NEUBRAINER, the official blog of Neubrain

If you have ever worked in a governmental organization, you probably experienced the mental gymnastics of the dreaded “what-if” drills.  The annual bureaucratic budget review and approval processes, changing priorities based on political agendas, and emerging agency requirements make these drills a frequent occurrence at all levels of government.  Governmental organizations are often tasked to  “develop options”, “look for efficiencies”, or other code words to deal with real or perceived budget cuts.  These units are scrambling to play defense – to defend (or re-defend) planned resourcing levels. A reason why budgeting is so difficult is that many government organizations have difficulty tying resource allocation to objective criteria that clearly enables decision-makers to make conscious trade-offs, as well as providing transparency throughout the organization. 

High performing Comptroller organizations can add tremendous organizational value beyond just financial transaction processing and audit readiness tasks.

By leading in the establishment of key processes, promoting enterprise-wide collaboration and a disciplined financial management culture, they can drastically improve the ability of an organization to achieve performance targets, strengthen the link between financial plans and strategic objectives, and enhance strategic decision-making.

It is a common mistake to assume that automation alone will bring necessary budget process improvements to an organization. Automating an inefficient or unintelligent bud­get process just makes the same process faster, not better.

The reality is traditional practices that govern budgeting, planning, forecasting, reporting and  risk management are becoming obsolete in the context of a fast paced digital marketplace and a volatile and uncertain global economy. Long established budget practices provide a false sense of security and fail to cope with the speed and volatility of today’s markets.

Additionally, the traditional budgeting process is widely de­cried, both by FP&A personnel—who must reconcile the requests from business managers with the targets handed down from the C-suite—and the business line managers they support—who view the budget process as a bureau­cratic exercise, a distraction from their job, a drag on their time, and a purely finance-driven process.

As you consider a new budget system, remember this is the optimal time to evaluate the strategies that can help your organization develop a more agile and intelligent budget process, use this process as decision making tool rather than a negotiation, and positively change your orga­nization’s perception of budgeting.

The following are a few strategies and best practices to consider:

While most modern budgeting software solutions can eliminate the basic spreadsheet challenges associated with data capture and simple aggregation, they typically do not take the next step: enabling the organization to use its data to improve budget decisions and the linkages between budgets and outcomes.

After many years observing organizations' budgeting and forecasting software selection and buying processes, we have discovered that many organizations, no matter their size, often jump into the buying process under that assumption that new software will be the answer to all of the organization's budgeting woes. While software can help improve an already well-established budgeting and forecasting process, software in and of itself is never the solution.

Budgeting, forecasting and performance management is a difficult process for organizations, not to mention reporting on results can be challenging, regardless of size or industry. Enterprise planning is critical for managers that contribute to the overall success or failure of a program, project or product, especially in good and bad economic times. Despite the importance of accurate forecasting, budgeting is often seen as a demanding and inefficient process. Yet forward-thinking organizations see integrated planning and performance management solutions necessary to compete.                                                                                                                   

Earlier this month, Aberdeen Research released the results of their 2014 Financial Planning, Budgeting, and Forecasting and Enterprise Performance Management Benchmark Survey. The survey sought to discover the best practices and technologies used by organizations that are successfully navigating the financial planning, budgeting and forecasting process. So, what did the survey reveal?