4 common mistakes CFO’s make when choosing a planning and budgeting software

Planning and budgeting are the navigation system of any business. Being aware where your business currently is, where it’s heading and where you want it to be in 6-months time is powerful knowledge that allows leaders to make decisions aligned with the company’s goals and strategies. CFO’s and managers can apply their knowledge and experience to these processes.

However, in today’s business environment many software tools have been developed that establish budgets and create plans. This allows CFO’s and managers to focus on analysing results and steer the company rather than performing low value adding tasks, such as creating budgets.

When deciding on which planning and budgeting software will suit the needs and individual aspects of the company the best, many CFO’s are solely driven by the requirements of the most basic features and lowest prices. Yet, it is important to consider additional aspects, not just price and capabilities.

The problem, that often influences these decisions is the lack of education and assumed lack of real tangible benefits. Many CFO’s are unaware of the difference a fully integrated and utilized software solution can make, compared to a solution that only operates on the surface of the company’s data pools.

Here are four common aspects CFO’s fail to consider effectively when choosing a budgeting and planning software solution for the business:

Price

Yes, we understand that the price of a software solution is one of the most important factors to consider. However, the price of a software solution doesn’t determine its capabilities, every business has individual needs and requirements that must be established separately from the price. Failing to do so leads to a software solution that won’t serve its purpose and ultimately be worthless to the organisation.

A tip on how to determine the acceptable price of a budgeting and planning solution is to calculate the return on investment (ROI).

The formula used to calculate ROI is as follows:

ROI = (Gain of Investment) – (Cost of Investment) / (Cost of Investment)

Depending on the industry your company operates in, the results can be rather tangible or intangible. It is up to you, as a person in charge, to determine which aspects are the most valuable to your organisation. Maybe it’s the monetary return a solution generates to your business, or it is the competitive advantage a software provides. Depending on how important and significant the return the software solution generates, is how the investment should be determined.

Consultant advice

A common mistake CFO’s make is to rely on their single professional opinion. Seeking advice from a business consultant specialised in business intelligence, an IT specialist or another professional can determine if your purchase will provide you with what you are asking for.

Sometimes a change of perspective will provide you with information that previously has been ignored or found unimportant. Collecting more than one professional opinion allows you to choose the best solution for your organisation without ignoring significant information.

Local support

Local expertise is important in any software implementation project. All too often, organisations deal with providers who do not offer many resources at the local level and who generally lack availability for your needs.

It is significant to have English-speaking personnel with both functional and technical expertise. Having written materials – training, user manuals and support – in the right language is also crucial.

Implementation

For most IT implementation projects, the team (both internal and external) is often the key to success. In this case, it is important to remember that finance managers will be the main users. It is therefore essential that these people be able to free up the resources to participate in the implementation, and that the software providers team have the following capabilities:

• Have an excellent grasp of budgeting, costing and financial dashboards; the team should be either trained CPAs or people with relevant experience;
• Be locally based so it can be available throughout the implementation process and, especially, to provide long-term support;
• Possess strong software knowledge so the organization can get the maximum benefit from its investment.