The Latest tools for Forecasting & Budgeting

1. The Latest tools for Forecasting & Budgeting Atul Sharma CFO, Tata Communications Banking InfraSolutions CFO Summit, Delhi, 9 December, 2011

2. Good Budgeting & Forecasting exercise - Key Imperatives • Align planning with corporate goals • Budgeting & Forecasting part of the Corporate Culture and buy-in of decision makers in the expected results • Improved data quality • Mandates for cost control • Be aware of the inefficiencies of the existing process • Strong change management policy to change Budget with proper justification

3. Challenges • Market volatility • Budgeting process generally coincides with year end activities of the company and has the risk of losing the desired focus and attention • Broken process – takes too long to complete • Not Involving all levels of executives, may not have their buy-in and looking at the exercise as an unwelcome chore

4. Budgeting exercise enablers • Budget/forecasting applications • Financial reporting and consolidation • Enterprise resource planning (ERP) • Enterprise performance management applications • Query and reporting tools • Dashboard and reporting capabilities • Enterprise business intelligent (BI) platforms

5. Shortcomings of Spreadsheets Spreadsheets are tremendous personal productivity tools, their numerous shortcomings prevent them from adequately managing a budgeting process of any significant size or sophistication • Spreadsheets are two-dimensional • Spreadsheets are hard to maintain • Spreadsheets may not integrate well with other systems • Spreadsheet models are difficult to share • Spreadsheet models are hard to understand

6. Some key features of best-practice budgeting software solutions • Multi-dimensional budgeting -ability to see revenue by customer, channel, period, product or region, aligned with the company’s key financial targets • Fast adaptation to changing constraints and assumptions • Easy data import and export - ability to integrate easily with performance management applications for monitoring and measuring results, reporting, consolidation, analyzing performance and common ERP systems and databases • Easy to use, simplicity for non-programmers to customize, user-friendly and user manageable, little-to-no IT involvement – is business led and not technology driven • Interactive simulation- allows working with various scenarios with real- time responsiveness and ability to work on multiple versions of the budget simultaneously .

7. Some leading Budgeting softwares • IBM Cognos Enterprise Planning Solution • PlanGuru • Budget Maestro • PROPHIX  • HCG Prevision • Hyperion Systems • …. • …. *It is only an indicative list taken from Budgeting Software Journal

8. Build a budget modularly Typical budgeting process -overwhelming, break it into more manageable modules. Different areas of the organization have different needs. A modular budget recognizes varying requirements and makes it easier to distribute the workload to numerous stakeholders. Advantages • People with specialized skills and knowledge can build different modules • Dividing the budgeting process significantly reduces cycle time • Important modules can be completed first • Training easier - a module at a time • Maintaining —and improving — the model is easier

9. In summary In spite of all the challenges, no organization can do away with the budgeting & forecasting exercise. There is too much value in the end result to run a business without a financial plan. Budgets are key operational tools that provide authorization for use of company resources throughout an organization, ensuring that managers clearly understand the quantifiable parameters used to judge their performance and effectiveness in administering those resources.

10. Thank you