Automation key to budgeting, forecasting [ITWeb]
(ITWeb Via Acquire Media NewsEdge) Automating budgeting and forecasting processes through the use of technology significantly reduces the risk of human error, and enhances the ability to budget "on the fly" for "what if" scenario planning that adapts to the pace of the current business environment.
This is according to Greg Bogiages, director at Cortell Corporate Performance Management, who adds that in today's fast-paced world, time-consuming manual processes can prove to be a major hindrance.
"Budgeting and forecasting can prove to be incredibly onerous, involving the collection and manipulation of data from multiple sources by multiple departments within the organisation, often into a single spreadsheet, which can only be accessed by one person at a time," he says.
According to Bogiages, not only do these take months to execute, but the more manual processes involved, the greater the risk of human error, ultimately affecting the accuracy of outcomes. Considering that organisations base many of their important decisions on the budget, accuracy is a key factor.
"More than often, by the time budget have been set, market influences have changed, making months of work and effort outdated and inaccurate, even potentially obsolete. These tools are also instrumental in reducing time spent with the budgeting process," adds Bogiages. "Using advanced budgeting and forecasting technology, organisations can reduce the time it takes to compile budgets by automating and streamlining many of the processes involved."
Bogiages states that, for example, collaboration enables many people to work on their areas of the budget simultaneously, while creating a full audit trail. This can also be linked to a workflow system, which ensures that the hierarchy of approval is followed.
Furthermore, he adds, it enables deadlines to be closely monitored and bottlenecks to be addressed, creating greater responsibility and accountability. Removing manual elements, such as spreadsheets, will help to reduce the risk of error, delivering a "single version of the truth"' that enhances the accuracy of budgets and forecasts. These tools can also significantly shorten the budgeting cycle and provide the ability to create rolling forecasts that can be reviewed more regularly.
"Aside from these advantages, budgeting and forecasting technology can also provide a host of other benefits to organisations. However, while these tools can go a long way towards solving budgeting and forecasting challenges, organisations need to be careful not to fall into the trap of over-complicating their budgeting just because the technology allows for it," explains Bogiages.
He also points out that through the use of advanced technology it is possible to budget according to hundreds of key performance indicators (KPIs).
"This means that organisations can lose sight of the actual business drivers – not everything carries the same level of importance. Adding hundreds or thousands of KPIs adds layers of complexity, but no additional value, nor does it increase accuracy, since the result is a lack of focus, which can cause errors to creep into the decision-making process," he says.
Bogiages concludes that all budgeting items and levels of detail need to add value, otherwise they only add complexity, which in turn adds time to the budgeting cycle and erodes the benefit of using advanced technology.
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