Did you know that less than 50% of companies perform their budgeting well?
A recent study conducted by Ventana Research found that many organizations are still using standalone spreadsheets, which are notoriously difficult to maintain and are often riddled with errors.
Faced the stress of the upcoming budgeting season, many finance professionals are wondering, how can I improve my company’s budgeting processes? What is the best alternative to spreadsheets?
In today’s blog, we’ll compare a few spreadsheets alternatives to help you find the best budgeting software for you.
The Problem with Spreadsheets
Is your organization still using spreadsheets? Don’t worry, you’re not alone.
Ventana Research found that 74% of midsize and larger companies are using Excel for their planning and budgeting processes.
What is so appealing about spreadsheets?
Many finance professionals have accumulated years of experience with Excel, although many only use a fraction of the program’s features.
It seems that many finance teams continue to use spreadsheets because they’re familiar with them. Many people have never conducted their budgeting or planning processes without these files at their disposal.
Also, many ‘expert’ spreadsheet users have a vested interest in continuing to use the complex systems they’ve created using large spreadsheet files. However, these files are often hard for other staff to understand and can leave a business high and dry when the ‘expert’ eventually leaves the organization.
The question to ask is, whether your company’s use of spreadsheets for budgeting gives you value?
From Spreadsheets to CPM Solutions
Most companies that switch to an Excel alternative, such as Corporate Performance Management (CPM) software, do so because they have realized the limitations of spreadsheets.
Corporate Performance Management (CPM) is a category of business software application that is used by companies to manage processes in the finance department.
In researching budgeting processes, Ventana Research found that many companies see significant savings when they switch to a dedicated planning and budgeting software, such as CPM.
Some of the measurable benefits of implementing CPM software include:
- Easier to deploy
- Better integration with other systems
- Data analysis that goes way beyond pivot tables
- Increased productivity
What’s more is that many CPM vendors operate under the Cloud services paradigm (Software as a Services or SaaS), which delivers adaptable, easy-to-use software solutions that do not require programming or complex formulas to make them work.
People in finance can learn how to drill-down to data and build business models and reports without being spreadsheet experts.
True Cloud CPM products are also configurable by finance staff and do not require customization in Excel or by IT professionals.
The bottom line is that people who have found the best budgeting software for their organization very rarely go back to spreadsheets.
Why You Should Be Wary of CPM Imitations
As you begin to research potential CPM vendors, you may come across a class of products that claim to be CPM software but are primarily spreadsheet-based.
For many early in the research process, a CPM solution that uses spreadsheets as the main user interface may seem like an appealing option. However, an important distinction needs to be made.
Spreadsheet-based CPM technologies have countless downsides, many of which are not present in true CPM solutions.
When you purchase a spreadsheet-based product, you will not have a usable solution without extensive customization to suit your needs. Spreadsheets have limited capabilities on their own, and often require a consultant to build the business model.
This technology also requires the correct version of the spreadsheet software. For example, the standard installation is 32-bit, but many require the 64-bit version of Excel.
This technology can also require other prerequisite components such as specific versions of .NET frameworks.
When ‘add-in’ functionality is required to improve the technology, the skill requirements to use the product grow exponentially. This can require complex, undocumented cell formulas and macros, which utilize a programming language.
Some of these technologies also require one or more excel add-ins. These will extend the start-up time whenever the spreadsheet program is used.
You should also be wary of the hidden costs associated with spreadsheet-based products. Many vendors will quote low customization costs, only to increase the price once the customer is dependent on their services.
Spreadsheet-based systems are usually too complicated for finance professionals to develop or maintain and so, many companies remain reliant on their vendor for changes. If the vendor’s consultants are busy, finance users may have to wait weeks or months for their changes, putting work at a standstill.
All these requirements will involve upgrading or reinstalling software on workstations each time components change. IT will need to be continually involved to install and maintain the required software.
The Best Budgeting Software for You
Selecting the best budgeting software for your organization is no easy task.
Spreadsheets still have a place in the armory of the Office of Finance, but this does not mean they can be used for everything.
Companies that want to avoid the costly downsides of imitation CPM software should look to adopt true Cloud CPM products.
Here are a few key takeaways:
- Companies should look to improve their budgeting processes by moving away from spreadsheets
- CPM software offers significant cost savings to the Office of Finance
- Be wary of spreadsheet-based technologies marketed as CPM solutions