In our previous blog post Why You Need More than Excel, we discussed the various problems with the singular reliance on spreadsheets. We discussed that although Excel is extremely useful and plays a key role in reporting strategies for businesses, it required the manual rolling of data, had no mechanism in place to catch human errors, and lacked data integrity. Despite many of these issues, many companies still singularly utilise spreadsheets for their budgeting process.
So what are some more benefits of implementing a system driven approach?
Traditional methods of budgeting using spreadsheets are extremely time consuming. The general process by finance teams of issuing templates in the form of a P&L based on historical data, takes a significant amount of time to compile. Furthermore, where multiple spreadsheets are utilised, a significant amount of time is used consolidating the data to extrapolate information to use for budgeting. A systems approach can facilitate median results based on multiple years, which can better identify historical trends, and allows finance team to focus on the budgeting. One of our previous clients reduced the amount of time they spent developing the budget by 40%. Embracing systems reduces time wasted, and leads to a more efficient process.
2. Employee Retention
Investing in a system is not just investing in a more automated and time efficient product. It’s also about improving the work quality for your people. Budgeting season for finance teams can be a period of intense stress and overwork. Losing a staff member because they are overworked can be a significant loss to the organisation. The impact of losing a staff member means additional costs in recruitment, as well as on-boarding, and training. It also means a loss in productivity and capability. Investing in a system gives staff ‘adequate time to proactively respond to any opportunities or challenges instead of trying to catch up because the entire financial planning process takes too much time’.
3. Providing Agility and Flexibility
It is essential in our modern-day fast-changing environment for companies to be able to prepare for any sudden changes. There might be a large event which disrupts the business environment, or strategic changes within the organisation. The use of spreadsheets means that the data is not interlinked. Thus, users have to manually go through multiple spreadsheets to manipulate the values. It’s a time consuming process which also carries a risk of data inconsistency and error. A systems approach gives businesses the ability to quickly respond to these changes.
A common headache for finance teams is having to make executive driven changes to their financial models quickly. Organisations with the right system implementations can make these changes relatively quickly and easily and with confidence in the data.
The limitations of excel in the planning process does not mean excel should be dismissed, it is still a useful tool and an integral part of many companies in budgeting, planning and reporting strategies, and will continue to play a major role in organisations, not least because of the broad base of highly skilled users. But considering all the benefits a systems approach can bring, organisations may want to think about how new technologies processed value to the planning and reporting process.
If you would like to inquire about any of these points in detail about implementing a systems approach to budgeting and planning contact us at www.oyb.com.au