Believe it or not, there was a time before online banking. I can still remember the frustration, and I’m sure you can too.

Did you bounce a check because you forgot to “carry the one” when manually balancing your checkbook? Did you not know your balance because you forgot your checkbook? Did you ever wonder how much you spent on non-fat lattes last year?

Thankfully, times have changed and technology has evolved. To formulate your personal budget, you expect answers in real-time and you expect them to be accurate and accessible. Why don’t we expect the same from agency budgets?

In today’s high-paced world, absolutely nothing replaces having the right information at the right time to make the best decisions. Unfortunately, many leaders are too busy with the challenges of formulating, tracking and reporting budgets, instead of tackling strategic improvements. Likewise, most government executives are occupied with budget mechanics versus working with budget process and using the information to make better decisions.

That’s because agencies are still using tools from the information Stone Age. Excel spreadsheets and antiquated software are simply not equipped to manage billion-dollar budgets with thousands of constantly changing line items. The end result is a budget formulation process that is time-consuming and error-prone.

There is a better way, as agency leaders and budget directors should view budgets as living, breathing initiatives, not static snapshots. Through a shift in management perspective, leaders should turn budget formulation into a dynamic process that delivers results and avoids common pitfalls.

Here are three steps to doing that:

1. Don’t have more than one version of the truth. Decision makers have a responsibility to ensure their sources of information are accurate and robust. Yet budget offices often have a disconnect between the numbers used to brief agency or administration leaders and the final numbers in official budget documents. There are two reasons for that. First, agencies often track budgets by department, which means many silos of information represented by many documents. Second, there is a need for version control, which requires a tremendous amount of communication and collaboration. While many agencies can accurately track static numbers through spreadsheets, problems arise when line items are updated but changes are not replicated throughout supporting or coordinated documents. It makes it impossible to maintain accurate, agencywide information if various internal teams are working from different numbers.Here’s the fix: Executives and managers must break down silos and empower departments to collaborate and make changes in real time. Good managers set the expectation that people work to achieve an integrated, synchronized plan and budget.To accomplish this goal, leaders should create bridges between silos, such as cross-functional teams that work together in pursuit of one important goal. But they must also provide the tools and software necessary to maintain a single, authoritative view of the truth, with the ability to seamlessly make information instantly usable across departments.
2. Don’t separate budget formulation and strategic planning. Ask a CEO to describe strategic planning and they will discuss spotting trends and anticipating challenges. This is where timely, accurate budgets play an obvious role. The problem is agencies need an efficient way to tie budget formulation to strategic planning initiatives and budget execution. This is not something that spreadsheets are good at. Lack of integration between budget documents, strategic plans and financial data inevitably results in undocumented differences between funding and results. The process of manual integration and report creation is just like the days before online checking when people used checkbooks. It wastes valuable time, results in inaccuracies and makes it impossible to identify key performance trends over time.The future of budget formulation must move past the goal of merely knowing how much money is planned to be spent and where. Agencies need the ability to bring budget reporting, strategic planning and financial analysis together to simplify reporting and, more importantly, make better decisions for the future of the mission.
3. Don’t limit your best people to data entry. Would you rather have budget professionals manually entering data or analyzing it? According to a recent analysis, agency CFOs say they can’t find enough Excel experts and are desperate for more “problem solvers” and “creative thinkers.” Yet a simple adoption of the latest technology would eliminate the need to use Excel and free up bandwidth to find and develop critical thinkers. Budget experts need time to focus on key strategic analysis to provide data-informed support to agency executive decision-makers. Changes can happen at any point in the budget process. Those changes related to funding levels or spending narratives seem to occur at the last minute, leaving precious little time to update budgets.Those issues can be addressed by automation. Why reinvent the wheel when you can have the latest version of the truth on file and ready to go at a moment’s notice? And why manually update budget tables and narratives when technology allows for automated updates in real time? Why not have a model ready for every known what-if scenario?

The budget formulation process is becoming more complex, and at the same time, budget scrutiny is increasing. By fostering collaboration and working together in real-time, an agency can rise to the challenge, formulate better budgets and focus more energy on developing the critical strategies that move our country forward.

Jon Hammock is the CEO of KeyLogic Systems.

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