Research Found That 37% of CFOs Say Their Approach To Enterprise Budgeting Is Valuable. But ALL Think It Needs Improvement.
13 April 2015
With more and more finance resources dedicated to regulatory compliance activities, CFOs run the risk of falling behind or settling for just running in place. Either choice means that the finance function limits its ability to perform high-value, forward-looking analysis. Many CFOs are relying on the basic historical reporting activities required for statutory and other financial statement preparation according to a new research report out of the USA from Grant Thornton and the American Productivity and Quality Centre (APQC).
In fact, only 37% of CFOs and finance leaders say their organisation’s approach to annual budgeting is valuable, and, of these, all think it needs improvement. An additional 25% of the CFOs and finance leaders who were polled about the budgeting process said it is somewhat valuable, but the annual budget quickly becomes obsolete. Seventeen percent said the annual budgeting process is very valuable, but, of those, none use the budget as an absolute baseline measure.
With continued pressure to minimise risk and deliver strong growth, we know that CFOs need to understand the levers that drive the business to then make strategic, forward-looking decisions which should be based on accurate information. So why for many isn’t the enterprise planning process supporting this? It comes down to the tools we use and our ability to deliver thorough, sophisticated planning and forecasting, the time it takes to do this and the resources we have on hand to deliver.
Of the finance leaders surveyed, a 56% majority said they report using a combination of spreadsheets and dedicated software for FP&A and internal reporting, while nearly 39% still use spreadsheets alone. The report showed that of the 40% of finance leaders that did rate their current financial planning and analysis, or FP&A, capabilities as effective, 62% said their staff are too buried in basic financial management duties to improve FP&A. Systemising and automating FP&A capabilities can not only free finance resources from transaction processing but can also generate value as a strategic enabler by making the move to rolling forecasting, driver-based planning and scenario analysis to deliver accurate insight and help steer the business.
The key is to use enterprise budgeting, planning, forecasting and reporting software that provides these sophisticated planning capabilities in a cost effective way that can easily be administered within the corporate finance team. One-quarter of finance leaders surveyed say that some work is currently enabled by cloud technology and 22% say their finance team is considering or planning a move to the cloud. Gartner in its recent 2015 CPM Magic Quadrant just released cites moving finance applications to the cloud as one of the top considerations for corporate finance teams to be more effective. So if your enterprise budgeting, forecasting or reporting process isn’t delivering, then perhaps it’s time to review and re-energise the process and the tools you’re using.
