f
l
TAGS
H

Budgeting Problems using BI Solutions

Business Intelligence (BI) solutions have been around for over 40 years.  They form the basis of most budgeting, forecasting and management reporting applications offered by mainstream vendors, and given the relatively low price of newcomers to the BI marketplace, would seem to be an ideal replacement for spreadsheets. As has been covered in numerous articles (see our blogs on spreadsheet hell and Spreadsheets vs. cloud solutions), spreadsheets have some fundamental failings when it comes to involving multiple people, and in the collecting and subsequent reporting of budgets. In looking for an alternative, some organisations see BI tools as being a good, but are they?
If we look at the requirements of a budgeting application, they should have the following capabilities:
  1. A multi-user, multi-dimensional database that allows the organisation to be modelled in terms of how resources are allocated to both accounts and departments.
  2. Have a robust security system that controls what users can see and what they can do.
  3. The ability to load data from external systems, particularly important when loading actual data from the general ledger for comparative purposes.
  4. Be financially ‘intelligent’, i.e. it should know how to perform currency conversions, detect exchange gain/losses, know how to aggregate P&L as well as Balance Sheet items over time (you just can’t add them up or you’ll get the wrong answer), and how to deal with summations involving Drs and Crs.
  5. Workflow that controls when a user can enter data, how it is approved and that prevents changes once it has been submitted.
There are other capabilities that are useful, but for now we’ll keep with this simplified list.
As most people will know from experience, a spreadsheet lacks all these capabilities, which is why budgeting turns into a maintenance nightmare when used for this purpose.  But take a look again at the list and you’ll see that BI tools also lack some of the capabilities – particularly points 4 (Financial intelligence) and 5 (Workflow). Without these two, administrators, like their spreadsheet counterpart, will be forced to ‘code’ around those problems, if it's possible.  For example, the lack of financial intelligence means you cannot write generic rules for adding up data over time.  You will need an ‘if’ clause on every variable.  Similarly, to convert data from local to base currency will also require individual account rules as some will be converted at opening rates, others at average rates, and some at closing rates.  Then what happens with exchange gains/losses?  Where are these posted? With workflow, setting up screens to capture data that are then automatically ‘turned off’ for individual users once they have submitted a budget or forecast is not easy.  That also applies to setting up some form of approval process where individual department submissions can be approved or rejected, which are then sent back to the right user for re-submission.  And how does an administrator know the status of the data?   What users have started to enter data, which users need chasing up?  This too will need to be written and maintained.
For these reasons, a ‘true’ budgeting, forecasting and management reporting system will have these capabilities ‘built-in’  i.e. they do not need to be coded – just turned ‘on’ and ‘off’ as required.  The result is a far simpler set up procedure and easier maintenance. And it need not cost any more.  Specialised budgeting systems such as Financial Driver have all of these capabilities but at a cost that is typically far less than even the lowest cost BI tool. If you’re looking to replace your spreadsheets this year for the annual budget process, then take a look at Financial Driver.  With Financial Driver you get a true budgeting application that:
  • Uses a multi-user, multi-dimensional database where it is simple to model any organisation.
  • Has a robust security system where you control what users can see and what they can do.
  • Is able to load data from external systems, such as the general ledger and other transaction systems for comparative purposes.
  • Is financially ‘intelligent’, i.e. it knows how to perform currency conversions, detect exchange gain/losses, knows the difference between P&L and Balance Sheet data, can deal with summations involving Drs and Crs.
  • Has in-built workflow that controls when a user can enter data, how it is approved.
Don’t be taken in by the slick adverts that tell you budgeting is easy with a BI tool.  As you’ll find out, you could end up replacing your spreadsheet problems with those associated with a BI tool. Why not contact Financial Driver to see how this specialised application could transform your budget process.