Planing and Budgeting: managing spreadsheets or making decisions?
By Abner Huertas
Spreadsheets are the most used tool for planning, but… is the right one?
Through the years I’ve been a witness of how companies have adopted the spreadsheets to do the planning and budgeting, and all of those companies have the same issues: too many spreadsheets, «#REF» errors, lost linkings to other spreadsheets, file corruption, and more. Can you relate to some of these?
These might be technical issues, but there’s more, there are more profound issues that many companies do not even realise: costly waste of time for maintaining a useless methodology, lack of prediction on time, not making decisions when they have to, and many times there’s an illusion of control.
Let’s brake the spreadsheet problem in two parts: technical and decision making.
Technically speaking, spreadsheets can become a waste of time. Doing the budget with just spreadsheets consumes precious time in non-value activities such as: consolidation, repairing corrupted spreadsheets, re-doing the consolidation for each scenario, rebuilding reports for new periods, etc. Don’t get me wrong, spreadsheets are really useful, but when we want to make decisions that have a positive impact in our business, we need to think beyond.
Many companies spends one to four weeks just consolidating the spreadsheets, plus more days to build reports, and more days if an adjustment is required. I’ve heard many times from the «Spreadsheet administrator» that they feel early to begin the budgeting season, just because of the many files they have to manage.
Now, with decision making the matter is simple: when the most part of the time is focused in the consolidating and building reports, what time is left to make decisions? If we think that the budget is just to meet a regulatory requirement, we are loosing valuable information.
Decision making with the budget helps to foresee possible issues, money requirements and even capacity analysis.
How can we flip the coin and start focusing in making decisions rather than focusing in the spreadsheets part? For that we need technology. In the market there are many tools for Planning and Budgeting. I’ve been working with SAS Financial Management and with Prophet Software for the past five years.
With a software application, and the implementation of a planning methodology such as Beyond Budgeting, your organisation will start focusing in the methodology rather than managing multiple files, and with this the result will be an agile planning that results in making decisions.