When to select the fine software over a simple budgeting tool.
Are you fed up with spreadsheet budgeting and ready to invest in an automation of the process? The big question is, which software solution matches your requirements and challenges?
Generally, there are two ways to go; You can choose a simple budgeting tool or a large, fine software solution for Corporate Performance Management, financial planning, or whatever you may call it.
In this article, I will enlighten you about what Corporate Performance Management is, and when you should choose one of the large solutions over a simple budgeting tool.
Learn more about Corporate Performance Management
Corporate Performance Management was first used as a term by the research and consultancy company Gartner in 2003.
In short, Performance Management is the ability to optimise business performance by continuously streamlining strategy and goals with efforts and activities.
That makes Performance Management a focused access to databased business management, involving more tools, methods, and processes. The focal point is data used systematically to monitor and analyse performance with the intend to make adjustments and implement new activities.
You can for example adjust purchase, production, and staff based on the valid insights, which is why optimising of parameters, such as stock and earning capacity, are some of the benefits that can be achieved by working towards Performance Management.
Software for Performance Management provides for extended budgeting
Budgeting is an important process in Corporate Performance Management. This is where you, based on your business strategy, define financial goals, and prioritize resources across the organisation.
Therefore, you will often meet Performance Management software when searching the market for a budgeting solution. But opposite the dedicated budgeting tools, Performance Management includes more functions for financial planning and analysis, which will provide for an extension of the traditional budgeting.
Software for Corporate Performance Management typically includes:
- Customized dashboards and ways of automatic reporting. That will provide real-time insight into areas such as finance, purchase & stock situation, as well as sales and order inflow, enabling you to follow up on budgets and improve performance.
- Module for financial consolidation across companies, allowing you quickly and easily to analyse and plan for the entire group.
- Fast and dynamic operation with rolling forecasting, successively letting you plan operation and activities on the same data basis.
- Distribution motor, automatically providing the key persons of the company with updated insight.
- Extensive analysis opportunities, allowing you to test scenarios, model profitability, and make ABC analyses.
This makes a solution for Corporate Performance Management much more than a tool for easy budgeting. It is software that meets all needs for financial planning and analysis.
Now, the question is – do you have the need?
When is the right time to switch to a Performance Management tool?
Only you can tell, which solution suits you best. When we discuss automatization of the budget process, the following issues are always included in the dialogue about how to create the best solution for your company.
How big is your company, and how are you organised?
It is not always about size. However, a parameter such as number of employees is a good indicator for the type of solution you need.
Usually, we recommend companies with less than 20 employees to go for a simple budgeting solution.
It often includes less internal – and less complex – processes, which means that the budgeting task and financial budgeting are less significant in the daily operation.
If you have more than 20 employees and ambitions about optimising your performance, a larger Performance Management tool may be the solution for you.
What is your level of ambition – and what are you prepared to offer?
Would you like to expand the traditional, annual budgeting with dynamic planning methods such as rolling forecasts? Then we recommend you examine the market for budgeting solutions that go further than ’just’ streamlining budget spreadsheets.
Modern, financial planning bases on large amounts of data, so if you aim at adapting a data driven access to your business, it will require more power than is typically available from the simple budgeting tools.
But one thing is having the ambitions. Are you at all ready to embrace the technological possibilities?
The larger solutions often boast of allowing for Artificial Intelligence and Machine Learning. And no matter how attractive that may sound, few companies are presently ready to base their financial planning on raw computing power. More than 70% of those surveyed in a survey by Gartner reply that AI and ML is not a priority.
Careful harmonisation of the level of ambitions and actual capability is therefore highly recommended before choosing your budgeting tool.
How is your present software-setup?
Finally, you should have a look at your present software solutions.
If you already have a well-functioning BI solution and a dedicated system for financial consolidation, it probably will not make sense to add a large Performance Management solution.
In this case, you would be better off selecting a dedicated budgeting tool, that can be implemented in your present setup.
A scalable budgeting solution may be the happy medium to Corporate Performance Management
Even though all budgeting solutions are scalable to a certain extent, scalability is a significant characteristic for several tools – including InfoSuite.
A scalable solution allows you to start with the core product – a dedicated budgeting tool automatising your budgeting process.
Add-on modules for BI, consolidations, cash-flow management etc. ensure scalability, also making the solution match your future requirements.
It is a model that addresses widely, as it often forms the basis of a fine compromise between the current praxis of the company and the ambitions of the management with Corporate Performance Management.