Important Considerations for Budgeting Software

Budgets are often prepared with the use of spreadsheets. As an organization grows and becomes more complex, the use of spreadsheets must give way to formal budgeting applications. A database of spreadsheets with increased functionality can significantly improve the budgeting process. Here are some features to look for in formal budgeting software:

•  Database Functionality: Each budget dimension (cost center, general ledger account, business segment, etc.) should stand separately so that data can be mapped against each dimension. This allows the user to view budgets by whatever x and y dimension he or she chooses.

•  Bi-Directional Calculations: It should be easy to make random changes to budgets within any level of the organization. Changes should be made from the top and the bottom at the same time. For example, a 5% cut to all departments is made and at the same time, the Marketing Department Budget increases its line item for research.

•  Multi User Sharing: The budget system should not be restricted to any single user. By allowing users to share access to the same database, duplicative procedures are eliminated. Obviously, the budgeting system should include line item security controls for each dimension within the system.

•  Easy to Learn & Use: The budgeting system should be simple and data entry should be self-explanatory. A spreadsheet like feel can help reduce learning time since most professionals are very familiar with spreadsheet programs.

•  Customizable: The actual calculation logic should be subject to modification by the user since one size does not fit all. Users need the ability to customize how budgets are prepared to meet the needs within the organization.

•  Audit Trails: It should be easy to tell who made a revision to the budget. The amount and variance associated with the revision should be easy to identify within the budgeting system.

•  External Importing of Data: The budgeting system should be able to import data from external systems. This can streamline the process and make budgeting more of a value-added activity.

Good budgeting programs should include features like "what if" analysis and customization options at each budget control point. The real power of automating the budgeting process can be found in consolidating large volumes of data and integrating all budget control points into a single, unified budgeting system.

One alternative to budgeting software is the use of Application Service Providers (ASP's) for the overall budgeting process. This so-called e-planning alternative offers some big advantages over formal installation of enterprise software:

•  Rapid deployment throughout the entire organization.

•  Bypasses the costly life cycle of designing and implementing formal programs.

•  Ensures consistent integration throughout the entire organization

•  Instantly transforms budgeting into a dynamic, real time process where on-line templates are used to update budget information.

Whichever option you choose, budgeting software or ASP's, you will need to have a process that is flexible and responsive to constant change. The single biggest problem in budgeting often boils down to failure to integrate the process. This should be a key concern in whichever option you choose.

matt evans photo Written by: Matt H. Evans, CPA, CMA, CFM | Email: | Phone: 1-877-807-8756

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