About Face: Why BPM Front Ends Are Failing
Worse yet, the typical spreadsheet budget tends to encourage expense inflation. In many companies, the budget input form presents an account -- say, G/L#1500300 Consulting -- along with the previous year's spending -- say, $50,000. For a budget manager who's given the amount of spending the previous year, the easy approach to budgeting for the next year is to take that account up by some percentage. That's the way it's visually displayed, and that's even the way many financial analysts interview line managers: "OK, Frank, you spent $50,000 on consulting last year. How much do you think you'll spend next year?" That's obviously a recipe for expense inflation, which finance reacts to with a chain saw, cutting budgets across the board -- which adds to operations managers' cynicism about the process and makes them more likely to take the path of least resistance (i.e., last year's numbers plus X percent) when working up their budget numbers in years to come. But that's not really a budget; it's just a calculated result.
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A quality budget, on the other hand, reflects quality thinking. Line managers should start the budgeting process by determining what their business unit is trying to achieve in the next year, what the company's priorities are, and how their department can contribute to organizational goals. Then, given the answers to those questions, a line manager can determine what resources he or she needs for the following year. A quality budget is not just a list of general ledger accounts and amounts in a spreadsheet grid. A quality budget breaks out spending by project or initiative or program. It provides each major line item with supporting detail. It provides a narrative for each major spending category that illuminates why the manager requests that particular level of spending.
Budget Holders' Expectations About "Easy"
If a quality budget sounds like a tall order, it is. It is an especially tall order given today's choices in budgeting software: Excel or an application with an end-user interface that looks just like Excel. While finance people think Excel is the pinnacle of ease of use, nonfinance managers have a different gold standard. They're used to ordering books on Amazon, booking trips on Expedia, and listening to music on an iPod. Think about the "training" you needed the first time you ordered a book on Amazon. That's the expectation nonfinance managers have for ease of use. And unless the bulk of your nonfinance managers already know what an absolute cell reference is in Excel or how to link formulas in disparate spreadsheets, they're going to find nothing intuitive about a spreadsheet interface on a budgeting system. That seems to be the real reason why two-thirds of budgeting and planning seats purchased for nonfinance managers go unused.
To convince the people who spend the money to budget their own spending, finance needs to provide line managers with both real-time Budgeting 101 training and a tool that truly simplifies the process, extending the intuitiveness of budgeting well beyond what Excel budget templates or Excel add-ins have to offer. My experience indicates that the ultimate tool is a budgeting agent that uses contextual commands, plain-English prompts, intelligent workflow, and a highly intuitive user interface to elicit numbers as managers think of them, then automatically roll those numbers up into the proper G/L accounts. This budgeting agent should act as a front end that dovetails with existing enterprise general ledger or BPM systems.
For a very practical precedent of such an intuitive interface, look no further than tax preparation software. Way back in 1983, Intuit fundamentally changed the way individuals master the complex and often exasperating task of completing a proper tax return. Rather than presenting users with an electronic version of IRS forms, which was the prevalent interface for personal tax applications at the time, Intuit thought people would prefer to answer questions and respond to plain-English prompts. The company was right, of course, and TurboTax became the undisputed leader in personal tax preparation software.
Isn't it amazing to think that in the nearly 25 years since the introduction of plain-English personal finance applications like TurboTax, nobody has come up with a similar answer for corporate budgeting? At first blush, it may appear that trying to replicate the TurboTax approach in corporate cost-center budgeting would be challenging. Don't managers in the pharmaceuticals industry think completely differently than managers in, say, publishing? When it comes to day-to-day operational issues, yes. But when it comes to budgeting, no. There is a surprising degree of commonality in the way line managers think about their cost center budgets, no matter what industry they're in. The questions at left are industry-neutral. These are not, of course, the only questions line managers must answer as they complete their budgets. But software that helped them answer these questions would be a step above traditional budget input forms. What's needed to better engage the typical operations manager in financial planning isn't a grid of general ledger accounts but something closer to what Intuit developed for tax preparation.
Budgeting software vendors want to get their product onto the desktop of every line manager in their customer companies, then have those line managers use it religiously. I think the biggest reason the industry is not succeeding in that mission is that end user interfaces are designed for finance people rather than line managers. But the vendor community at large is working to overcome this problem.
