What is Project Budgeting?
Project Budgeting (Annual and Continuous) is a challenge for a lot of organizations. We see more and more companies going from an annual project budget into more of a continuous planning cycle. The benefit of that is that you have visibility beyond twelve months into your spend.
Many projects - about 40% of projects - are carryover projects from prior year. There is already a - one way to look at is that you already have 40% of your projects spend or your project budget already committed.
CapEx & OpEx
This process is strictly done at a high level in terms of capturing the project plan which includes CapEx and OpEx. Our system will take the CapEx and OpEx and turn that into an expense budget.
Capture & Select
The goal of project budgeting is to understand which projects you will invest in for the upcoming year. Then you need can go through a cycle where you're capturing all of the initiatives, prioritizing and scoring those initiatives, selecting the appropriate projects then allocating budgets.
Inpensa tool has the ability to get that down to the chart of account level. Inpensa system can act as a sub-ledger to feed data into your financial systems.
Single source of truth
Companies are managing this process on spreadsheets. They have different systems that are producing various data. Their product management data may be providing some high-level financials on ongoing projects. So, they are capturing that data, they are capturing ideas and new projects that are submitted by the business managers for the upcoming year. There is a combination of existing projects, new projects, capital intensive versus OpEx-based projects. These are all data points coming in from different sources.
No more need for spreadsheets
Then it is important to be able to take all those different data points, put them into one place, manage the data, select the right projects and then understand how it impacts your various accounts on the general ledger is important. So what Inpensa system does is it sits in the middle of all data sources. It eliminates all these needs for any of the spreadsheets. Inpensa SaaS platfrom captures projects information. We look at your project's CapEx, your project's OpEx, we capture any cost savings that you may have at the individual project or program level.
Top down Budgeting
Inpensa SaaS platform pulls data together so that you can then align it to a top down budget. So, one of the things we do that's important is a top down budgeting process and a bottom up budgeting process. The top down is setting organizational budget that could be five hundred million dollars.
Bottom Up Budgeting
Then your bottom up is to identify the programs that will be funded by that five hundred million dollars. The big piece of that is to understand not just the CapEx but for your in-year or your planning year, what's the P&L impact?
So even though you may have five hundred million dollars of budgeting your P&L, you may have a billion dollars’ worth of projects to spend based on your amortization and depreciation schedule, you could fund a billion dollars’ worth of projects with a five hundred-million-dollar expense base.
PPM Tools Integration
Inpensa system allows you to calculate your P&L impact to capture data at the chart of accounts level and cost center level to act as a sub-ledger so we can then extract that data created journal entry and post that data directly into your financial systems, we can post that data into - export that data into your PPM tools and then track that data on an ongoing basis.
Inpensa has the capability to run a planning cycle, start/stop or run a continuous process that you're constantly iterating the budget and re-prioritizing/ re-balancing the budget on an ongoing continuous basis.
What are the benefits of Inpensa platform?
The first thing is agility. It is the ability to pull this data together very quickly. It is both from data capture standpoint and from an outpu standpoint. The output is your fiscal year budget. Being able to get to that output in a reasonable amount of time with a great deal of accuracy is the end result of our solution. The way it is done today is with a lot of people with a lot of spreadsheets. It takes a lot longer to get that data. Then the accuracy of that data is lost as it aligns to you chart of accounts. Specific initiatives can be lost through aggregation and consolidation process.
Very important things are accuracy and time. The analytics that Inpensa platform provides is a game changer. You can cycle through projects very fast. You can see if you are over or under-investing in a particular strategy. You can quickly view if you are allocating a big part of the budget into areas that don't have the highest strategic value for the organization. So, three benefits: time, accuracy and standardization. Making sure that you are allocating the appropriate budget to the right place. A critical piece is having real-time visibility into the data through data analytics.