Budgeting

Before business analytics software, many people were likely to pad budgets. But, the budgeting software makes that a little more difficult. That is, when the employees actually use the forecasting software. A few studies have shown that approximately half of employees who should be using it they have at their disposal are not. Perhaps that is because they still want to pad budgets to some degree.

Department heads who want to avoid this situation must come up with a plan that will ensure all employees use the budgeting software. But, there are problems with this as well. The study conducted also revealed that the employees using the budgeting software do not always make the best budgeting decisions. So, overall it appears that department heads and company owners must educate their employees more when it comes to budgeting and when using it.

Overall, most department heads respond that budgeting software is excellent when used as it is supposed to be used. But, when it is not used like it should be then it will not give accurate results. For example, when habits like "land grabbing" become part of the budget software then problems will arise. What happens with land grabbing is that the revenue is raised or lowered so that targets previously forecast will be met. This is not really worth creating a budget for if the numbers are going to be padded. The same goes for the expense lines that are padded so that when market conditions change there will be a little wiggle room.

So, what can budgeting software do to combat the fudging of expenses? The answer is not much if the individual inputting the information is fudging. This means there must be stringent rules in place by department heads to ensure that the numbers entered into the system are accurate. And, this means playing by the rules themselves as well.

Currently, budgeting and forecasting software is not used in many companies as their one and only budget. Instead, it is used to create a base budget and then the company has a running budget as well. Not many department heads had any suggestions on how to bring the two together to use just one budget. This was blamed on the budgeting software's inability to work with quarterly budgets that are not necessarily on target with yearly budget forecasts.