If there are two things that many organizations have in common, it is that they all have limited financial and IT resources – and they are all trying to do more with less, while simultaneously keeping costs down. There isn’t a lot of excess cash for large software or hardware purchases.
Yet despite this lack of resources (or perhaps, because of it…) and because of the need to control costs, many organizations are in desperate need of a better budget process. Most of these organizations try to budget using Microsoft Excel budget templates. This Excel process has tremendous hidden costs associated with it and also limits the effectiveness of a mission-critical application in today’s world.
What does Excel really cost you? First, there are hidden costs in Excel budgeting due to the amount of work finance has to expend in building macros. Then the financial staff needs to manually manage all of these spreadsheets throughout the budget process – and the (many) various iterations thereof. Someone has to manually check to make sure that budget managers have not intentionally, or unintentionally, modified the templates – which can result in errors. The templates need to be manually consolidated and then, in most organizations data is re-keyed or transferred to other spreadsheets for reporting and analysis purposes. This results in massive hidden costs, in terms of labor and time.
But since 90% of spreadsheets in the world today have hidden errors in them, the greatest cost of using Excel for budgeting is the possibility of preparing a budget with errors…errors that result in embarrassment to the financial team, the senior business officer, and the president.
Speaking of the president…they want to see a budget that supports the strategy of the institution (versus one that is based simply on history or politics). And department heads want to be able to budget for their areas and departments the way they think about them.
Of course the IT department would prefer to see a database application that protects the integrity of the information, allows for easy backup, controls security and has all of the functionality and flexibility to prepare a budget uniquely by department. However, IT does not have the time or the money to support a new application with hardware or personnel resources.
So across the board, there is a need for a better budgeting process – and the solution resides in the cloud.
Cloud-based budgeting (also known as SaaS, or Software-as-a-Service) is perfect for any organization. This approach solves the problems of all the major constituents in the process – allowing stretched finance and IT teams to achieve (much) more with (much) less. Here are some reasons:
- With cloud-based budgeting products, such as XLerant’s BudgetPak, budgeting intelligence is built right into the application. It is a database application. It naturally understands the budget process and workflow, has the flexibility to allow budget managers to budget their areas the way they think about their areas – and allows them to demonstrate how they are budgeting to the strategy. Plus it allows these budget managers to budget and report from anywhere (anytime) using all the popular hardware and browsers including PC’s, Mac’s, iPads and other devices.
- Finance gets a prepackaged and completely configurable solution so that there is no need to program anything. Plus the approval workflow is built in, so that the process supports organizational approval up the line. And cloud-based budgeting uses a structured database so that there is no data to check and no data to manage.
- IT gets a huge advantage as well. There is no hardware to buy and maintain, and no people resources to apply since the vendor manages the entire application. Security, monitoring, backup and all functions are included in the service.
- The other advantage is that there is no upfront investment to make in hardware or software. Cloud-based budgeting is offered on a subscription basis where the costs are spread evenly over a 7-8 year time frame. This provides a lower-cost and predictable cost structure for organizations trying to hold down costs.
- Also implementation times are dramatically shorter.
Cloud-based budgeting allows for complete implementations in around six to eight total weeks –reducing the impact on both finance and IT teams, at substantially lower costs than on-premise computing.
- Finally, the organization gets a better budget process, with greater engagement in the process which leads to ownership of the numbers by department heads. The process produces better results that are tied to strategy and all of this can be accomplished in a shorter elapsed time with no errors.
Cloud-based budgeting is the best alternative any organization. Cloud-based budgeting offers safety, cost, and functional advantages – and provides advantages to every constituency associated with the budget process.