Did you know that more people die in crosswalks than jaywalking? The reason is because people have a false sense of security in a crosswalk and don’t feel compelled to pay attention to what is going on around them.
The same can be true for other aspects of life…or business for that matter. People (and companies) hate risk and believe that continuity and staying the course is the safe path. But in todays rapidly changing world organizations can easily get blindsided through lack of change or innovation.
Take the budgeting process as example. The role of the budget is to justify how a department will fund the strategic plan of the organization over the next fiscal year. And one of the best ways to achieve a successful, thoughtful budget with accurate numbers (and improve financial results) is to get more departmental participation in – and ownership of – the budget. So for most organizations, budgeting has moved from a mechanical and routine exercise to “check the box” for the finance team to a “mission critical” strategic communications process with profound impact on an organization’s success.
Despite this shift in strategic status for budgeting, most organizations haven’t changed their budgeting process – using Excel-based spreadsheets to manage this “mission-critical” function. With this approach, department heads do not fully embrace the budget process because the Excel templates limit their ability to budget to strategy or limit their ability to budget their areas the way they think about their areas. So they end up hating the budgeting process, viewing it as a chore, and end up budgeting to history or politics instead of strategy. Plus, studies have proven that 92% of ALL spreadsheets in the world have errors in them. And yet, most organizations still use inflexible, error-prone Excel spreadsheets for budgeting! Why? With a natural human tendency to avoid change and risk, organizational leadership turns a blind eye to the inherent problems in their budgeting approach and convince themselves that the current method remains the best one.
But this lack of acceptance of change and improvement actually turns out to be the high-risk approach. When a change in the budgeting process does occur, in many cases the impetus for that change i was that management, or worse, the board, found an error in the Excel-based budget. So “safe” becomes “risky”. The financial professional who takes the initiative and challenge the current limitations in their Excel-based budgeting process (including the rekeying of data, lack of flexibility, lack of budget approval workflow, lack of budget review reporting and analysis) become the people who actually are the ones who are playing it safe. The change and improvement in the process allow them to rise and become more strategic to their organizations. They are the people recognized as the ones to make finance a strategic partner in the company.
So safe is the new risky. Play it “safe” and educate your organization about the value of implementing a true, dedicated budgeting application and the criticality of eliminating Excel for budgeting. If you don’t you will continue your slow decline into obsolescence.