• Strategy
  • CFO.com | US

Major Miners

The concept of collaborative budgeting may be both a great idea and a royal pain. But it doesn't look like it's going away anytime soon.

Budgeting and planning software has gotten a whole lot better over the past few years. Most B&P applications are now Web-enabled, which means finance executives can access the programs from practically any location. Almost all the programs slot seamlessly with ERP systems. The latest crop of B&P software is also more powerful than earlier incarnations, and is therefore able to parse gigantic data sets. Many of the applications feature real-time transaction updates.

In fact, about the only thing B&P software doesn’t come with is a radio button that says “Reformat Employee’s Brain.” That’s too bad. The fact is, it’s not particularly easy to get workers to change their views of what the budgeting and planning process is. And as experts note, you don’t get the full benefits of many budgeting and planning programs if you don’t get employees thinking differently about the budgeting and planning process.

Management types are certainly thinking about that process. “Budget and planning is a hot topic,” says Daniel Weinfurter, CEO at Parson Group, an operational consulting firm, “because the annual review process is under review.” Until recently, a company’s divisional budget coordinators handled all things related to the budget, and systematically delivered a single line entry to the finance department. It takes some serious reprogramming — the mental kind — to get finance employees interested in helping create that number.

What’s more, some corporations are now planning to roll out business planning software packages that connect more than 1,000 seats with collaborative applications. Putting a thousand employees to work on a single corporate budget sounds like a swell concept — for an Irwin Allen movie. In the real world, CFOs keen on rolling out collaborative planning programs need to do some serious planning of their own. The trick, according to John Van Decker, senior program director for consultancy Meta Group Inc., is getting workers to see budgeting and planning as a comprehensive business planning process — not an exercise in front-end data delivery.

Not Your Father’s Budget

If the concept of collaborative budgeting is both a great idea and a royal pain, it doesn’t look like it’s going away anytime soon. According to Paul Hamerman, analyst and director at Giga Information Group in Cambridge, Mass., the market size for B&P software licenses grew to $300 million in 2001.

Currently, there are two types of B&P applications on the market. Thin-server software (where most of the application logic resides on a user’s computer) is better suited for a more traditional cost-management budgeting process, says Giga’s Hamerman. Buyers of thin-server B&P programs usually view budgeting as a seasonal — and deadline-sensitive — task. For these users, the budgeting process typically involves brief periods of high demand for system resources.

On the other hand, companies that create rolling budgets usually purchase transaction-oriented, thin-client applications (where the application logic resides on the server). Why? Because rolling budgets require more frequent updates to predict financial results on a real-time basis. While thin-client B&P applications tend to eat up less system resources, they generate a lot of data. That means CFOs must invest in capacious — and expensive — storage systems to get the most out of the applications.


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