Monthly Archives: July 2014

No Time for Budget

Why is this process flawed in so many organizations?

CFO Magazine recently featured an article titled “No Time for Budgets” authored by Edward Teach. This article points out that traditional budgeting (e.g., the corporate annual budget) is flawed and often irrelevant to the changing economic reality.  It quotes Steve Player who is the North America program director for the Beyond Budgeting Round Table saying, among other things, that using traditional budgeting tools is often based on assumptions that turn out to be wrong, or inaccurate at best, and not being able to continuously monitor and update the data (assumptions, drivers, etc.) can quickly render the budget outdated and often useless.

Another important observation given by John Macrae, a principal at accounting and consulting firm CohnReznick is that the budget process is often too complex, and requires companies to devote too many resources in order to complete it, but in the end, the result is simply used as a “report card” and not as a planning and analysis process tool.
There are additional observations made by other contributors to this article, and the conclusion is not surprising:  Many organizations either are not capable of or are not aware of the fact that their budget and planning process is not really used for its original intended purpose, which is simply plan the organization’s activities based on goals, monitor periodic results and make appropriate adjustments driven by decisions directly influenced by the original goals, planning data and actual results.

I’ve made several entries in this blog pointing out these same principal flaws in traditional budgeting and planning and trying to identify the underlying reasons behind these flaws and deficiencies.

I’ve also written more than several times that having the right tools and the method behind this process are critical to success.  My opinion has not changed and my advice continues to be:  Find the right solution to address your particular situation but most importantly make sure it is practical to implement and will be consistently used and in a manner beneficial to the organization.

The last thing you want is for this process to become an unbearable chore that will always be reluctantly completed and never properly used.  My blog entry titled: “10 Must Have Features of a Budgeting & Business Intelligence Solution” is a good example of what features and capabilities a planning, budgeting and business intelligence software solution should have in order to make it not only practical to implement and use, but also create a whole new approach to this process, deliver the benefits that really matter and reduce or even completely eliminate the traditional flaws in the process.

Onboarding a new Budgeting, Forecasting and Business Intelligence System

What to do to ease-in the new process

I just finished reading an article by Rob Livingstone titled “BP&F (Budgeting, Planning and Forecasting) software budget manager training tips”.  This is available to registered users (free registration) at:

After registering, the article can be found at:

The focus of this article are the four steps needed to be taken in order to successfully onboard a new budgeting, planning and forecasting system and the importance of getting the budget managers and other employees participating in this process acclimated and feeling comfortable with managing the process.

When it comes to implementing a practical budgeting, forecasting and business intelligence solution, especially in a small to medium size organization, having the right persons on board, with sufficient experience and willingness to succeed in the initial implementation is extremely important.  However, having the right system in place is just as important and will often encourage a less experienced team to quickly learn and adapt the software to the particular organization’s needs.

I’ve had the opportunity of working with various software applications, some of which where not intuitive to implement and maintain, where training of employees and budget administrators was lengthy and costly, always dependent on outside consulting, and with constant programming and reprogramming of even the most mundane changes.

On the other hand, my experience with an application such as Budget Maestro from Centage Corporation ( proved the opposite to be true.  Because of the way this software application was designed, implementation is short and generally inexpensive.  The modular approach lends itself to different persons contributing budget elements in specific modules (e.g., revenue and cost, operating expenses, personnel, assets, debt, etc.).

Consolidations of the various budget pieces within the business entities, regardless of model complexity, is completely automated and with no user programming.

The driver based system with built-in business rules where persons choose from menus and drop-down lists without entering a single formula or link makes the whole process very intuitive with a much shorter learning curve than all other systems I’ve worked with.

To that add the integrated, built-in financial statements, again without any programming, and there is little wonder why so many small and medium size organizations have been successful in implementing this software with such modest cost and minimal training.

My advice to any organization looking to implement a planning, forecasting and business intelligence solution is to look for a system that can quickly go live with minimal training and that can be internally maintained without programming and complex change management processes.

When budget managers experience an easy and intuitive onboarding process, the effort of obtaining results and the regular maintenance will seem less of a chore and will ensure greater accuracy and willingness to use the process for its intended process, which is gaining insight into the future financial health of the organization and providing management with the tools to make informed decisions along the way in order to align current operations with original or modified goals.

2014 top accounting software buyer trends

I just read an interesting report published by published by accounting software research firm, Software Advice  titled:  Small Business Accounting Software Buyer View 2014.  It was compiled and written by Noel Radley, Managing Editor, Software Advice and can be found at the following link: Accounting Software Buyer View 2014
The report was compiled from data acquired from surveying several hundred buyers primarily representing small companies, with the majority of them under 500 employees and under $50 MM in annual revenue.

Buyers were questioned on their search for the right accounting software for their companies, the reasons for their search and what features and functionality they were most interested in.

It was not surprising to learn that many of the survey participants were looking to upgrade from more basic (and older) accounting software applications to packages with more advanced features, allowing greater efficiency and increased automation and accuracy.
Another interesting observation was that the surveyed buyers expressed less interest in web-based accounting software applications than what is experienced these days with general software purchases.  This is an indication that the priority here is functionality first and delivery method second.

What I have personally experienced in consulting to smaller companies (the majority of my work is with larger organizations) is that company managements are seriously looking to leverage technology and advancements in information processing, as well as automated budgeting, accounting and finance functions, quicker period close cycles and enhanced reporting.

These companies are also realizing that software tools that were only available to very large organizations in the past are becoming more accessible to smaller enterprises and with lower cost of ownership and less maintenance and employee training.
I believe the results of this survey fairly represent goals and desires of smaller company managements, as represented by buyers of technology products and in this particular case, accounting software.