VideoManaging data can be a real pain (your Brent Spiner joke here).
In fact, Alan Yong, a veteran technology analyst at Aberdeen Group in Boston, says he was shocked to discover that users still list data integration as one of the biggest hurdles in implementing budgeting and planning (B&P) software. Even with recent advances in financial portals and application program interfaces, CFOs still report sizable headaches in getting B&P software to access information stored in far-flung computer systems.
Compounding the pain: Many companies are moving away from once-a-year budgeting, choosing instead to go with hybrid annual-rolling forecasts. Those applications, fueled by real-time updates and analysis, don't offer a heck of lot of insight when parsing data from 1963. "Even top-flight B&P solutions fall short if the legacy system it's pulling data from is not running in real time," notes Yong. "The data flow remains disjointed."
Very Retro
Typically, that disjointing starts when companies attempt to bring together scads of spreadsheets scattered across scores of departmental applications. As e.Intelligence CEO Richard Tanler notes, it's hard to know whose data to trust when tens of thousands of Excel files flood in from every corner of a company — often in a willy-nilly fashion. Such ad hoc management of data, says Tanler, leads to all sorts of troubles, from security snags and input errors to spreadsheet formats that discourage adjustments after a budget is in place.
If this all sounds discouraging, buck up. While data may be the root of the budgeting and planning problem, it's also the solution. Experts say data warehouses — those massive storage devices companies starting buying in the mid to late '90s — can actually bring a little sanity to the budgeting and planning process. "Companies never thought that the biggest aid to planning would be the data warehouse," declares Tanler.
Indeed, finance managers have mostly used data warehouses to see what has happened at a company — not what might happen. In fact, Tanler estimates that 80 percent of the data warehouses in use today lack detailed planning data. "If those [planning] numbers exist, they are probably in a spreadsheet somewhere," he claims. "But they're not connected to anyone else's spreadsheet."
Take the case of Lands' End, the Dodgeville, Wisconsin-based retailer. For years, management at the direct merchant relied on a homegrown spreadsheet when making budgets. By all accounts, the proprietary program was not nearly up to the task. Patrick Gilbert, director of financial planning and analysis, says the in-house software created a nightmare for finance staffers trying to consolidate information at the department and account level. "It used to literally take days to make simple changes." recalls Gilbert.
Last June, management at Lands' End finally decided to ditch its in-house setup. Within five months, the company rolled out an enterprisewide B&P system. Gilbert says it's proved to be a real upgrade. For example, using the old software, there was no easy way for Gilbert to enter an employee health insurance upgrade that would trigger an across-the-board price increase. "Now," Gilbert notes, "I can make that kind of change in a heartbeat."
The Lands' End financial planner says he had another reason for investing in a new B&P system: He needed better management of an uneven revenue cycle. "Our business doesn't fit a fiscal timeframe," notes Gilbert. The company's call center operates 24 hours a day. Specialty catalogs — which drive additional revenue — supplement regular catalog mailings. And the gift-giving season is no longer relegated to December.
With the vendor-built B&P application in place, Gilbert now issues monthly budget reforecasts that can include consolidated and departmental reports. His next goal is to move into seasonal forecasting, which mirrors how the company's merchandising and production units operate. Notes Gilbert: "Lands' End wants to know what's around the corner."
Details, Details
The desire to avoid nasty surprises is not limited to senior level executives. Managers at operating units, divisions, and subsidiaries are also generally keen to produce more accurate forecasts — and thus hit their numbers.
Such is the case with Caterpiller Logistics Services, the Morton, Illinois-based unit of heavy equipment manufacture Caterpillar Inc. According to David Swanson, a business analyst at Cat Logistics, the unit's business resources department collects 550 separate profit-and-loss statements in one standard template. That template then gets rolled up and sent to the corporate database. But unlike users of some older B&P software, Swanson is able to pull down consolidated data from the parent company. He then uses the application to break down the corporate numbers into lower-level detail to improve unit budgeting and planning.
When the data is downloaded, for instance, Swanson can look at consolidated travel expenses by region, department manager, unit vice president, or any other defined parameter. The system also helps with currency translation. That's important, since management at Caterpillar Inc. wants all foreign unit sales figures adjusted back to the beginning of the year. Without the adjustment, Swanson says it's not always easy to tell if an operating unit turned in a solid performance — or merely benefited from changes in forex rates.
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