Two years ago Vicor Corp., a Massachusetts-based manufacturer of power supplies and other electronics components, was fairly sophisticated in most areas of business management. But its budgeting process was excruciating for the finance department and was considered a joke by managers companywide. The finance team turned to a relatively inexpensive, hosted performance management system for help — and was surprised by the result.

BPM Magazine: Can you describe for me what Vicor’s budgeting process looked like in 2006?

Doug Brunton: Well, first, let me explain what we were doing right in terms of financial management. We have roughly 20 independent business units, and about eight of those are overseas. Roughly 40 percent of our annual revenue is overseas business; we have a manufacturing facility in Japan and two major facilities in the USA. To manage our entire business, we use PeopleSoft. We have highly customized the core product, and we use it almost across the board: engineering, manufacturing, billing, receivables, A/P, general ledger, and planning. I don’t think there’s a component that we don’t use except for budgeting and the fixed asset suite. We do a lot of reporting in nVision, a tool that comes with PeopleSoft. It’s a very sophisticated and versatile tool. It uses the tree structure of the business account structure and business unit structure we set up inside of PeopleSoft, so we’re able to do a lot of detailed expenditure analysis at the top business-unit level, along with the obvious reports. We tend to take information straight to the business-unit level in nVision, then do consolidations in Excel. We have some minority interests in several of our companies in the U.S., so we don’t do a straight consolidation out of the PeopleSoft system. We have also developed Cognos data cubes, populated by constant uploads from our ledger systems, as well as executive dashboards. We had these systems in place in 2006, so we had a very wide range of information available on how we were performing. But we were delinquent in the gathering of our budget information. We used Excel to gather budget information, then imported it into PeopleSoft, but the process was a nightmare.

BPM: Why?

Brunton: People tended to do their own thing. We would send them a spreadsheet in a standard template, but for many people, it didn’t quite suit them. They had a different layout that they preferred. Some would send us their own, completely different file. Others would use our file, but they would insert new rows or change things. Obviously, you can’t easily consolidate a bunch of spreadsheets if the format isn’t the same throughout.

BPM: Were there any particular changes that managers felt they needed to make, or was the problem more that people were just set in their ways?

Brunton: I think sometimes people are so engrossed in what they’re doing they can’t see the forest for the trees. One engineer gave us a hard copy of his budget spreadsheet, when we wanted the electronic copy. We also have some people who are not highly proficient with spreadsheets. Although it seems pretty easy to most of us, there are people who aren’t comfortable with Excel.

BPM: How did the spreadsheet problems impact Vicor’s budgeting process?

Brunton: Well, we would send out the Excel templates in the fall and expect to get them back before year-end so that we had them by..