Evolution vs. Revolution: Which Approach for Improving Budgeting?

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Choosing to make changes to your budgeting process can be a bold move.

It can be intimidating to make any major business changes, but it's a necessary part of continually improving the efficiency and success of your business model. When implementing a new budgeting method, businesses can either approach the process evolutionarily or revolutionarily. So, which tactic is right for your business?


An Overview of Budgeting Overhaul

Implementing a new budgeting strategy can either be a short-term or long-term process. While there is always a gray area, generally speaking, companies either approach budgeting overhauls in an evolutionary or revolutionary framework. With revolutionary budgeting overhauls, exasperated businesses throw their arms in the air, declaring the immediate need for a new approach, and completely alter their current strategy in a short period of time. Evolutionary approaches, on the other hand, take a bit longer, so as not to disrupt current business processes, while gradually improving on the budgeting methods.


The Revolutionary Approach to Budget Implementation

The revolutionary method is far less common, but it's still sometimes preferred by businesses. A revolutionary approach offers some distinct advantages, including:

  • The change occurs quickly. This is ideal for businesses facing extreme difficulties with their current processes and need a new approach immediately, such as a switch to Zero-Based Budgeting.
  • High adoption rates. Since the budget overhaul happens so quickly, employees are pressured into immediately adapting. This can be a positive and a negative, as it encourages rapid adoption rates, but leaves little opportunity for adjustment.
  • It often looks better on professional reports. Investors may see revolutionary changes more favorably, particularly if the change immediately proves beneficial.

While revolutionary budget overhauls certainly have some advantages, they aren't without their risks. Changing processes so quickly can greatly disrupt the flow of business, and if employees aren't sufficiently prepared, it could drastically impact overall efficiency. Additionally, there is little opportunity to test the new approach and determine its effectiveness. Thus, if it proves to be less desirable than your old budgeting tactics, the budget overhaul could have devastating effects on the company.


The Evolutionary Approach to Budget Implementation

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The evolutionary approach to budget implementation is far more popular among businesses for a variety of reasons. These are some of the top advantages to consider.

  • Slower adoption leads to greater comprehension of processes and roles by each employee, which will lead to a higher rate of success.
  • It doesn't disrupt the flow of business. Companies can gradually improve upon their old budgeting methods without completely overhauling their methods overnight.
  • The company has more time to test out the new methods and ensure they're meshing well with the company.
  • The company has more time to hire new talent or train existing talent to prepare for the shifting roles.

When adopting a new approach to budgeting, either evolutionary or revolutionary methods can be implemented. However, many businesses opt for an evolutionary approach, where they gradually implement new budgeting tactics, so as not to disrupt the flow of business.

Host Analytics cloud-based EPM platform provides the flexibility to support a variety of budgeting approaches. And it can be implemented slowly or incrementally if needed, so it doesn't disrupt current processes. For instance, you can start out with a narrow focus on the annual budget, with Finance staff entering data on behalf of line managers initially. Then over time you can roll the software out to line managers and train them to enter their budget assumptions or forecasts themselves. With intuitive interfaces and an easy-to-use platform, employees will pick up on its usage quickly.

Start your new budgeting approach today. Read our white paper EPM in the Cloud to learn more.

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Posted by on August 4, 2016
Topics: Budgeting
John O'Rourke

John O’Rourke is Vice President of Strategic Marketing at Host Analytics. With a background in accounting and finance, John has over 30 years of experience in the software industry and 20 years of experience in EPM product marketing at Hyperion Solutions, Oracle and Host Analytics. He has worked with many customers and partners on financial reporting and planning initiatives and has spoken and written on many topics in EPM. John has also held positions in strategic marketing and product marketing at Dun & Bradstreet Software, Kenan Systems, and Decisyon. John has a BS degree in accounting from Bentley University and an MBA from Boston College.

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