E-budgeting: how Web based solutions simplify budget development.

• Author: Hornyak, Steve

Electronic budgeting (E-Budgeting) solutions can streamline and transform the budgeting process at all levels of the organization.

Editor's note: Public finance officers are increasingly presented with new electronic and technological means to improve budgeting. This article originally appeared in the October 1998 issue of Management Accounting, copyright by the Institute of Management Accountants, and is reprinted with permission. Although this article is written for a private-sector audience, the implications for governments are straightforward.

It's budget time!

In most companies, these three words strike fear in employees' hearts. Financial officers and management accountants brace themselves for reconciling reams of spreadsheets that may reveal wildly disparate data depending on order and configuration. Nonfinance employees in various divisions scurry to understand their role in the process and struggle to pull together the facts and figures they hope will appear attractive to management. And fast-approaching budget deadlines invariably will result in weeks of all-night numbers crunching if the process proves to be as bumpy as usual.

Managers in the modern mid- to large-sized company want to work a different way, and a number of additional factors are prompting a change in their philosophy regarding budgeting and planning. Many of these organizations are expanding rapidly, prompting managers to demand precise resource allocation to support growth plans. Operational managers are heavily involved in preparing the company's budget. A tight management plan is contingent upon a comprehensive and accurate budget. A company's officers want the budget completed on time and correctly on the first round. And people in various departments want to know how their piece of the budget affects overall corporate operations so they can do some "what if" scenarios and modeling.

Fortunately, new technology solutions are taking the toil, guesswork, and disparity out of the budgeting process. Enterprisewide budgeting and planning over the Internet ("e-budgeting") is a corporate service application that supports an organization's operations and efficiency. The "e" in e-budgeting refers to both electronic and enterprisewide, and it represents a revolutionary new way for companies to plan for the future. Companies can implement a budgeting system that scales to the entire enterprise, and they can harness the power of the Internet from any location in the world to budget effectively. Some significant benefits that e-budgeting offers an organization include:

* reducing administrative costs and tasks;

* increasing service levels to employees; and

* freeing the finance department to focus on strategy, not spreadsheets.

Financial managers and management accountants can help steer their company toward these new, Internet-based applications that can deliver immediate benefits, especially the streamlining of a previously cumbersome process. By discovering ways new e-budgeting technology can deliver business solutions, the budgeting and planning process can be transformed from a chore of drudgery to a strategic luxury for the organization.

Pitfalls Of Traditional Budgeting

First, let's look at the traditional budgeting process. Whether manual or performed via spreadsheets, in the past, the budgeting process has depended on the notion that everyone involved in the planning phase comes equipped with a baseline knowledge of accounting. This is rarely the case. Although few will admit it, many nonfinance participants in the budgeting process often do not know where to begin. They understand their jobs thoroughly and how those functions fit into overall operations but they have not been trained in any kind of budgeting procedures. And they have been told that all the tools anyone needs to develop a specific slice of a company's budget are a...