The Dangers of Budgeting in a Siloed Environment
… and how to avoid getting stuck in budgeting mayhem
by Joseph Denk, Senior Consultant at InnoVergent
Regardless of the size of your business, you undoubtedly have multiple departments that contribute to the budgeting process. This means that when budgeting season comes around, you send out Excel documents and await responses with fingers crossed, sit with each individual and painstakingly input the information into a master document or utilize a software system that allows multiple users to efficiently and easily develop their budget simultaneously.
Clearly your time is limited, which means the first two of these choices would force you to take multiple months to build your budget and leave you incapable of re-budgeting on a recurring basis. At the end of the day, you are left wondering how meaningful the budget data that was put in 3 months ago is … and what about 10 months ago?
Business environments can change fast and these outdated budgets can lead to improper spending and decision making. This means that the best practice for budgeting should be one that allows you to constantly update budgets and forecasts as business drivers change.
These cumbersome budgeting processes often mean you’ll end up with three dangerous silos:
Silo 1: Data Dispersion – Data is dispersed throughout the organization and there is no one place where all this data can be found.
Silo 2: Departmental Separation — Various departments are simply inputting budget figures to ensure the success of their department, with little to no idea of how their performance plays into the bigger picture.
Silo 3: Informational or Decision Misalignment – There are little to no capabilities to re-budget or re-forecast as business changes, thus, creating a “decision silo” that’s not aligned with the current situation.
An Ideal Budgeting Solution for You
How can you avoid these dangerous budgeting silos? The ideal solution should have:
1. One place to store all actuals (GL, census, HRIS, statistical) data from all other systems currently in use.
2. One place for all budgeters to input their data, visualize their performance and understand the impact outside of their silo.
3. Up to date current forecasts and budgets, which allow decision makers to act fast and plan ahead while having to make the least possible number of non data-driven decisions.
When all departments work from the same information in the same software system, the budget produced represents “one version of the truth,” rather than a variety of stand-alone, disjointed budget proposals that do not represent departmental collaboration. Smart decisions across your company start with up to date information and visualizations. In order to promote the smartest, healthiest performance budgeting, silos should be intelligently removed from the organization as quickly as possible.
Ready to take the first step toward easy budgeting? Contact us at info@innovergent.com to learn more!
About Joseph
Joseph successfully manages Adaptive Insights clients at InnoVergent. From project scoping to completion and moving on to ongoing, personalized support, his years of experience with finance and accounting software allow him to find the best possible solutions that meet each specific business challenge, delivering an excellent customer experience.
