Stuck in Neutral: 2005 Budgeting and Reforecasting Survey

Companies continue to use outmoded budgeting and forecasting processes and tools even though they know this policy impedes progress. Why are they so slow to change?

Plenty of talk about all the problems associated with spreadsheet-based budgeting, planning, forecasting and reforecasting has circulated for years now. You'd think by this time companies would have gotten the message and taken steps to improve those processes. Certainly the current business climate is providing convincing reasons to do so: Pressures from competition and markets have intensified, customers have become more fickle, and the price of raw materials has been fluctuating wildly -- all of which have fueled the need to boost budgeting and reforecasting capabilities.

A look back at companies' approach to budgeting and forecasting two years ago compared with their policies today shows nothing much has changed. In the July 2003 Business Finance/ALG Software Budget Reforecasting Survey, 73 percent of the respondents indicated that they were using Excel spreadsheets. Now, two years later, 69 percent of survey participants still say that they use the same software. And their desire to reforecast is as strong as it ever was. In both 2003 and 2005, 43 percent said that they want to be able to forecast monthly. Close behind, 39 percent this year indicate a preference for reforecasting quarterly, up from 35 percent in 2003. A small number of 2005 respondents would like to forecast even more frequently: daily (2 percent), weekly (6 percent) or biweekly (3 percent). (See graph 1.)