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Why Locked Down Budget Templates Are Failing You

Excel is an incredibly flexible tool. Anyone who’s worked with it for more than a week knows that. It’s a blank canvass where you can write any formula your imagination can conceive. But when it comes to using Excel for budgeting, Excel becomes the exact opposite of flexible. It becomes rigid as stone. And this is by design. Have you ever known any Finance professional that didn’t want to lock down a budget template?

That’s the great paradox of Excel. In one form, it’s the very definition of flexible. But in the form of a locked down budget template, it becomes rigid.

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So it’s worth looking at why people (namely the finance professionals running the budget process) want to lock down budget templates to start with. The basic rationale for locking down budget templates amounts to this:

  • If you don’t lock down the budget template, users might insert rows or overwrite formulas or break links or otherwise mess up the templates
  • All the roll ups and reporting will be corrupted If users mess up their budget templates

That’s sounds like a good rationale for locking down budget templates, but you’ve now completely undermined the fundamental value of Excel’s flexibility.

And after you’ve stripped away Excel’s flexibility, what are you left with? Just a template for inputting numbers and rolling them up. While that might meet Finance’s need for consolidating the budget, it adds no value to the department heads who need to develop defensible budgets to begin with.

So what you find… if you turned budgeting into a Reality TV program and followed Budget Holders around with a video camera… is people going offline to develop their budgets. Offline meaning developing their budgets with shadow excel spreadsheets, or on legal pads and calculators. And then as a last step, keypunching their numbers into the official Finance budget template.

What could possibly go wrong?

The answer is “everything”. We’ve all lived through the budget process that takes too long, delivers too little value, and generates a chorus of “That’s not MY number.”

Now in response to all this, some Finance departments have labored to create “user friendly” budget templates. But “user friendly” means something different to a CPA in the accounting department than it does to… well almost anyone else in the organization.

Case in point. There was a Finance Manager of a professional services firm who thought the “old” budget template that asked for Fee Income projections should be updated. Specifically, he wanted the managers to enter the number of practitioners at each level and their billing rates and their utilization rates to arrive at projected fee income. It was all very logical.

The problem was that’s not really how the managers thought about the business.

The managers knew what deals they were working on, for which prospective clients, and what the likelihood each would close. They also knew the projects they were already engaged with, and when they would come to an end. In other words, the managers thought about projects and the dollars associated with those projects.

So when they were handed the new “budget model” they were… not happy. But here’s the larger point. If a manager did want to develop her fee income projections the way Finance thought was a good way to go about it, well that’s great. They should be able to do that. But if others wanted to develop their budgets in an equally valid – but different – way, they should.

That’s exactly the flexibility you want to have in a budget system, and it’s precisely what can’t be achieved in a locked down budget template.

What’s surprising is that even budget systems costing hundreds of thousands of dollars have adopted “the Excel way.” Meaning, Finance can create any sort of budget template you want, but once you’ve selected it, that’s it. The budget template is locked down, just like it is in Excel. The budget now becomes a rigid tool requiring a trained administer to alter. One size fits… Nobody?

The real goal has to be increasing flexibility while maintaining (or even improving) control. If you’d like to continue this thread and see what we’re talking about, click here or use the link below:


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