Does the traditional budget template itself become an impediment to communication?
I believe the answer is YES. And incidentally, it doesn’t matter if you use Excel or a million dollar system. If it looks like a spreadsheet, and quacks like a spreadsheet — it’s an impediment to communication.
Let’s step back a minute and look at how we got here. Since Accountants created the budget process, and they think in terms of G/L Accounts, it’s no surprise that budget input screens look like spreadsheets. You’ve got a column that list out General Ledger accounts and then there are columns of time periods to enter budget numbers.
This is very convenient for the Accountants, because at the end of the budget exercise they need to add up all the spending in all the G/L accounts. So we’ve taken care of Accounting’s needs. But what about the Managers?
If I want to communicate what I need for a Strategic Initiative how do I do it in this grid? Or what about budgeting for the new Product Launch? Or IT Projects? Or Marketing Campaigns? Or Employee Training Programs?
The answer is – if these programs are in there at all – they are buried in rows of General Ledger Accounts. If you want to see the detail, you’re going to have to go back to source documents that are outside of the system. This spreadsheet template idea for getting a budget developed and documented ITSELF is a barrier to good budgeting and good communication. Whether in Excel or a million dollar system, the spreadsheet look and feel is the fundamentally wrong one to use to promote communication in the budget process.