Canada is a beautiful place with nice people. They certainly didn’t deserve the fate I unwittingly bestowed late one budget cycle.
Many years ago I was a financial analyst in a San Jose CA based computer systems company, supporting the worldwide Sales & Marketing organization. In addition to our headquarters staff, we had sales and service offices around the world to develop and support the company’s regional and local markets.
Our budgeting “system” was Excel (as this was before the development of the modern planning systems we have today). I created and maintained a series of linked spreadsheets to build headcount, expense and capital plans by department and location, modeling bottom-up from drivers and consolidating dollars into worldwide totals. Revenue and COGS were planned by the product business units, and therefore outside my spreadsheet process.
I was meticulous about keeping my models in sync. As we went through iteration after iteration over a three month period, I spent long days heads-down in Excel to be sure that my formulas and spreadsheet links were working correctly and that the numbers tied out.
Finally, as the current fiscal year was about to end, senior management and the board agreed on financial targets for the upcoming year. Final changes needed to be worked through all the models I and my Finance colleagues maintained. After one last long night of spreadsheet work, I sent my final budget numbers to be consolidated with company totals and went home to catch up on overdue sleep.
A couple days later, as I was preparing for a presentation of the final budget to the Sales & Marketing organization, I discovered my grand totals didn’t tie with the country-level numbers. In a panic I scoured the formulas and links in my spreadsheets.
Quickly enough I discovered that a link had broken, to the headcount and expense spreadsheet for one of the sales offices. Over a dozen headcount and a few million dollars of spending budget for the Canadian sales office had not made it into the final numbers! Meanwhile, Canadian revenue was correctly included in the company’s total revenue plan. While not a big deal relative to the overall company budget, it was enough of a shortfall to matter for variance reporting for the Sales & Marketing organization’s headcount and expenses.
I gathered my courage and walked into the CFO’s office. I contritely admitted my mistake and asked how we can correct it to make the Sales & Marketing function’s budget whole. The CFO replied, “The board has signed off on the final budget and nothing can be changed. You’ll just have to manage Sales & Marketing through the year with those numbers.” I got no sympathy from the CFO, but fortunately I wasn’t fired … nor turned in to the Mounties.
Most of us with finance careers have our spreadsheet horror stories. Incorrect formulas and broken links are just a couple of the risks of spreadsheet-based planning models. Yet spreadsheets remain common as the planning system in many companies.
As a finance guy, I still love spreadsheets. But today Analysis Team helps our clients improve their planning processes and reduce risk by implementing modern solutions with Hyperion Planning, Oracle Planning & Budgeting Cloud Service (PBCS), and Applied OLAP’s Dodeca with Oracle Essbase. These technologies can deliver a smoother, more reliable process along with an improved user experience.
What international scandals are waiting to happen in your planning processes? Are you ready to upgrade to a solution that delivers better functionality with reduced risk?