Once upon a time, financial planning, budgeting and forecasting was a staid affair, an annual period of days and meetings set aside to divvy up dollars and set targets for the year to come. But because of market volatility, mergers, acquisitions and rapid market dynamics, the process today is more like coaching a football game. You tell your best 11 guys what to do, put them on the field, and watch them react to what the other team does. You remove the injured, you keep redesigning your approach and sixty minutes later someone wins.

 

Because business moves and changes so rapidly today, CFOs have been put on the spot when it comes to planning, budgeting and forecasting. And CFOs face a tougher job, because, unlike football coaches, they don’t have the benefit of watching all the subtleties play out. The CFO’s job is more like sitting in a dark room and having a player rush in from time to time to explain what’s happening on the field.

 

There was also a time when we figured enterprise software was going to help us automate ourselves out of the problem. Integrated products like SAP's OutlookSoft are improving those prospects. But look around the office and you still find all sorts of people tending to disconnected spreadsheets and trying to reconcile figures.

 

Last week I received the results of a survey conducted by BPM Forum, a network of executives in financial planning, strategic planning and operational positions representing some 2000 businesses.The study, Perfect How You Project, Assessing Diligence and Discipline in the Planning Process, studied 340 finance professionals and is the expected sum of all fears in the planning, forecasting and budgeting world.

 

Or maybe it’s the fear of all sums. “Almost unanimously these executives feel that the budgeting, forecasting processes are very important to their organizations but they don’t seem to be having a lot of fun with the process,” Dave Murray, Executive Manager of the BPM Forum told me. In fact, about 40 percent of respondents said they experienced a high degree of anguish and frustration with the budgeting process and that percentage increased to more than half for large and medium-sized companies with more complex processes. More than one in five characterize the process as a huge time and resource drain.

 

Murray says the three main problems identified by respondents are a lack of information availability, the fact that the business is changing too quickly to accurately budget and project the financials, and the difficulty encountered in collaborating with others in the organization. “The issue of collaboration is the top concern for mid-sized and large companies,” he says.

 

Just as telling, the level of frustration could be correlated to the degree spreadsheets were the de facto finance tool. The respondents were 50 percent more likely to have a high degree of frustration if they had a high dependence on spreadsheets and four times more likely to describe the process as a huge time drain. Seventy-six percent of all respondents and 73 percent of large companies said they are still dependent on spreadsheets.

 

That would seem to open the door for more cohesive finance tools to ease the pain, and indeed, the survey was sponsored by Adaptive Planning, a software-as-service vendor to mid-sized companies in the software, high-tech manufacturing, health care and non-profit sectors. (A variety of vendors serve different parts of the planning/forecasting market including Capterra, Prophix, HostAnalytics and several others.)

 

But can finance software address the collaboration problem? I’d tend to disagree and both Murray and Bill Sowell, CEO of Adaptive Planning concur that organizational structure culture are likely the greater problems. They both made the point however, that Web-based software that marries changes across income statements, balance sheets head counts and capital budgets does provide a rallying point to engage bottom-up awareness of moving plans and results.

 

The first part of collaboration is getting everyone on the same page. “By delivering financial reporting to the line managers and decision-makers, plan versus actual through dashboards, gives them timely information but also [makes them] accountable for the results because they can’t go back to finance and say they didn’t have the information in time,” Sowell says.

 

But the second half of collaboration (and the underlying pain for the CFO), lies in what’s going on behind the numbers, understanding what makes plans change and how that affects the greater plan overall. Sowell says his customers are trying to report more often, not rolling forecasts as much as moving to quarterly to monthly over a year or two. It’s a phased approach and realistically takes a couple of iterations, Sowell says. “The technology part is quick, it’s more about companies getting their approach and people involved in repeat activity. The cultural change takes the longest.”

 

What’s missing, Murray and Sowell agree, are a roadmap and set of best practices for modeling an effective and improved planning, budgeting and forecasting program. That’s something that could become a project for the BPM Forum, but I’ve found several recent and useful articles right in the DM Review archives. You could start with a good overview, an industry-specific set of practices, customer written examples of their experiences with software here and here or a foundational look. Just search planning and forecasting  and visit our CPM channel at DMReview.com and you’ll find much more useful information.

 

I’ll be doing the same and reading up when I get a chance, but first, I have a spreadsheet to tend to.

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