The case for zero-based budgeting

Budgets can be an opportunity for reflection on strategy and alignment

Have you ever noticed departments in your organisation rushing frantically to spend their budgets at the end of the financial year? Have you ever seen someone commission a service they didn’t really need to avoid having their budget cut? Have you ever done it yourself?

I’m willing to bet that most of my readers have either participated in that year-end spending panic, or seen it happen. It’s all too common – and an unmistakeable sign that an organisation’s budget has come seriously adrift from its strategy. If an activity is genuinely important, nobody should be scrambling to get it done just before the deadline. But after years of creating budgets based on what you spent last year plus X, the instinct to hold onto what you have can become deeply entrenched. Zero-based budgeting is an exceptionally powerful tool to avoid that lethal complacency.

Zero-based budgeting stops mindless routine in its tracks and forces everyone to actually think about what they’re doing. It can be an immensely empowering process for line managers, creating an opportunity to reconnect with how their work fits into the bigger picture. It will almost certainly also create opportunities to cut costs, as people see where they could be doing things more efficiently – but the cost cutting is not the main point. Indeed, if zero-based budgeting is done right, it should also identify areas where the organisation is under-spending, or where you could get more value for the same spending.

Over-emphasis on cost cutting is one reason, I suspect, why zero-based budgeting isn’t more widely used. There’s a certain swashbuckling appeal to the idea of burning everything to the ground and making everyone justify their entire budget from the ground up. The reality of that approach, however, is more likely to be widespread fear, resentment and frantic attempts to protect pet projects.

There’s a healthier way to approach zero-based budgeting. It’s not just about costs, it’s about linking spending with strategy. When a new business or project is starting from scratch, the budget is the place where big dreams get their reality check. It means asking questions: What do we actually need to get this off the ground? What can we do without? What’s the most efficient way to achieve our objectives? What are the best tools and people for the job?

In an established business, the day-to-day routine can carry on for years without anyone ever stopping to reconsider whether the existing answers to these questions are still the right ones. Taking time out to review them can be invigorating, identifying opportunities for change, growth and new investment as well

as for pruning.

This can be particularly terrifying for areas of the business which are essential but whose value is intangible, like marketing or customer service. A zero-based budget process should provide ways to demonstrate value that aren’t directly linked to revenue—but also, if someone can’t make a convincing argument for their existence then they probably need to be thinking harder about it. Finding and honing the arguments can contribute to a renewed sense of purpose and alignment with overall strategic goals.

Of course this all takes a lot more time than the usual approach, which is why so few businesses do it. There are two ways to solve the problem. First, the whole organisation doesn’t have to start from scratch every year. A rolling four-year process where just 25% of the organisation does a zero-based budget every year will achieve all the same benefits without most of the disruption. Second, for the other 75%, a budget process that is fast and well-supported by software and automation tools will free finance staff up to spend time where they are most needed.

It’s not an easy path to take – but if implemented correctly, zero-based budgeting can be a powerful tool to engage and empower line managers, increase budget transparency and make sure spending actually supports business goals.

As published in AccountingWeb - 27 November 2019

Corporate Renaissance Group partners with IDU

Toronto, Ontario – December 2, 2019 – Corporate Renaissance Group (CRGroup), a Quisitive Company (TSXV: QUIS), Microsoft Partner and premier provider of business technology and consulting services, today announced it has finalized a distribution agreement with IDU, a Microsoft Partner and leader in corporate budgeting, forecasting and reporting software.

IDU’s flagship product, idu-Concept™, provides budgeting and financial reporting for medium-sized to large businesses. idu-Concept has been named a leader in the budgeting and reporting category and a high performer in the Corporate Performance Management Categories of the G2 Crowd™ Fall 2019 Report, as well as being named one of the top financial planning applications by Gartner®. idu-Concept was developed to eliminate barriers to reporting by allowing businesses to leverage existing systems and tools for extensive reporting and data visualizations.

The agreement grants CRGroup the right to market, sell and implement idu-Concept across North-Eastern United States, Canada and the Caribbean.

This partnership with IDU not only strengthens CRGroup’s position in the FP&A transformative space but addresses a need in the marketplace for affordable budgeting software that leverages existing technical investments and data reporting platforms like Microsoft Power BI™, SQL™, and Azure™.

“We are very excited to strengthen the idu-Concept footprint in the North American and Caribbean markets,” said Thomas Ironstone, Manager, CPM/BI at CRGroup. “Adding idu-Concept to CRGroup’s toolset of CPM and FP&A solutions provides our customers with a powerful, affordable, flexible and secure system that leverages the Microsoft® platform – both on-premise and in the Cloud.”

“We’re delighted to partner with an industry leader like CRGroup to extend our reach in North America and the Caribbean,” said Kevin Phillips, CEO of IDU. “idu-Concept is built on the values of increasing financial accountability, transparency and empowerment throughout an organization, said Kevin Phillips, CEO of IDU. “We enable non-financial managers to engage with budget, forecast and financial information in ways that make it easy to understand. The formalized partnership with CRGroup provides us access to enterprise businesses looking for a reliable cost-effective solution that fits within the terms of their IT strategy.”

About IDU

IDU delivers top of class packaged budgeting, forecasting, performance management and reporting tools to simplify financial management. Our flagship product, idu-Concept, provides easy, effective budgeting, forecasting and financial reporting for medium-sized to large businesses. idu-Concept integrates easily with ERP software, but unlike more cumbersome offerings, idu-Concept can be implemented quickly, requires little or no ongoing consulting and reduces budgeting cycles from months to weeks. For more information on IDU, please visit www.idusoft.com

About CRGroup

Since 1989, Corporate Renaissance Group (CRGroup), a Quisitive Company (TSXV: QUIS), has been delivering expert guidance and leading technology solutions to help organizations transform enterprise performance. With over 4,500 customers worldwide, CRGroup has established itself with expertise in business management, financial management, consulting and software development. Working with its technology partners such as Microsoft, Board, Adaptive Insights, Tableau, IDU and Atlassian, CRGroup delivers solutions in Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Office 365 (O365), Corporate Performance Management (CPM), Human Capital Management (HCM) and Business Intelligence (BI). These solutions and more cover the full business spectrum, consistent with CRGroup’s Level 7™ Framework. To learn more about CRGroup, visit crgroup.com and follow @crgroup

About Quisitive

A premier Microsoft solutions provider, Quisitive empowers enterprises to skillfully navigate the ever-changing technology landscape through the utilization of Microsoft cloud technology including Microsoft Azure, Dynamics and Office 365.

Named the 2019 Microsoft U.S. Country Partner of the Year for demonstrated excellence in innovation and implementation of customer solutions based on Microsoft cloud technology, Quisitive is uniquely poised to help businesses harness the power of the cloud.

Quisitive combines technical expertise, internal Independent software vendor capabilities and proprietary SaaS solutions, such as CRG emPerform ™ and LedgerPay to create impactful solutions that drive transformation for their clients. Whether it’s moving to the Microsoft cloud, understanding the implications of operating in the cloud, or pushing the boundaries of cloud innovation, Quisitive offers a variety of services that can be implemented individually or layered to create a unique solution to fit an organization’s specific needs.

Quisitive is comprised of experienced Microsoft partner leaders and technologists who share a deep understanding of market needs and the appropriate application of Microsoft cloud technology. The company’s expertise and focus are on helping industries such as financial services, manufacturing, oil and gas, and retail, drive innovation using Microsoft cloud-based technologies.

Quisitive serves clients globally with offices in Dallas, TX; Denver, CO; Minneapolis, MN; Ottawa, ON; and Toronto, ON. For more information, visit quisitive.com and follow @BeQuisitive. TSXV: QUIS.

IDU User Conference 2020 - Registration open!

On the 27^th and 28^th February 2020 Financial Managers, Financial Accountants, IT Managers, and Financial Administrators from a wide range of companies, industries, and countries will gather in Cape Town for two full days of conferencing at the 11^th Annual IDU User Conference 2020. The conference will again be held at the Marriott Hotel, Crystal Towers, Century City.

The theme for the conference is Empowerment, as this is one of our core values at IDU. We believe in empowering our staff and yours, as well as the community around us.  idu-Concept empowers your business by creating time for finance to be more strategic. The conference creative centers around unleashing your inner superhero and unlocking those hidden superpowers.

CEO Kevin Phillips will share the IDU Development Roadmap for 2020 and attendees will be able to provide input to influence the final result.

Guests will be introduced to exciting new features and modules of idu-Concept; learn all the tricks and tips to maximise their use of the system and be able to attend in-depth master class sessions, where delegates can attain full IDU administrator accreditation certificates for topics such as Employee Remuneration Budgeting and Reporting and Analytics.

We have some exciting expert guest speakers like Chantell Ilbury, one of Africa’s leading strategists and scenario planners, and Craig Pederson a leading exponent of the digital forensics field. With more speakers to be announced in the near future.

Registration is open and there are limited spaces available, so go online to www.idusoft.com and click on the conference link to reserve your spot today. What’s more, delegates who register and pay before the 20^th December will receive a 5% early bird discount.

Free the accountants!

The “bean counter” trope is long past due for retirement, but what’s the alternative? Kevin Phillips argues it’s time for accountants to embrace their inner sage. 

 

We’ve all heard all the cracks about accountants: we’re boring, we’re annoyingly obsessed with tiny details, we’re bean counters. With our tedious controls and processes we get in the way of more interesting people doing more interesting things.  We’re necessary, like flossing and medical checks are necessary, but few people look forward to meetings with their accountants. 

There are occasional attempts to break the stereotype and make accountancy look thrilling. But they tend to veer into overcompensation: CIMA once sponsored a website called extreme-accounting.com, which featured photographs of accountants doing extreme sports while wearing their office suits. But on the whole, the world needs reckless accountants a lot less than it needs boring accountants. Reckless accounting, after all, is what gave us Enron and a raft of other corporate scandals. The way out of the bean counter’s cage is not to become daredevils (which is highly unlikely to work in any case, since it doesn’t exactly come naturally to many of us) but to step into our role as advisors and mentors.

There is real demand for this role: I’ve lost count of the number of business owners, senior managers and other decision makers who’ve told me they long for more than just monthly financial statements from their accountants and finance departments. They need to know not just what the numbers are, but what they mean. Accountants are the ones best placed to offer this interpretation and advice. Our expertise means we can read things in ways lay people just can’t – if you’ve ever marvelled at how a doctor can read an ultrasound scan or an architect can read a plan, then you know how people feel watching us read balance sheets. What seems to us, after years of practice, like a banal everyday activity can look something like wizardry to the uninitiated. 

One of the things that’s been preventing accountants and financial managers from embracing their role as guide and mentor is the sheer volume of more mundane work to be done. The numbers do, after all, need to be crunched. Software, automated processes and AI are rapidly taking over this routine work, though, and we should be glad of it. The less time we spend on the nuts-and-bolts work, the more time we have to think: to consider, analyse and interpret what all those numbers actually mean. 

What might that look like? It might mean spending time coaching that one cost centre manager who just hasn’t got a clue; it might mean identifying problems and weak areas in the business and finding ways to make them better; it might mean scanning for trends that nobody else has spotted yet; it might mean deeper conversations with the leadership team.

Whatever this more ambitious role looks like, it will make much better use of our financial expertise, which is an expensive but often scandalously under-utilised resource. 

IDU a leader in the G2 Crowd Fall 2019 Report

IDU has been named a Leader in the Budgeting and Reporting category and a High Performer in the Corporate Performance Management Categories of the G2 Crowd Fall 2019 Report. 

G2 Crowd is one of the world’s leading business solution review platforms, which leverages more than 330,000 user reviews to drive informed purchase decisions.  

IDU has received this accolade after having been recognised by G2 Crowd in four previous reports.   

Our clients voted us tops in terms of “ease of doing business” and “quality of support”. This is a testament to the knowledgeable and dedicated team at IDU. On average other corporate performance management software vendors score 8.6 out of 10 for customer support. IDU scored a 9.1.  

"Customer satisfaction like this comes from having a great product and the right team. The IDU team is highly experienced and listens to customer needs, providing knowledgeable support and services." - Kevin Phillips, CEO of IDU  

It is client reviews like this one that have contributed to us receiving this recognition from G2 Crowd.  

 “The team at IDU have a good business and finance understanding and spend time understanding the specifics of your organization to deliver a solution that is fit for purpose.” – Clive S 

To read the full list of reviews please visit the IDU page on G2 Crowd.  

Read more about IDU or to schedule a demo of our software visit our website at www.idusoft.com.

  

About G2 Crowd

G2 Crowd, the world’s leading business solution review platform, leverages more than 330,000 user reviews to drive better purchasing decisions. Business professionals, buyers, investors, and analysts use the site to compare and select the best software and services based on peer reviews and synthesized social data. Every month, nearly one million people visit G2 Crowd’s site to gain unique insights. G2 Crowd aims to bring authenticity and transparency to the business marketplace. For more information, go to G2Crowd.com.

Remove drama from budget cycles

Taking the drama out of budget cycles

Nobody has ever written an opera about organisational budget cycles – but given the amount of human drama they generate, perhaps someone should. The typical budget process is a grim and drawn-out cycle of power games, nagging, resistance, resentment, dread, despair and wasted effort. And all of it, in keeping with the best traditions of high drama, is entirely avoidable.

It begins innocently enough, with our heroes in the finance department preparing spreadsheet templates and sending them out for completion by cost centre managers; and yet the seeds of conflict are already sown, because the spreadsheet is a marvelous tool, but a poor messenger. It is not designed to facilitate the complex and sensitive negotiations that are the real substance of a budget process. Our heroes have an inkling of this and try to compensate with elaborate design; but they can always only respond to the problems that surfaced last year, which inevitably causes a whole new set of problems.

Meanwhile the cost centre managers, on the front lines and grumbling about their generals, do their best to fill in the numbers based on their best estimate of what the future holds. The process is stressful because few of them have much financial training and the spreadsheets can be intimidating, and so in many cases the task falls to the bottom of the priority list until the nagging finally pushes it into the category of ‘urgent’.

As the returned spreadsheets accumulate back in the finance department and people try to compile all the information into a single coherent picture, it becomes clear that there are errors. Our heroes, now growing frustrated and impatient, send them back out again with requests for clarification or changes. Cost centre managers make some corrections, but leave other things unchanged because yes, that is really what they meant. Resentment begins to fester.

After a few rounds of this, with a final deadline looming and everyone at odds, the finance department gives up and makes some changes of its own to bring everything into line. The final budget is not what the cost centre manager asked for, but the reasons for the numbers have got lost; and so they roll their eyes at the waste of time and move on.

Some time later, when told they’re over budget, they retort that they’re exactly on target with what they originally asked for -- if some bean counter decided to override them, that’s not their problem.

And so the circus rolls on: Cost centre managers are disempowered, feel no sense of ownership over their numbers, and resist any attempt to hold them accountable because they are being governed by decisions made over their heads. Instead of being a useful planning and decision-making tool, the budget has become a bureaucratic exercise that feels like a meaningless waste of time.

It really doesn’t have to be this way. In my experience most people really do want to do their jobs well, and they want to be empowered with the knowledge, skills and tools they need to achieve that goal. When it comes to budgets, individual cost centre managers have the best knowledge available in the organisation of what is likely to come their way in the next year – and so they need to be given the leeway to make budget decisions that will be respected. That may involve argument and negotiation, but those are vastly preferable to decisions imposed from outside.

Instead of a vicious cycle of nagging, resistance, disengagement and surrender, it’s possible to build the opposite – a virtuous cycle in which empowerment and clear communication build accountability and a sense of ownership.  It doesn’t make for high drama – but then nobody actually wants to live inside a soap opera.

As published on AccountingWeb  - 24th September 2019

Want your staff to be accountable for their numbers?

Empower them.

If you want to track the rise and fall of buzzwords over time, the Google Books Ngram Viewer, which tracks word frequency in a vast number of books published since 1800, is a very useful tool.  It reveals, for example, that while “accountability” has been consistently rising in popularity since 1950, “empowerment” only arrived on the scene in the mid-1970s, enjoyed a rapid rise and then plateaued in the late 1990s.

Ngram Viewer tracks word frequency

That’s a pity, because at IDU we believe very strongly that if you really want people in an organisation to have a sense of sharing in its success, you need to empower them with the tools that promotes a sense of ownership for their actions and ultimately some true accountability. One of those tools is accurate, timely financial information. 

It’s especially important to deliver this financial information at the level of individual departments – and to deliver it in a way that makes sense to non-financial managers. A typical line manager in most organisations have no more than basic accounting knowledge, if they have any at all. It’s not reasonable to expect them to be able to read ledgers, income statements or balance sheets in the same way as accountants can – and in fact, that isn’t the information they need. 

What managers need to know about is what’s under their control – what is earned and spent in their departments. And they can be most easily held accountable for their financial performance if they’re able to track it in close to real time. This is easier if they have quick access to just the numbers they need, in a format that’s easy to understand and interact with. 

If line managers are empowered to propose their own revenue and spending budgets, then manage and adjust those budgets in real time, they’re empowered to respond quickly and effectively to changing conditions, both within the organisation and in the marketplace.  How much of our travel budget have we spent? Can we afford that high-profile trainer the engineering team has asked for? Who’s pushing the limits on their expenses a little too hard? Are we on track to meeting our revenue targets? With good financial management systems, getting answers to questions like this should be as simple as checking a social media feed. 

A number of things can happen as a result. First, it’s possible to spot and respond to anomalies in time: What’s behind an unexpected spike in sales of a product you weren’t promoting, and is there an opportunity to seize? Why have several clients placed smaller orders than usual? Do we have a problem? When you can ask the “why” questions early and get answers, you have more chance to take the right action. 

Second, it becomes harder to avoid, evade, delay, escape, stall, deny and otherwise hide from reality. If the numbers are there in front of you every day, you can’t be surprised by them; and if they’re equally visible to your own manager and whoever’s managing them, you have an incentive to take care of them. 

Finally, having user-friendly financial analysis and planning systems in place saves time. If managers can add comments and explain variances when they need to request a budget update, for example, the finance department is able to make a quick decision instead of having to delay while they wait for more information and explanations. 

So if you’re concerned about staff who don’t seem to be taking ownership of their own performance – the first thing to do is make sure they have the information they need to make that ownership real.

Accountancy as heroism

The financial health of South Africa’s cities and towns is worse than ever before, with only 18 out of 257 municipalities getting clean audit reports for the 2017/18 financial year. Surely it’s long past time to introduce more transparency into our government spending. 

There are plenty of unenviable jobs in South Africa these days (university vice-chancellor, anyone?), but Auditor-General Kimi Makwetu and his team have been having a particularly hard time lately. Municipalities have been brazenly disregarding audit recommendations – the performance of 63 of them actually got worse last year, with only 22 doing better. To make matters worse, Makwetu says his audit teams have experienced people pressuring them to change their findings, questioning their motives, and even outright threats and intimidation. 

Accountancy shouldn’t have to be an heroic profession, so it’s good news that the new Public Audit Act gives the Auditor-General stronger powers to press for further investigations and initiate binding remedial action. But relying on the auditors to catch irregularities years after they’ve happened is much too little, too late. 

Like mould in a damp cellar, dodgy dealings, bad faith and even plain old incompetence thrive in darkness. Transparency and free-flowing information are the light and air a democracy needs if it’s not to start rotting at the foundations – and with today’s technology, there is no excuse for a lack of transparency. 

What does transparency look like? It means real-time access to information that’s easy to understand, even if you’re not a professional accountant. It means being able to dive below the top layer of aggregated numbers, all the way down to individual transactions if necessary. And most of all, it means the people who are responsible for spending money are also held accountable for it. 

Imagine if your local municipality’s accounting systems were open to public scrutiny in real time. Ordinary citizens could see exactly what was being spent on travel, or entertainment, or mystery consultants—and just as important, what was not being spent on upgrading sewerage plants, fuel for refuse collection trucks or maintenance of public roads and housing. And they’d be able to see it within days, not months or years – which means there might be time to stop problems in their tracks, before the money has been siphoned away into offshore bank accounts and properties in Dubai. Best of all, people who know their actions are being watched are less likely to go wrong in the first place. 

None of this is impossible to do right now – it’s not even particularly difficult or expensive, especially compared to the billions we’re continuing to lose to “irregularities”. The technology to achieve all of this already exists and is in use around the world, including in many places right here in South Africa. So is government not making its spending transparent because it can’t – or because it doesn’t want to?

Did you know that South Africa’s national Budget is rated as one of the most transparent in the world? In fact, in 2017 we tied first with New Zealand in the International Budget Partnership’s Open Budget Survey of 102 countries. So we’re getting one side of the equation right. Now it’s time to focus attention on the other side, and get our spending right as well. 

As published in Accountancy SA - September 2019

Recession and Resilience

There might be a recession coming soon; or it might come later. Economists are notoriously bad at recognising recessions until we’re in one – but we do know, at least, that another one will be along eventually.

Given this certainty, what’s the best way to deal with a looming downturn? For most people, the instinctive response is to prepare as if for disaster: nail up the windows, batten down the hatches, tighten belts or whatever the metaphor of choice might be for stockpiling resources, cutting spending and reducing exposure to risk.

Our instinctual response makes sense in the context of storing food for a long winter, or in anticipation of a famine – but in a more complex world than our ancestors faced, some of these reflexes can be counterproductive, particularly the instinct to stop spending. Deloitte, for example, reports from its latest survey of European CFOs that companies that reinvested more during the last recession, particularly those who were more advanced in the use of ICTs, achieved higher growth rates during the recovery. They attribute this success to thinking ahead and planning to take early advantage of the opportunities that inevitably arrive with a recovery.

Similarly, McKinsey partners writing in the Harvard Business Review say that during the next recession they expect companies to invest in, and rely increasingly on, digital tools to improve quality, simplify operations and boost productivity.

A recession, then, is an opportunity to invest, thoughtfully and strategically, in tools that will boost your organisation’s resilience and agility. Some of the most valuable tools are those that are able to improve communication, transparency and accountability across the company.

For example, depending on their needs and culture, some organisations centralise during times of trouble – others choose to disperse. Whichever choice they make, visibility is key: decision makers need to know what is happening at every level in the organisation, employees need clear direction from their managers and leaders, and teams need to communicate clearly across the organisation. Whatever level of confusion and mismatch we might be able to get away with in good times, we cannot afford it when things get tight. In particular, we need to take full advantage of the combined brains of everyone in the organisation – we need to gather and use all the resources of knowledge, skill, talent, experience and creativity we have.

In some ways this is common sense – but then again, we all know common sense is not all that common, particularly when people are feeling worried or fearful.  One of the most dangerously self-defeating reactions is to start hiding or withholding information, usually in the entirely misguided belief that giving people access to an accurate picture of reality will cause panic or encourage defeatism.

There’s a great example of this in the deservedly acclaimed TV series Chernobyl. In the first episode, local party officials agree on the night of the explosion at the nuclear reactor not to tell the local townspeople what has happened – for their own good. It was nearly two days before the town was evacuated. Other lies, omissions and concealments contributed greatly to human suffering in the wake of the disaster.

Tempting as it might be to tell ourselves that concealment of information was a disease peculiar to Soviet-era Russia, we all know it’s not. Again and again, leaders withhold or soften the truth about problems facing their organisations  – whether out of shame, fear, belief that they can fix it on their own, outright denial or some combination of all of these.

The truth may indeed hurt – but avoiding it always hurts more in the end. Leading people successfully through difficult times requires the courage to share the truth – and to seek, then accept, input from the rest of the organisation.

Only when everyone in an organisation has access to all the information they need can they truly apply themselves to fixing problems, developing new ideas and creating new opportunities. Choosing and using digital tools that facilitate information flows throughout the organisation is essential to building the resilience that’s needed to weather tough times.

So if you find yourself worried about the future, put your instinctive reactions on hold. Pause; reflect; look ahead – and then choose the actions and investments that will strengthen your organisation rather than weakening it.

As published AccountingWeb - 28th August 2019 

Stuck in spreadsheet hell?

It’s time to upgrade your budgeting and forecasting process

How long does it take your company to prepare its annual budget – two weeks? Six weeks? Two months? Three months? And on a scale of “walk in the park” to “swim through shark-infested waters”, how stressful is the process?

If your answer is six weeks or longer, we’re betting the process is also stressful and unpleasant. For some human activities, a slower pace means more leisure and time to reflect; budgeting is NOT one of those activities. If a budget takes many weeks or months to complete, it’s not because anybody is taking it easy but more likely because they’re stuck in a nightmarish cycle of data collection hassles, arguments, delays, requests for more information and spreadsheet version conflicts.

The good news is: It doesn’t have to be that way. It’s possible to shorten your budget planning and approval process, in most cases to four weeks or less, while also making it less stressful, more accurate and more useful. The key is ditching those pesky spreadsheets in favour of a single, central information source that makes it easy to find and share accurate information with everyone who needs it.

Don’t get us wrong – spreadsheets are a fabulous tool and serve many small and early-stage businesses well. But at some point in the life of every organisation they begin to outlive their usefulness – and like any other tool unfit for purpose, they can start to cause more problems than they solve. Problems like inaccurate data capture, version conflicts, broken links, and user confusion and misunderstanding.

Here’s what’s possible instead: budget information is held in a single database to which all line managers have the access they need to check their past spending and propose new budgets. The interface is easy to use, so they don’t feel intimidated and overwhelmed by the task and there’s less temptation to procrastinate. The moment their numbers are entered, the finance department and their managers can see them, and query them if needed – right down to the level of individual line items. There are no long email threads with multiple attachments, just a single database with comments and attachments embedded. Each department’s budget proposal is submitted on time, and approval is quick; if the budget isn’t approved, line managers know why and can make alternative proposals.

As a result, departments feel more ownership of their budgets, and empowered to make better financial decisions. If the situation changes, they’re able to update their budgets in real time – and the finance department gets early warning of changes, instead of only finding out months later when actuals are finalised. The finance department is also freed up for more strategic tasks like profitability analysis and proactive planning.

In the end, moving to a dedicated budgeting and financial planning system means each budget planning phase is shorter – but also that budgeting is continuous, making the entire firm more agile and adaptable to changing market conditions.

So if you’re still stuck in spreadsheet hell – you don’t have to be. Have a look at what idu-Concept can offer.  

Will Libra entrench Facebook’s dominance or trigger its downfall?

“Move fast and break things”, Facebook’s motto until 2014, was the mantra of the “disruptive innovation” era.  Five years on, the naivety of this starry-eyed approach has become painfully obvious. Disruption, it turns out, causes damage. So far, the list of things Facebook has broken in its haste includes journalism, personal privacy, Myanmar, and democracy; will the global financial system be next?

Facebook launched its new digital currency Libra and digital wallet system Calibre in June with the question: “What if everyone was invited to the global economy, with access to the same financial opportunities?” It seems, on the face of it, like an obviously wonderful plan: it’s hard to argue with the idea that everyone should have access to the same opportunities.

There’s a lot to like here. Cryptocurrencies really do have the potential to dramatically expand financial access for everyone, particularly in parts of the world where government interference in money systems is heavy-handed and unproductive. The costs of transferring money across borders are absurdly high, and it’s the world’s poorest people who pay the highest costs. Making cross-border transfers cheaper and easier will undoubtedly improve lives.

The major barriers to greater adoption of digital currencies so far have been not only their volatility (looking at you, Bitcoin), but also the fact that they are complex and difficult to understand and use, locking out precisely the people who could benefit most. Between Facebook’s global reach and its undoubted skill at making products people want to use, they have an excellent shot at actually making Libra fly.

It may not be as easy as they think, though. People’s behaviour around money is complex and not always easy to understand, particularly when you are working across cultures. In regions where many people don’t have formal bank accounts there are already very successful local mobile money transfer systems, East Africa’s Mpesa being one of the most well-known examples. These services are well adapted to their local markets, compliant with local regulations and well supported. Can a single digital currency system possibly deliver a service that will work as well in Dhaka, Mombasa, or Lima as it does in San Francisco?

The problem becomes particularly acute at the point where digital currency must be swapped for real currency, which most people will want to do. The scope for money laundering and other criminal activity is huge, and Libra’s proponents say they have been in talks with “local convenience stores and money exchanges” to ensure anti-laundering checks are carried out – but it’s frankly hard to believe this is possible on a global scale. Calibra’s VP of produce Kevin Weil recently asked TechCrunch to imagine a situation “where if you want to cash in or cash out, you’ll pop up a map that highlights physical locations around that allow you to do it. You select one that’s nearby, you select an amount, and you get a QR code that you can take to them and complete the transaction.” Weil’s faith that the entire planet works like California is touching, but misplaced.

Even if Libra can succeed on a global scale, there is another problem: getting around central banks and governments, which are already struggling to control cryptocurrencies. It’s tempting to cheer them on for precisely this reason – government controls aren’t popular anywhere – but there is potential for unleashing a disastrous cascade of unintended consequences.

Libra is a “stablecoin”, backed by a reserve of real currencies and other assets to prevent the kinds of wild price fluctuations that have bedevilled Bitcoin – but this reserve does not amount to the kind of liquidity backstop that a global currency requires. As Columbia University’s Katharina Pistor has pointed out: “The idea of a private, frictionless payment system with 2.6 billion active users may sound attractive. But as every banker and monetary policymaker knows, payment systems require a level of liquidity backstopping that no private entity can provide.” If there’s ever a run on Libra, will it have to be bailed out by central banks?

In effect, Libra is creating a set of obligations on the entire global financial system – without submitting itself any kind of regulation, control or accountability beyond the figleaf of the Libra Association. No wonder governments and central banks are rushing to pour cold water on the idea.

Then, of course, there is the problem of Facebook itself: The company has become a perfect example of the harms that can be caused by large monopolies answerable to nobody but their shareholders. The concentration of even more power in the hands of Facebook and companies like it serves nobody.

Facebook says, and possibly even believes, that Libra will be “positive for people”. Given their track record so far, the rest of us can be forgiven for taking this serene self-assurance with a very large dose of scepticism. The way things are going, Facebook might even achieve the incredibly unlikely feat of making government look attractive again.

 As published on AccountingWeb - July 2019

Unravelling the consequences of the US ban on Huawei

The US government has been steadily ramping up its campaign against Chinese tech giant Huawei in the past few years – and its latest move is already beginning to have serious global consequences.

In May the US Commerce Department placed Huawei on an “entity list” of organisations essentially banned from doing business in the US or with US companies. The effects rippled out far and fast: Within days, Google halted sales of its Android mobile operating system to Huawei, meaning that one of the world’s most popular handset manufacturers can no longer ship phones using the world’s most popular operating system. Huawei will either have to “fork” Android, continuing to develop its open-source core along a divergent new path, or develop its own operating system. Either choice will have significant consequences for billions of ordinary cellphone users around the world.

It’s not only US firms who are affected, either. British microchip designer ARM has told its staff to suspend all dealings with the Chinese firm because its designs contain technology developed in the US, and Japan’s Panasonic likewise stopped shipping some components.  This is only the start. Technology companies around the world are deeply interconnected: research is conducted and standards are developed by global teams, designs developed in one country are manufactured in another using components sourced from yet others; and those components themselves have components which were produced in global collaborations. The connections go all the way down.

One of the more easily foreseen consequences of interfering so bluntly in this set of global networks is that Huawei and other Chinese companies, with the backing of the Chinese government, will speed up their already significant efforts to develop their own technologies to replace everything from chipsets to software. Most analysts suggest this will be difficult and take time – but it will happen.

The US, in other words, is incentivising China to become a lot less dependent on the US (and in the process perhaps making many other nations think twice as well). This is not great news for American tech companies, for whom China is a major export market; many will suffer in the short term, and in the long term they face the risk of being cut off from the world’s largest market.

In at least one area, China and Huawei are already far out in front. Huawei is the world’s largest manufacturer of network equipment. It also holds critical patents over the fifth-generation (5G) mobile technology which is beginning to be implemented around the world, and is expected to start seeing mass adoption by 2025.  5G, which promises mobile connectivity as fast and reliable as the fastest current wired connections, is a potential game changer, enabling everything from autonomous vehicles to remote surgery.

It’s Huawei’s dominance of network equipment, of course, that is behind the US ban in the first place. The ostensible reason is that Huawei’s ties with the Chinese government are too close and that allowing its equipment into critical network infrastructure is a national security risk. Those of us outside the US are perhaps justified in viewing this with some scepticism. The US government, defence establishment and the tech industry have deep links going back many decades; indeed, the Internet itself has its roots in DARPAnet, a project of the Defence Advanced Research Projects Agency. If Huawei is a threat because of government links, should we not be asking equally difficult questions about Cisco, or other US-based firms whose equipment is embedded in US and other global telecommunications networks?

The US already arrogates to itself significant powers to monitor global network traffic and seize private data around the world. The Clarifying Lawful Overseas Use of Data (CLOUD) Act, passed hastily by Congress in March 2018 without any committee review or hearing, compels US companies –like Google, Amazon, Microsoft, Apple, Dropbox, and many others --  to release data they hold to US authorities, even when this data originates and is stored overseas. This will require a lawful warrant, of course – but the warrant will be classified. And with the US having a notably elastic idea of what constitutes a threat to national security, it’s easy to imagine that most warrant requests will be granted with little scrutiny – especially if they don’t affect US citizens.

Whether the US battle against Huawei is a matter of national security, anticompetitive meddling to protect its own economic interests or a bit of both, the implications reach far beyond America and China. When elephants fight, goes an old African saying, it’s the grass that is damaged; and in this fight, it’s the rest of us who are grass.

As published on AccountingWeb - 1 July 2019

IDU partners with Sage Intacct

IDU Partners with Sage Intacct, bringing together powerful Financial Planning and Analytics capabilities with the innovation and customer satisfaction leader in cloud financial management solutions.

SAN JOSE, Calif. – July 10, 2019 – IDU, a leading provider of Financial Budgeting and Reporting solutions, today announced its official partnership with Sage Intacct. IDU has been listed as a certified Marketplace partner with Sage Intacct. This partnership means the idu-Concept solution has been thoroughly reviewed and approved by Sage Intacct's partnership team, and that Sage Intacct users can use idu-Concept to integrate seamlessly with their cloud accounting software.

Sage Intacct delivers incredible value to users by empowering finance teams with deep functionality that automates complex processes and provides deep financial and operational insights to help companies grow. Sage Intacct also offers an easy path to extend the solution by seamlessly connecting with other best-in-class solutions like idu-Concept for their financial budgeting, reporting, and forecasting requirements. Sage Intacct focuses on delivering a solution that puts client success first, and that commitment has allowed it to earn the highest customer satisfaction in the industry.

IDU makes budgeting, forecasting, performance management and reporting tools to simplify financial management. Our flagship product, idu-Concept, provides easy, effective budgeting and financial reporting for medium-sized to large businesses. idu-Concept integrates easily with Sage Intacct, reducing budget cycles from months to weeks.

The idu-Concept integration with Sage Intacct offers real-time, online access to information in a format that is easy to use and understand by both financial and non-financial managers. Instant access to key information allows the business to react faster to deviations from the plan. It also increases cost-center managers’ involvement, empowerment, and ownership of the numbers. 

“We’ve built a thriving partner community and marketplace, with solutions that help companies extend the value of Sage Intacct,” said Eileen Wiens, VP of Business Development, Sage Intacct. “Our customers choose Sage Intacct to drive efficiencies across their financial processes, and by automating their budgeting, forecasting and reporting with this integrated solution, IDU helps them further this goal.”

IDU’s Sage Intacct integration is available to customers via the Sage Intacct Marketplace. To learn more visit the IDU profile page on the Sage Intacct Marketplace.

About IDU

IDU delivers top of class packaged budgeting, forecasting, performance management and reporting tools to simplify financial management. Our flagship product, idu-Concept, provides easy, effective budgeting and financial reporting for medium-sized to large businesses. idu-Concept integrates easily with ERP software, but unlike more cumbersome offerings, idu-Concept can be implemented quickly, requires little or no ongoing consulting fees and reduces budgeting cycles from months to weeks. For more information on IDU, please visit www.idusoft.com

About Sage Intacct

Sage Intacct is the innovation and customer satisfaction leader in cloud Financial Management. With the powerful combination of Sage and Intacct, the Sage Business Cloud offers the best capabilities of both companies. In use by organizations from startups to public companies, Sage Intacct is designed to improve company performance and make finance more productive. Hundreds of leading CPA firms and Value Added Resellers also offer Intacct to their clients.

Sage Intacct is based in San Jose, California and an entity of Sage, the market and technology leader for integrated accounting, payroll and payment systems, supporting the ambition of entrepreneurs and business builders and a FTSE 100 business. For more information on Sage Intacct, please visit www.sageintacct.com or call 877-437-7765.

Am I an asset?

The accountants attending our annual user conference earlier this year paused for thought about how to navigate the rapidly changing workplace as we move into the fourth industrial revolution. And, they asked some insightful questions about what it means to be a valuable employee today.

Sameer Rawjee, the founder of Google’s Life Design Lab, and currently working with companies and schools to tackle continuous learning and purpose at work, sparked a lively audience discussion during his keynote address. This was when one of the attendees asked: “Am I an asset to my company? Or am I just OpEx?”

Only an accountant could have summed up today’s workplace existential crisis in this way. And it neatly frames the conversation about how to ensure we stay relevant in our own roles, plus how we can help our people stay valuable in our companies.

My view is that on day one of our jobs, we are all assets to our company. But that we run the risk of depreciating every single day, unless we actively work to ensure our own growth, and the growth of the people around us, in order to stay relevant and valuable in an ever-changing world.

And don’t think that as accountants we are exempt from this tidal wave of change. Previously we may have had a predictable career path where hard work and experience progressed us along the ranks. Sure, we got better at what we did, we might specialise in a certain area, or we might encounter unusual jobs that gave us unique experience, but, fundamentally our core skills remained relevant.

Today, this is being entirely destabilised, with AI and automation promising to take over more of our roles. This is a double-edged sword: we’ll be saved a lot of the repetitive mundane work, but will have to find ways to replace the experience gained from some of the basic work machines can now do, as well as constantly reinvent ourselves, learn continuously and move fast to stay ahead of the machines, always adding value by doing what they can’t.

It is essential that these new skills and capabilities align with the goals of the company. For this to happen, companies need to ensure that everyone is very clear about the business’s vision, goals and plans. Just like my advice to canvass the grassroots of your organisation during the budget process, it’s the people on the ground who know what they need to learn to remain relevant, and happy, in their roles.

Get this right, and then, there will be no doubt that you, and your people, are true assets, constantly appreciating, and continuously adding value in ever-changing times. And never becoming expenses, or worse, liabilities.

Invest in learning

Companies will need to spend some of the gains achieved by digitalisation’s greater efficiencies and productivity on helping their people learn. In the same way that businesses have an imperative to digitalise in order to survive, they have a moral obligation to their people to help them adapt to these changes. During a recession mindset, business leaders might be tempted to save by not investing in ongoing learning. But retraining your people makes good business sense as well. For AI to be effective, it needs to work well with people who can keep shifting to the next area of competency that AI has not yet reached.

As published in ASA Magazine - 21st May 2019 

IDU Leader in Budgeting & Forecasting Category of G2 Crowd Report

G2 Crowd, the world’s leading business solutions review website, released its Summer 2019 Report in Chicago on the 24th June 2019.  idu-Concept achieved Leader in the Budgeting and Forecasting Category and High Performer in the CPM Category based on the responses of real users for each category respectively.

The Budgeting and Forecasting Category is new to G2 Crowd, and to qualify for inclusion in the Budgeting and Forecasting category, a product must meet a number of key requirements including:

·         Comparing revenues and expenses estimates with actuals

·         The ability to consolidate budgets from several departments

·         Use what-if scenarios to forecast possible budget changes

·         Monitor the performance of budgeting processes

idu-Concept’s rich functionality ticks all these boxes and more, while remaining an extremely user-friendly toolset!  With the IDU Cloud solution companies can now also make use of world class financial planning, reporting and analytics capabilities without large capital expenditure outlays. IDU Cloud harnesses the power, performance, security and scalability of the Microsoft Azure Cloud Platform, and offers ease of use, rapid deployment, and seamless data integration at an affordable price.

IDU achieved Leader and High Performer awards in the Summer 2019 Report by receiving positive reviews, from verified users compared to similar products in their category. For inclusion in the report a product must have received ten or more reviews, IDU currently has 28 reviews.  

“We are very proud to once again be included in the G2 Crowd Report, and to have received such high ratings from our customers, who are ultimately the driving force behind our success” said Kevin Phillips, CEO, IDU

“Rankings on G2 Crowd reports are based on data provided to us by real users,” said Michael Fauscette, chief research officer, G2 Crowd. “We are excited to share the achievements of the products ranked on our site because they represent the voice of the user and offer terrific insights to potential buyers around the world.”

Learn more about what real users have to say or leave your own review of idu-Concept on G2 Crowd’s review page!

About G2 Crowd

G2 Crowd, the world’s leading business solution review platform, leverages more than 440,000 user reviews to drive better purchasing decisions. Business professionals, buyers, investors, and analysts use the site to compare and select the best software and services based on peer reviews and synthesized social data. Every month, more than one million people visit G2 Crowd’s site to gain unique insights. Co-founded by the founder and former executives of SaaS leaders like BigMachines (acquired by Oracle) and SteelBrick (acquired by Salesforce) and backed by more than $45 million in capital, G2 Crowd aims to bring authenticity and transparency to the business marketplace. For more information, go to G2Crowd.com.