towards the traditional budgeting process, identified through three key avenues:
People
Regardless of the abilities of the platforms, datasets and spreadsheets with which your team works, your organization really is built upon the skill of your workforce.
Despite their proven talent and track record, how efficient are their workflows?
Are your personnel – across all departments – using a single source of truth for their data forecasting?
Differing platforms and models can slow cross-department efficiency to a crawl. Excel is a wonderfully versatile budgeting tool, but as the volume of data analyzed increases, the program begins to form disparate spreadsheets that are difficult to navigate.
As more of your workforce contributes to a spreadsheet, it becomes more challenging to both use and share effectively.
Imagine a shift from tactical conversations to strategic ones when interpreting data. If your key personnel were free to focus on more than the numbers – and get down to the WHY behind them – your organization could leverage their talents and experience collectively in new ways to begin the shift to predictive, proactive budgeting.
Processes
We’ve previously discussed the dangers associated with 11th-hour budgets.
Does this sound familiar? Having experienced the time crunch, you’re left to feverishly observe and authorize a cobbled-together forecast of next year’s budget. You’re hoping and trusting that your data experts keyed in the correct information, and that one tiny little conditional formatting error didn’t throw a wrench in the gears of what you’re deliriously scanning.
If your heart races a little reading that, then it may be time to rethink your budgeting process.
Sure, you’ve got layers of approval to authenticate the data before you lay eyes on it, but that can complicate and slow the process, ultimately contributing to the dreaded 11th-hour budget.
Moreover, if your approvers aren’t able to quickly and easily discern where their budget managers are in their individual processes, this particular segment of your budgeting efforts can take as long as the number crunching itself.
Managers are often putting puzzle pieces together from a variety of traditional systems. Your ERPs attempt to tackle the budgeting process, but they really only scratch the surface: Rarely do they provide a real and relevant flow to offer you full context and understanding of WHY the numbers are what they are.
Your ERP provides a transactional approach to budgeting – imagine a planning solution that could provide both transactional and strategic insights.
Your processes may involve effective tools, but Allitix offers a connected planning solution that can honor your systems while augmenting them. We can effectively integrate with your current data architecture to provide a single source of truth.
Technology
Now that we’ve uncovered the solution to streamline your annual budgeting process, it’s time to ask yourself a series of questions regarding your technology – the third and final key avenue related to your budgeting and forecasting identity.
Is your business architecture operating on a platform that makes things easier, or more difficult to meet your budgeting and forecasting needs?
Are you leveraging the most advanced technology that will grow with you over time?
Do you have help and support from a connected planning platform?
Is your current platform highlighting or ‘ringing bells’ to draw your attention to both issues and solutions?
If you’ve answered ‘no’ to any – or, let’s be honest, all of these questions – it’s time to discover a new path forward.
Don’t Wait! Implement these five best practices to help next year’s budget process now:
Standardize. Automate. Streamline.
Coalesce your important data in one place.
Unify your financial and operational data (and departments)!
Bend, don’t break: Flexibility is the key to operational efficiency
Implement data security and access initiatives
These best practices sound simple, right? But having read them, how does your organization move from a reactive annual budgeting process, to something like this?
By harnessing the power of a Connected Planning platform.
Allitix provides Anaplan solutions
Allitix understands the challenges facing educational institutions and government agencies. That’s why we offer the Anaplan connected platform, designed to model complex forecasting scenarios under a central location – a single source of truth.
Anaplan is hyperscale computing applied to operational insights. By partnering with Allitix, we’ll work together to integrate the five best practices outlined above and improve the end-to-end visibility of your budgeting and forecasting processes.
Here’s how:
With Allitix and the Anaplan solution, your organization will be able to run virtually any planning process by connecting data, people and plans – across all departments, on a universal platform.
Your connected workforce will be able to influence model changes with drag and drop interactivity within minutes, offering insight into data that would take weeks to coalesce in traditional spreadsheets.
You’ll have an overview of detailed planning models that harness all of your data with any level of chosen granularity, so you can impact decisions in real time. This effectively moves your organization from a reactive approach to forecasting, to a proactive one.
You’ll empower your business to be more dynamic, collaborative and intelligent.
To experience a demonstration of how the Allitix Connected Planning platform can impact your annual budgeting process, follow us here. Once you’re ready to move forward with a streamlined approach for your budgeting and forecasting future, contact Allitix to learn how a bespoke Anaplan solution can make your future planning easier.