Escaping Excel Hell - Budgeting

Budgeting. A word that strikes horror into every finance department and every corporate manager.

For smaller businesses budgeting is often a totally alien concept. So sadly is cash flow forecasting. For them a simple Excel spreadsheet could transform their business, giving them forward visibility of issues and the time to avoid therm.  But as they grow ....

Many larger businesses still use Excel. Imagine running 300 cost centres across a £250m business that had changed from manufacturing to product/service projects in just a few short years. I've seen it and helped replace it:

• Forecasting cycles that are far too long and laborious
• Spreadsheets that are probably riddled with errors but management's worried they don't know where or how big
• Integrated spreadsheets held together in their own words "with sticking plaster"
• Where is the final version when we want to compare actual to budget?
• What, no drill down?

That's Excel hell!

The FD's vision when we first met was a system that allowed them to compile a budget and more regular forecasts, in equivalent detail to the spreadsheets. He then wanted to be able to easily compare actual to budget/forecast with drill down to detail for both actuals and budgets

The first step was to reconsider the whole reporting structure. Revenue from products and now an increasing number of services, some in-house and some bought in. Projects involving both projects and services, and far fewer than 300 real cost centres. How should this be rationalised? Should the "profit centres" concept be used, with an internal market? If so, how?

The next step was to fully understand what was in the existing spreadsheets, how they linked together, and the issues involved in collecting information from budget holders. Mind-boggling!

The third step was to bring everything together into a "User Requirements Specification" (URS) that simplified all the needs and issues as concisely as possible, for management to review and sign off. This also contained enough to brief potential suppliers, and to be used for demos and system testing. As they say, the rest is history....

With  solutions available on-premise and in the cloud, it's important to be aware of the risks both ways, and keep an open mind of the opportunities. It's also important to follow a selection process that caters for both on-premise and cloud SaaS...



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