Organizations normally want their department heads to hit some targeted expense number in the budget process. They set corporate guidelines and ask each department to stay within those guidelines.
But sometimes, individual departments have ideas, programs, activities or initiatives that they would like to propose that fall outside of the “standard” guidelines. These initiatives could be one-off expenditures, could be a program to support a strategic objective, or could simply be some good idea that either increases revenue, reduces expense, or provides meaningful impact to the organization.
These strategic initiatives are departmental specific. In other words, they may only touch the department submitting the budget and no other department in the organization. They also may touch multiple accounts within the account structure. For example, the proposed initiative may require expenditures in consulting fees, the travel account, and in legal fees.
How can we make special requests for special initiatives that touch multiple accounts and are specific to an individual department? This is a problem that has plagued organizations and budgeting applications forever. The solution to this problem requires special functionality that allows for flexibility in how a department head makes these requests, proper documentation to justify these requests, a workflow that allows for approval of the requests all the way up the line, along with unique reporting that allows management to see and approve or disapprove them. Plus, if the individual request is not approved, the budget system needs to be smart enough to take the right amount, from the right month, from the right accounts in the right department so that people don’t have to remember how they grossed up a particular account for the request.
The user experience for this process is critical for success. It needs to be crystal clear to department heads how to propose unique initiatives and crystal clear to managers where to find them and how to approve or reject them. It should also require no support from either finance or IT as this would defeat the purpose and cost too much in support for the organization.
The organization also would need a way to look at each of these individual departmental requests and determine which of them will be approved and which will not be approved as part of the standard budget review process. This approval will need to be done at each level of the organization structure beginning at the bottom and going up.
Because of the strategic value of these types of special initiatives (in increased revenue, reduced expenses, and in the less tangible – but equally important – increase in employee innovation and ownership) – initiative-based budgeting or activity-based budgeting is becoming more and more popular in organizations today. Having the right functionality woven into your budget process with no central administration required for each initiative or activity is a must-have for this to work properly. Organizations that want to implement such capabilities are turning to commercial grade and cloud-based budgeting applications that have this unique functionality woven in. There are solutions to this unique challenge but they will require you to get rid of your cumbersome Excel-based process and replace it with a more robust and user-friendly purpose-built budgeting system.