The right time to move Excel budgeting to your CPM tool

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Today, I was talking with a customer about budgeting.  My customer does some fantastic reporting with CALUMO, but they don’t use CALUMO for budgeting - instead they use Excel. 

Today, I was talking with a customer about budgeting.  My customer does some fantastic reporting with CALUMO, but they don’t use CALUMO for budgeting - instead they use Excel.  The company is a significant organization - with revenue in the $100's of millions. Yet they are more than happy in Excel for budgeting.  And you know what? That’s OK.

Here are the reasons they are going to stay using Excel for budgeting:

1. HQ sets budgets at a very high level

When only a small number of people, usually 2 or less, are involved in the budget data entry process, and the CEO and CFO are setting the budget, it’s going to be simple and high level.  My customer has over 400 departments, but the department managers do not get involved with their budget, it’s given to them.

2. The budget model is very simple

The budget for my customer is actually just P&L. They don’t get into too much detail. Total revenue and expenses are the primary focus.  Now if you have put a budget together by building up payroll models, revenue models, etc., you know budgeting is a more complex and detailed activity, but for some, they don’t care about the detail.

3. Budget drivers (the model) is yet to be defined

Ok, so they do have some drivers for the P&L. Last year, there were drivers like revenue that drove costs and detailed revenue. This year, the expenses drove revenue! The executives then decided they wanted to overwrite revenue and not have it connect to costs other the direct entry based on numbers they felt were right.  Sure, they loosely based the numbers on actuals but only loosely.

Could my customer use CALUMO for this budget process?

Sure. But is there a good ROI? Not in this case. I am a firm believer that organizations need to get their reporting right.  To me, this means having hierarchies, consolidations, calculations, metrics, KPIs, etc. agreed upon and set in stone. People need to be comfortable with these business drivers. We need to reconcile to these metrics and until we do, trying to budget at a detailed level is futile.

If however, the business agrees on the metrics of the business, and have utilized these metrics for a while, maybe have even built a budget model in Excel, even if they have not rolled it out to the company for input, you have the foundations for a CPM tool to help you out.

If you want more information on CALUMO, contact me at wleitch@calumo.com.