Winshuttle and ACCA's Global Budgeting & Planning Survey 2013
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Through our joint campaign with ACCA we managed to get more than 1800 people to respond to our questionnaire. The survey reveals the top budgeting tools, problem areas, accuracy rates, and more.
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Winshuttle and ACCA's Global Budgeting & Planning Survey 2013
- 1. Global Budgeting & Planning Questionnaire 2013 - Findings Heroes who transform the way their companies work. 1 Copyright Winshuttle 2013
- 2. Social Sharing Click the Twitter button throughout the presentation to easily share stats and quotes with your social network.
- 3. ACCA Survey Response Overview Membership participation ACCA members Non ACCA members 4% Budgeting in a nutshell is the planning of company activity with the capability of controlling resources and analyzing results achieved during the course of the plan. Top participating countries 27% 3% 4% 5% 6% 96% 1806 participants 4 108 countries
- 4. Survey Respondents’ Budget Responsibility 47% 20% 23% 24% 14% 5 Less than a quarter of the respondents own the entire budget process. Which provides more room for complications, more revisions, more cycles and long decision cycles for budget approval for the rest of the survey respondents. 26%
- 5. Core Accounting Systems In Use 573 504 366 113 58 53 40 30 26 A surprising number indicated that they only use Excel. 6 23 21
- 6. Budget Management 40% More than half indicated that they start their budgeting season with a formal announcement, which is consistent with a centralized approach 37% 18% 16% 11% 4% By division 7 Centrally Regionally By location Globally Other
- 7. The Budgeting Process 80% start budgeting 3 – 6 months before the end of the financial year 90% finalize budgets in less than 5 cycles 1 year out Other 9% 2% 5% 5% Yearend 1 month out 8 37% 43% 6 months out 3 months out
- 8. Top 3 Budgeting Methods Incremental budgets were in use by almost 40% of respondents and in theory take less time to approve because they generally require approvals more on deltas than on the actual numbers which are often inherited from previous years. 23.00% 35.00% Incremental Activity based Zero based 32.00% The surprising budget method was zero based budgets - historically they have been particularly popular in the public sector as a whole whereas in the private sector they are often limited to administrative overhead activities 9
- 9. Challenges with the Process Key Tools Used 90% 38% 29% 10 16% 9% Manageability Issues • • • • 32% reported actual-budget variances of >10% 54% feel the budgeting frequency is just right 21% have no plans to change budget frequency Only 52% were happy with the status quo
- 10. Finance Disruption by Budgeting Frequency The fact that half were satisfied with their budgeting process is most likely due to the flexibility of Microsoft Excel and the simplicity of getting budgets compiled only once a year. Over half of the respondents felt that the budgeting process was not disruptive to finance operations. Not sure, 16% No, 53% 11 Yes, 31%
- 11. Discoveries through analysis What are the relationships between responses and the analysis of the discoveries reveled? 12
- 12. Dependence on MS Excel • 90% of respondents use MS Excel as a key technology • 49% of MS Excel users have no other tools yet are satisfied • 41% use email in the process • Only 12% have workflow Findings: Data collation and coordination remains a major challenge with the process Companies still depend heavily on Microsoft Excel for budgeting & planning 13
- 13. Budget Cycle Time The majority of budgets take a long time to complete. Around half took longer than 3 months and a large portion of those with long budget cycles actually had variances of actual vs. budget greater than 5% • 49% take 3+ months to complete • 86% with long cycles have a actualbudget variance of > 5% • 57% have 3 or less budget cycle iterations per budget Budget iterations add time to the budget cycle and we determined that over half of the respondents have 3 or fewer budget cycle iterations. Even with a low number of iterations though, budgets seemed to take a long time to finalize. 14
- 14. Multi-participation Budgets often have many levels of participation • • • • • • 11% have >5 levels of approval Banking & Public Sector dominate 80% have <5 cycles of revision 75% used a specialised tools 39% find budgeting disruptive 33% dissatisfied with the process Complexity results in business disruption even with tools and this can lead to significant dissatisfaction 15
- 15. Budget accuracy Businesses have problems with budget inaccuracy • 27% indicated actual-budget variance of 10%+ • 25% felt this was improving • Variance issues with centrally managed budgets – 59% identified indirect costs – 43% identified direct costs • 50% felt the budget frequency was just right Data collation and commitment to the process were indicated as the greatest challenges Implementing rolling budgets seem for the most part to be absent from future plans 16
- 16. Budgeting more frequently Moving to more frequent and rolling budgets will improve budget accuracy • 8% use rolling budgets • Banking, Healthcare, Media, Mining and Professional Services dominate in this segment • 33% use formal tools in the process • Variances in actual-budget remain high – >10% reported by 26% – 5-9% reported by 46% Using tools doesn’t seem to improve precision but it appears to make rebudgeting easier 17
- 17. Conclusions • • • • • 18 Rolling budgets remain rare Excel spreadsheets remains a No.1 budgeting tool Managing and collating data is a problem area Formal budgeting tools are not commonplace Even when used, budgeting tools don’t improve accuracy
- 18. The Winshuttle Advantage Business process improvement Historical data extraction Data & procedure distribution Data collation ERP synchronization Workflow & control Process standardisation Participant/approver hierarchy Approval process transparency Hierarchical approval 19
- 19. Customer story • • • • Founded 2002 Total revenue of $233M 600 employees Maintain ~12,000km of High Voltage power transmission lines and 280 substations in Alberta, Canada November 16, 2007 20 KP06 (Yearly forecast) COcontrolling; updating cost elements 8 hours manually per cycle 30 mins to build 2 hours to setup for uploading Minutes to run KP06 (Quarterly forecast) COcontrolling; updating cost elements 4 hours manually per cycle 30 mins to build 1 hr to setup for uploading Minutes to run
- 20. Winshuttle’s Surround Strategy Use Excel, SharePoint, Web, mobile, PDF for efficiency. Systems of Engagement Daily and periodic tasks completed more easily. Provide automation solutions while leveraging existing skills and infrastructure. System of Enablement Autonomy for business users and improved control by IT. Ease your ERP data creation or changes. Systems of Record 21 ERP Increase ERP ROI and user satisfaction. Increase the quality and detail of audit records.
- 21. Winshuttle Value Winshuttle License & Maintenance Investment $2,741,080 Support Desk Savings $2,487,190 $2,202,250 Productivity Savings Annual Training Savings Initial/Ongoing Development Savings Deployment Savings Year 1 Year 2 Year 3 Estimated value for one customer: Graphing actual transaction data against Winshuttle’s database (based on experience with nearly 2,000 customers) calculating the potential time and cost savings. 22 Annual Savings
- 22. Where to next? Find out how Winshuttle can assist your: SAP Finance processes - visit winshuttle.com/finance SAP Master Data processes - visit winshuttle.com/masterdata Learn more about Winshuttle’s no-programming products and solutions: View or register for a webinar View a product demonstration Explore the Winshuttle TV YouTube channel Browse the Winshuttle Community site Find out more about the challenges that companies faced, decisions they made, and the benefits they realized by implementing Winshuttle: Read a case study on one of our customers. 23 For a quick reply contact info@winshuttle.com
- 23. Be a Winshuttle hero. Thank you. info@winshuttle.com www.winshuttle.com 24
Notes de l'éditeur
- Through our joint campaign with ACCA we managed to get more than 1800 people to respond to our questionnaire. While a significant number were in the UK and Ireland, we found that we received responses from people in more than 100 different countries so the results truly are somewhat globally representative.Almost all respondents are ACCA members and therefore are believed tohave good knowledge and experience in the Accounting field.More than a third of respondents are from the UK and Ireland whose organizations would be subject to IFRS, GAAP or both.Budgeting is recognized in IFRS and GAAP as being a critical element of planning, control and evaluation. The standards have budgetary requirements which include the suggestion that budget(s) should be adopted by every business entity, the accounting system should provide the basis for appropriate budgetary control, and budgetary comparisons should be included in the appropriate financial statements. comparisons should present both the original and the final appropriated budgets for the period as well as actual inflows, outflows, and balances.Budgeting in a nutshellis the planning of company activity with the capability of controlling resources and analyzing results achieved during the course of the plan. Some of the activities involve forecasting and planning of future financial conditions; assisting in assurance of meeting key performance indicators for activities; delegation of financial authority and responsibilities for lower management levels; obtaining accurate information and analysis on the financial situation of the company; monitoring of critically important or limited assets and outflows;
- Many of the respondents to the survey were found to be senior finance personnel with responsibility, oversight or control over the budgeting processes in their organizations – this is an important aspect of the survey because it implies a level of seniority among the respondents that suggests that they have the influence and power to control and assess the effectiveness of the overall process and determine whether there need to be tactical changes to the way budgets are compiled and agreed.Less than a quarter of the respondents own the entire process.
- 58% of respondents use SAP, Oracle or Sage for core accounting functions, although the leading ERPs were explicity offered as choices, many of the respondents chose the ‘Other’ category and wrote down the name of the system that they used. A surprising number indicated that they only use Excel.
- Respondents were not limited to one choice here, terminology is important because people call similar things by different names. However we did find that the description of By Division and Centrally were the most popular.The trend suggests centralized control either completely as a central function for cross divisional budgeting or at least at a divisional level where central management perhaps does not make sense cross divisionally – this makes particular sense where the business divisions function largely independently of one another but perhaps have consolidated performance reporting. Global budgeting More than half indicated that they start budgeting season with a formal announcement which would also be consistent with a centralized approach.
- 80% start budgeting 3 – 6 months before the end of the financial year, this mean that for many the budget season could start as early as June or as late as September
- Respondents were given a choice here of one or more budget methods and interestingly the dominant methods were Incremental budgets were in use by almost 40% of respondents and in theory take less time to approve because they generally require approvals more on deltas than on the actual numbers which are often inherited from previous years.Activity Based budgets are generally tied to actual business activity, so use of utilities and costs of things like transportation are tied to production or output volumes which are in turn tied to sales volumes. When sales volumes decline, activity based costs are expected to decline also. The surprising budget method was zero based budgets - historically they have been particularly popular in the public sector as a whole whereas in the private sector they are often limited to administrative overhead activities (i.e. administrative expenses needed to maintain the organization such as indirect costs. – in this method all expenses must be justified for each new period. ZBB starts from a "zero base" and every function within an organization is analyzed for its needs and costs and budgeted accordingly. Budgets are built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one.ZBB allows top-level strategic goals to be implemented into the budgeting process by tying them to specific functional areas of the organization, where costs can be first grouped, then measured against previous results and current expectations.Since respondents were able to answer with more than one type of budgeting method as a choice it is conceivable that a variety of budgeting methods were used in a single budget season by some respondents depending on varying needs and requirements.
- In this section we are interested in determining what if any are the challenges with the process.Are there plans to change the process and what are the tools that are used for the process.
- A little over half of the respondents felt that the budgeting process was not disruptive to finance operations, but almost a third felt that it was. It is likely that this result reflects on the fact that some of the participants in the collation and approval of the budgets are different resources from those involved in daily operations. Additional analysis of the numbers will likely reveal that respondents who say it is disruptive are more involved in the process and have challenges with deadlines and coordination and collation efforts.
- In our analysis we looked at more of the relationships between responses and the following analysis outlines some of the discoveries revealed by looking at responses in relation to one another.
- We assumed that companies depend heavily on Excel and we found that this assumption was trueCompanies continue to depend heavily on Microsoft Excel with 90% of respondents using it as a key technology49% of those dependent on Excel who use no formal budgeting tools are satisfied with the status quo41% use email as part of the process that process yet only 12% have workflow Collating the data and coordinating activities with disparate groups remains a top priority and disability for almost half of the respondents and is best addressed by managing the objects used in the process in a standardized and structured way.
- We believed budgets took a long time to complete and the results bore this out. Around half took longer than 3 months and a large portion of those with long budget cycles actually had variances of actual vs budget greater than 5%. While the 5% may not seem to be a significant value, this could have a compounding effect if we were able to determine exactly which budgets have the highest variances that are not sales or sales related.Budget iterations add time to the budget cycle and we determined that over half of the respondents have 3 or fewer budget cycle iterations. Even with a low number of iterations though, budgets seemed to take a long time to finalize.
- We expected more complexity to lead to more revisions, more cycles and long decision cycles for budget approcval. This was a suprising result in that the hierarchy of complexity expected in the responses was not found. There was no surprise in the Industry segments though that did have complexity.The use of specialised tools to meet the complexity objectives was as expected. Complexity results in business disruption even with tools and this can lead to significant dissatisfaction
- We felt that variances in actual vs. budgeted values up to 10% would be a reasonable number. Greater than 10% suggests that a full calendar month of estimations could be completely wrong and this could have a negative business impact.The numbers focused on NON SALES variances in this assessment. We found that just over a quarter of responses indicated high variancesA quarter felt that the situation was improving with respect to accuracyDirect costs was expected, particularly if Sales estimates were volatile but the relatively high value for indirect costs was suprisingly highDissatisfaction with the status quo was expected but was not present despite a negative outlook. Suprisingly respondents had no plans to changes the process.. Implementing Rolling budgets were largely indicated as not planned.
- We believed that more frequent budgeting was desirable to improve precision and would in fact lead to better numbersWe felt that around 8% of the respondents could be classified as using rolling budgets as they budgeted monthlyThe most aggressive in terms of budgeting were the banking healthcare, media mining and professional services segments which was consistent with expectations around market volatility.For all respondents collating data and coordination of participants were viewed as hurdles that seemed a challenge.Excel was not specifically called out as a problem in particular but the collaboration element clearly caused issuesBudgeting more frequently seems to depend on the industry segment, the use of formal tools doesn’t seem to make the process any more precise despite the increasing frequency. To ease the process more control around the process seems to be in demand
- Rolling budgets remain a rare occurrence and elusive ideal despite active promotion amongst thought leaders on budgeting and planning.Excel spreadsheets remains a No1 budgeting toolManaging Excel spreadsheets, collating data and coordinating activities with disparate groups are top priorities and hold businesses back from being able to budget more frequently.Using formal budgeting tools is not commonplace even when ERP is in use and for those that do use them, they seem most appropriate where organizations and decision making processes are complex.
- When you apply Winshuttle technology to budgeting and planning you can benefit from the following advantages
- Altalink is relatively small company that is lean in resources, they try to automate where possible to streamline their processes and more effectively apply people where it matters most.They were looking for a software solution that allows easy and secure upload of large amounts of Excel data into SAP using minimal IT resources while reducing manual data entry effort by SAP business usersPrior to the use of Winshuttle they had used an inflexible tool called LSMW to create data in SAP but the business was still spending a lot of time on rekeying data from Excel into SAP. This was time consuming, resource intensive and often resulted in errors/omissions, had a dependency on IT to process upload requests via LSMW.Altalink wanted the Ability to run any SAP transaction in any SAP product or module to ease the high volume data upload - between Excel or Access and any SAP transaction, they wanted a user friendly solution without programming changes or a high degree of training and something that preserved existing SAP role based security and had audit trail capabilities. In addition they wanted to be able to schedule data transfers and updates in an unattended mode (ie. During off hours or weekends)This would all ease Sarbanes-Oxley article 404 compliance by giving business users control of their own data and not requiring IT involvement.
- We describe Winshuttle as having a surround strategy for process improvementWe achieve the surround strategy by providing technology that supports your preferred entry methods or ‘systems of engagement’; these can be interracted with daily or periodically depending on what you needThose systems of engagement are then supported with enablers, enablers for automation. This is achieved using existing business skills and doesn’t require complex programming or specialized developer skills – this gives the business autonomy while still supporting IT’s need for control.From an audit and compliance standpoint of course we target your backend ERP as your system of record, this means improved ERP usability and ROI and helps audit with determining who was involved in business decisions and being able to examine proofs of approvals and supporting documentation.
- On average we have found that we save customers around two minutes per interactive event with a back end system like SAP. In some instances more. This means that when you create budgets annually in a system like SAP for hundreds of lines of budget data, you could be saving hours, days or even weeksDepending on the number of iterations and the size of your budget process.