Most small businesses do little or no formal planning or budgeting, and of the larger companies that do, some 70 to 80 percent are still using a spreadsheet program. And that's a problem for companies of every size. As powerful as today's generation of spreadsheet programs may be, they are complex and often daunting. They require substantial formatting, are difficult to troubleshoot for broken links and formulas, and are limited in their reporting capabilities. It's what accountants and their clients refer to as "spreadsheet hell."
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The software used for planning and budgeting reflects this dichotomy, with some applications designed as Excel templates, others designed to use Excel as the front end, and others yet that distance themselves as far as possible from cells and their formulas.
That makes selection of the software an important process for accounting firms. Because continuing emphasis on financial performance and forecasting for businesses of every size is driving three value-added services from accounting professionals:
Audit Tie-Ins. The days when the annual audit served mostly as a check and balance on stock or executive performance are largely over. Today, in addition to certifying financial results, auditors are expected to tie the audit results back to the company's budget and operating plan so that management can make sense of actual results versus plan.
Analysis and explanation of trends. Small business owners are adept at spotting trends in the macro financial data-when cash flow or sales are off, or when they are booming-but may have difficulty understanding the underlying causal factors. This becomes even more important for mid-range businesses where the executives now must make use of business performance analysis tools and other decision support systems. They look for their accountants to provide this analysis and understanding.
Management of the process. Whether for small businesses, where the owner wants the accountant to do the planning and budgeting, or a global enterprise that wants an impartial project manager for the process, accountants are increasingly hands-on managers within the client company.
It is this third point that makes software selection critical. A firm that is adept at Excel may want to stick with the familiar. A firm where only some expertise is resident may find themselves throwing large sums of money into training and hours lost to fumbling. Companies have to decide whether they wish a spreadsheet-centric planning solution, or one that avoids the spreadsheet at all costs.
The eight programs viewed for 2006 are a cross-section of the industry, both in terms of the ranges of companies served and their relative reliance on the spreadsheet model.
Adaptive Planning 3.0
Adaptive Planning serves up a suite of applications for mid-market companies that reside on the cutting edge of development in budgeting and forecasting. Combining the flexibility of the spreadsheet with the structure and process of an enterprise-level business intelligence system, it is a hybrid application available both as a hosted, Web-based system or an on-premises application.
This customized worksheet and dashboard structure permit planners to enter new data, modify formulas and assumptions, create new customized metrics, and analyze the resulting information through sophisticated dashboards and reports. Data is gleaned from the general ledger, human resources, and other sources via flat files, and the data is then integrated into the application's database for use in creating and analyzing forecasts, budgets, and actual performance across dimensions such as customer, product, and region.
Pre-defined metrics within the models offer preset, key performance metrics such as customer profitability, order to cash timing, and billings, bookings, and backlog, that immediately deliver the information most often needed to manage a business The budgeting and forecasting worksheets include the capabilities such as annotations, workflow, and wizard-driven interfaces. Reporting and performance monitoring is offered both through graphical dashboards and through three sets of reports-personal, shared, and global.
Adaptive Planning has crafted a fully functional, open source, Internet-based budgeting and planning tool, but is looking to further innovations. In August, the company introduced a free Express edition of its application with slightly less functionality; and announced open-source available of its software to spur user input and third-party development. Other future plans include the expansion to use of third-party Key Performance Indicators to expand the value of forecasts and business performance management reports.
Using neither OLAP databases nor traditional spreadsheets, Adaptive Planning has crafted a well integrated and customized solution for budgeting and planning. Accountants will appreciate its economy and flexibility, particularly in terms of collaboration with clients.
Adaptive Planning 3.0
Mountain View, Calif.
Price: Express Edition, free. Corporate Edition, $3,500 per year plus $750 per user; Enterprise Edition base, $5,000 per year plus $1,000 per user.
Alight Planning 3.2
Alight's stated mission is to cut planning time in half while measurably improving analysis of the numbers and insights into the business. It is a mission well-served by version 3.2, which is as close as a planner can get to escaping the look, feel, and problems of spreadsheet budgeting and planning.
Alight has abandoned even the look and feel of a spreadsheet, offering instead a sleek graphical interface that combines data tables with input and assumption panels in an easily navigated and updated format. Plans are built (at speeds claimed to be 10 times faster than what it takes for a spreadsheet) using stage-based planning-creation of a bottom-up "base" model tied to the company's financial goals, with alternate stages to reach those goals. These are then converted to time periods for planning and budgeting, and evaluated using the software's analytical tools.
Alight Desktop features integrated, GAAP-formatted financials, unlimited line-item detail, object-based linking, stage-and-scenario planning, and a range of analysis and reporting tools. Each plan can accommodate up to 1,000 unique stages, and up to 100 different scenarios may be evaluated with up to 84 time periods for each. Analytical tools include systems for sensitivity analysis; "goal seeking" adjustments to assumptions; the ability to change inputs across the board (e.g., for changes in product pricing); and a full range of default and customizable graphs.
The Desktop system is substantial enough for the majority of accounting firms for straightforward business planning, but those who have need for integrating actuals data from accounting systems and other databases will want to upgrade to the Business version. A more expansive Corporate version offers multiple-user capabilities with multi-dimensional reporting.
Since its introduction in 2005, Alight has offered a cost-effective yet powerful application for accounting firms looking to escape "spreadsheet hell." The company is emerging as a leader in planning systems that feature object-based rather than cell-based linking, with effective audit trails necessary to track complex budget models and data relationships.
Alight Planning 3.2
Diamond Springs, Calif.
Price: Desktop version, $975, $150 (annual support); Business version, $2,985, $450 (annual support). Corporate version, $8,475, $1,270 (annual support).
For a global enterprise, neither spreadsheet planning tools nor desktop systems can provide the power and flexibility needed for real-time analytics and forecasting. Such enterprises need an OLAP (Online Analytical Processing) system that can import data from multiple locations and formats to perform complex and ad-hoc queries with extremely fast execution times. Applix TM1, one of the most notable of these budgeting and planning systems, is a solid platform for business planning, budgeting, and forecasting.
The TM1 strategic planning application is a set of five integrated components. The plan is built on the TM1 multi-cube OLAP engine and uses the Turbo Integrator to quickly load data from line-of-business managers and staff across business units. The TM1 Planning Template enables setup of the plan to provide a single view of data and advanced capabilities for ad hoc reporting. Workflow management for the process is provided by the TM1 Planning Manager, and allows plan managers to assign responsibility for portions of the plan and allowing reviewers to accept or reject plans. The full power and familiarity of Excel is also available from within that application via an add-in module for Excel.
TM1 Web provides read, write, and what-if capabilities to quickly create real-time Web-based worksheets or 'Websheets,' which support the functions, formatting, and graphic capabilities of Excel on the Web. The use of these Websheets leverages the user's knowledge of Excel to provide collaboration and what-if analyses, enables the accountant to interact with clients without a significant further investment in software.
The Applix strategy is to provide the enterprise planner with a flexible and scalable solution for budgeting, planning, sales analysis and forecasting, consolidation, multicurrency analysis, inventory management, profitability, headcount analysis, and raw material cost analysis. TM1 provides this solution. While it is likely to be too powerful for use by the average accounting office, it offers exceptional benefits for firms with global clients or those that must incorporate data from multiple sources and still make sense of them in a simple spreadsheet report for management.
Price: Configurations start at $50,000 (based on price per server per user).
Budget Maestro 5.8