It is important to decide on the requirements for your new budgeting, planning, and forecasting system prior to looking at vendors. Making sure the team understands the differences (and similarities) of these key processes will go a long way to ensuring the right requirements are developed.

by Craig Schiff

A series of key business processes in successful business performance management (BPM) systems is planning, budgeting and forecasting. This area is well understood by people working in the Finance department, misunderstood and generally disliked by budget managers throughout the company and of little interest to everyone else. However, the team charged with identifying the ideal technology solution to support the company in this area needs a solid understanding of what’s involved.

First, there is some confusion around the terms planning, budgeting and forecasting. Although related, these terms mean distinctly different things  and have different technology requirements as well. Let’s start at the top: planning. Most companies put together an annual plan that is part of the  larger strategic plan of the company, usually covering three to five years.  This is where the senior executives lay out their vision for the company at a high level. For example, they may show total revenues growing at ten percent per year while expenses are shrinking at five percent per year and the  margins are improving accordingly. These plans usually do not show the details of where the increases or decreases are coming from. In some instances, a more detailed version of the strategic planning process can include scenario modeling and what-if analyses. The plan is a way to share the intended future path of the company with investors, board members and management.

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Link to full article: https://www.bpmpartners.com/wp-content/uploads/2018/11/BudgetingRequirements.pdf