Ecommerce has become an integral part of business life – while the affect it is having on company culture is becoming increasingly apparent. This is particularly so in the world of budgeting, forecasting and planning. Traditional client/server methods are alive and well, but the advent of web-based methods is revolutionising the culture of businesses. There’s no room for doubt that e-commerce will radically change the way businesses approach the planning, budgeting and forecasting process. It is acknowledged that product development cycles are getting shorter, business is becoming more aggressive and the marketplace is moving with ever increasing gusto. But, with the recent growth in the use of rolling forecasts, businesses have been helped to manage this development and reduce decision-making timescales. E-commerce is pressing business to change its approach to budgeting and forecasting so it can move more rapidly. On the revenue side, businesses will need to budget for potentially new streams such as a new e-commerce site, or selling products over the web. The market itself is changing every day as new competitors with a lower cost base and stronger technical skills are coming in offering better deals or free products and services – potentially leading to a change of business model on a monthly basis and making it impossible to predict what is around the corner. On the cost side, organisations are using web technology to change the shape of the business. Ventures such as collaborative arrangements with other companies to offer buying through a purchasing portal will change the shape of companies and cost structures forever. Organisations are being squeezed from both revenue and cost sides to frequently reappraise budgets and forecasts. Businesses are moving into a budgeting environment completely different from two to three years ago. Shorter decision cycles mean the long-term plan is becoming less valuable. The accounting profession is no exception as regulatory environments can change almost overnight causing a series of changes within the sector. A recent survey suggested 90% of organisations still struggle with spreadsheets with only a few people involved in the process. A huge amount of time is spent manipulating the numbers with little time to analyse results. The real excitement is that several changes are happening which support the collaborative spirit of what budgeting and forecasting is all about. This is reflected in a sea-change attitude from most senior finance professionals who accept the web is a critical part of their future. As recently as two years ago people were sceptical. The change in attitude has mirrored the significant changes in technology in that time. Relational databases including Oracle, Microsoft SQL Server or DB2 can now offer the same functionality as multi-dimensional OLAP databases – this means organisations can leverage existing IT investments and staff skills making web-based solutions easier and cheaper to deploy. The power of servers has also increased and it is now possible to run large numbers of users on relatively inexpensive systems, while the advent of Wireless Application Protocol (WAP) technology is set to increasingly give more managers accessibility using mobile telephones. The increasing pressure for delivery is occurring at the same time as the simplification of technology. Fortunately these sit together, so at the time the requirement arises, the technology is ready. Implementing web technology brings a number of benefits including relatively low maintenance, low cost, easy data entry and ready availability. What really counts is the quality of information. Forecasting is not about producing numbers. It should be about giving a more accurate view of where the business is, and its future performance. The more people involved in the process the better. There are now opportunities for chief executives and more importantly, all levels of management to know what is happening in a subsidiary on the other side of the world – creating a marked change in the culture of businesses. If the web enables only one additional person in a company to engage in the budgeting process – it can greatly improve the quality of information. As well as internal benefits, quality of information helps organisations express themselves externally. Many are apprehensive about presenting results to the stock market. Unless a good growth rate is predicted, the share price suffers. If they don’t show they are in control, the market can punish them. If a company can explain it is not going to do quite so well this quarter for perfectly legitimate reasons then the market can accept businesses go through periods of change. Where most businesses fail is when they don’t have information systems to tell the market what they are going to do. The impact of the web on the organisation culture comes from technology. In the future more people will be involved in budgeting despite coming from different backgrounds – and this can lead to greater understanding of what the business drivers are. Managers are empowered to change the performance of their business and the whole organisation because people understand what makes it tick. ‘Client/server also changes the culture of a company by granting controlled access to a single database which holds all of the company information. ‘Many companies hold its customer records in multiple databases because they have no choice. For example, they have a marketing database, a customer database, a commissions or royalties database, a phone book (or several phone books),’ said a spokesman for Colchester-based Access Accounts. Web technology also streamlines work processes, creating much less paperwork. There’s not a ‘chase mentality’ about work as so much happens automatically. People spend less time on menial tasks, meaning they can focus on real issues. As a result they feel they’ve got more to contribute and are much more informed than they were in the 1950s or 60s. ‘A classic example of better workflow is salary upgrades. The intranet enables line managers to forward plan salaries online using information already in the system. The details are automatically transferred to the FD who can analyse and approve. The time-consuming aspects are taken away, and there’s no double entry – the details are already in the system to be processed,’ says Kellie-Ann Williams a spokeswoman from HR software provider PWA Personnel Systems. The culture of businesses is becoming more transparent. Everybody in the company – from shopfloor to management – may be able to see the same or tailored information. This greater accessibility means staff don’t have to chase each other for information if it’s already there. It can be so powerful if a manager has a meeting with the chairman and he asks for a certain report – it might now be possible to produce it in 10 minutes. Benefits of the web mean staff have information available and can create greater direction within their team, which means a focused business. When people feel more productive and know what to achieve, they may work hard to do that. It’s a positive feeling and great for morale, recruitment and the business. Every duplication costs time, money and accuracy. This leads to poor service and dissatisfaction. Companies have been faced with this predicament because the systems have evolved over the years and at any given time, it is easier to install another standard packaged incomplete solution than to extend their existing system to cater for the new task. The answer to improving the situation may lie in picking an industry standard database such as Oracle or Microsoft SQL Server and rationalising the number of tables used by ensuring there are enough fields available to store information on any given topic. Putting security in place so that everyone the company wants to see (or deny) certain data and enter or edit data has the correct level of password would then be required. However, businesses have been warned to expect technology to continue to accelerate as e-commerce takes off – or risk falling behind the competition. ‘Many organisations will be in real danger of not being able to budget and forecast fast enough unless they embrace web enablement in their budgeting and planning processes,’ according to Gary Simon, the partner responsible for the UK Financial Solutions practice at Deloitte & Touche. ‘Fortunately there is a growing source of web-based budgeting and forecasting software. The right e-business software application supported by effective change management can open the floodgates to thousands of budget holders from different backgrounds to access a centrally maintained database over the internet’, Simon adds. A spokesman for Access Accounts, adds: ‘We see desktop software and browser based web software coming together (faster than we thought a year ago). ‘They will become indistinguishable, but many users will still run the desktop version until business bandwidth becomes truly affordable.’ Yash Nagpal, Navision managing director, confidently expects the internet to be the future. ‘There is no question of this, although the internet as we know it is not going to stay, it will change. The internet will be a major platform and people will develop their systems using XML that will create real open communications throughout the organisation. ‘However client/server will be around for a while as it gives people a lot of power at the desktop which is required for local work such as processing. Culture changes look set to increase into the long-term horizon.’ CASE STUDY: SCOTTISH COURAGE Scottish Courage, the UK’s leading brewer, has selected Comshare BudgetPLUS 3.1 to manage budgeting and forecasting across all five on-trade companies – Courage, John Smith’s, Scottish Brewers, Newcastle Breweries and National Sales. In the first phase, BudgetPLUS will be rolled out to between 50-100 users ready for the first quarterly forecast at the end of August. In line with Scottish Courage’s e-business strategy, users at any location only need a web browser and password to manage their version of the forecast. All processing takes place on the server that is tightly coupled to a powerful, Oracle database. ‘Our finance community found it difficult to consolidate and build up forecasts for overheads and product margins using our transaction system and Lotus models,’ says Glen Davies, finance director at Courage. ‘We needed a flexible, user-friendly solution with robust web-based functionality. Following the selection process we chose Comshare BudgetPLUS because its web architecture enables remote users to interact with the application.’ Another feature was the ease of copying forecast models into BudgetPLUS. ‘We liked the strength of BudgetPLUS for consolidation. The spreadsheet interface is familiar to users inputting forecast data and it’s also easy to convert existing spreadsheet models straight into BudgetPLUS.’ ‘Scottish Courage plans to use BudgetPLUS as part of the forecasting process as early as July 2000. BudgetPLUS will handle quarterly forecasts and the annual budget in the longer term. Once the forecasts are complete, they’ll be fed into SAP and compared to the organisation’s monitoring systems,’ adds Davies. ‘We are pleased Scottish Courage has selected Comshare BudgetPLUS,’ says Comshare’s international marketing director, Nigel Youell. ‘Scottish Courage will gain significant benefits from using a centralised web-based budgeting solution, and look forward to many more contracts in the food and drinks industry as organisations realise the importance of web-based budgeting.’ WEB-BASED SOLUTIONS – WHAT TO LOOK OUT FOR A new generation of e-business applications that support the management planning and control (MPC) process are providing solutions that bring actuals, budgets, forecasts and longer-term plans into a single database. Some of the most advanced in the development of these solutions include Hyperion, SAS and Walker, which offer the converging functionality that the market place demands. The remaining suppliers continue to sell specialised software which only satisfies part of the business requirement. Implementing such solutions is challenging because the project involves deployment to hundreds, even thousands of users in fairly short time scales. It’s not just about rolling out the technology. There is the whole change management issue about involving many people that are new to the process and helping them understand what is required. It’s easy to put a web browser on someone’s desk to input data but do they understand what they are doing; how they are being measured and why they are doing it? There is a popular misconception that just because you give someone a web browser it is automatically easy to use. Millions of people use the net without training but all they are doing is clicking on a hyperlink and moving from one document to another. Whereas a budgeting and forecasting environment is much more complex. The idea of being able to roll out with zero training is pie in the sky. The way forward is to re-examine the whole process. Decide how far you are going to roll out the application and to what level in the organisation. Develop a change management plan alongside it – don’t treat it as a technology project. Understand how you are going to change the culture of the organisation to accept and use this technology to improve the quality of the data. It needs to come from both directions – senior management has aspirations about the business and local management says ‘I can’t meet you all the way but I can do this’ and then there is a meeting of minds – a collaborative spirit. And be bold. It’s rather like e-mail in the early days. I remember time and time again advising clients that you can’t part implement an e-mail solution! As soon as one has more people off the system than on it, then it will not work! That is the leap in faith with technology that we now need with the web world. You’ve got to say either I’m going to have all my budget holders on the web or I’m not going to do it. If its a halfway house and some people say ‘I’m not going to be involved in that’ then the whole thing breaks down. The web is a communication, medium so for the best results plan the whole process, be bold and have a change of management approach that is going to support it. – Gary Simon is the partner responsible for the UK Financial Solutions practice at Deloitte & Touche.
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