Here are three steps for moving from static spreadsheets to truly dynamic tools that support decision-making and mission analysis.
To the general public, federal agency budgets answer one question: Did spending go up or down?
But for agency chief financial officers, budget directors and finance departments, budgets represent answers to a million mission-critical questions, and those answers are constantly evolving.
The complexity of agency budgets is stunning in scope, and the challenge to formulate, track and measure them is even more difficult. The process is expected to accomplish many goals -- from specifying strategic objectives to assessing program performance to delivering analysis-based reports on spending.
For such a complex job, many agencies are still using tools from the Stone Age. Spreadsheets are not equipped to manage billion-dollar budgets with thousands of dynamic line items. The result is a budget formulation process that is time-consuming, error-prone and expensive.
The time has come to stop viewing budgets as static snapshots from an accounting perspective and treat them as the living, breathing, strategic initiatives they are. Through simple upgrades to technology and processes, agency finance teams can evolve as their budgets do and focus their time and energy on making strategic mission decisions based on more accurate, timely data.
Here are three steps to doing that:
1. Maintain one version of the truth.
One of the most common issues plaguing budget offices is the disconnect between the numbers used to brief agency or administration leaders and the numbers used in official budget documents.
There are a couple reasons for that. First, agencies often track budgets by department, which means many silos of information represented by many documents. Second, there is a need for version control, which requires a tremendous amount of communication and collaboration. Many agencies rely on spreadsheets that are great for tracking static numbers, but when line items are constantly updated across various internal teams and those changes aren't replicated, it's impossible to maintain accurate, agencywide data.
The key is breaking down those silos and empowering finance personnel to collaborate and make changes in real time. Automation and analytics have transformed nearly every aspect of agency operations, and budget formulation should be no different. Software can maintain a single, authoritative view of the truth, with the ability to seamlessly roll up and drill down into numbers and make information instantly usable across departments.
2. Bring budget formulation and strategic planning under one roof.
When an agency delivers its budget for review -- to Congress, agency leaders or the president -- every single cent must be accounted for. That means every single line item must have a return-on-investment narrative on why programs are being funded, the desired goal and whether it is being attained. Agencies need an efficient way to tie budget formulation to strategic planning initiatives.
This is not something that spreadsheets are good at. Lack of integration between budget documents and strategic plans inevitably results in undocumented differences between funding and results. The process of manual integration and report creation wastes valuable time, results in inaccuracies and makes it impossible to identify key performance trends over time.
The future of federal budget formulation must move past the goal of merely knowing how much money was spent. Agencies need the ability to bring budget reporting and strategic planning together to simplify reporting and, more important, make better decisions for the future of the mission.
3. Let your people be knowledge workers, not data entry specialists.
Would you rather have budget professionals manually entering data or analyzing it?
For budget experts to be most effective, they need time to focus on key strategic analysis to quickly make important, informed decisions. Changes can happen at any point in the budget process, and those related to funding levels or spending narratives seem to occur at the last minute, leaving little time to update budgets.
Those issues can be addressed by automation. For example, short-term continuing resolutions require repeated, rules-based creation of financial operating plans. Why go through the pain of creating new plans each time when you can have the latest version of the truth on file and ready to go at a moment’s notice?
Likewise, why manually update budget tables and narratives when technology allows for automated updates in real time? With a budget that has been brought to life, changes automatically propagate throughout the document defined by rules that you customize ahead of time.
The budget formulation process is becoming more complex, and at the same time, budget scrutiny is increasing. Automation and analytics can help agency finance teams rise to the challenge and focus their energy on mission analysis, not data entry.
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