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In the New Norm of Fiscal Cliffs, Governments Need Powerful Budgeting Tools

by ISG

Until recently, governments at all levels have found the market for budgeting tools to be woefully inadequate. Accordingly, most governmental organizations continue to use cobbled-together, Frankenstein-like budgeting tools that, more often than not, rely on users to extract or re-enter data in offline spreadsheets to analyze budgetary policy proposals. Such tools are labor-intensive, inflexible, error prone, limited by the data collected and fail to provide timely, sufficient budgetary insight to optimize resource allocation.

Top 5In this time of greater public budget scrutiny, these legacy government budgeting tools are being taxed to their limits. In many cases, governments have little insight into where they are truly allocating their scarce resources and, more importantly, what they are getting for that investment. Recently, the market for government budgeting software applications has improved, and a myriad of options now exists for governments seeking to replace their legacy budgeting tools, but there is significant differentiation in capabilities between available solutions. The following are Top 5 must-haves when selecting a new government budgeting solution:

1. Set yourself up for robust personnel expenditure forecasting. Often more than 70% of a governmental organization’s budget is dedicated to personnel expenditures. Position and employee level personnel cost planning and forecasting is, therefore, essential to effectively manage personnel expenditures and support forecasting and analysis on proposed compensation changes.

2. Provide users a single point of entry and review. Unlike private businesses, governments are required to publish their budgets. The resulting public scrutiny means government budgets must provide context and justification decisions. Thus, government budgeting systems need to integrate word processing with budget forms and provide automated budget book publishing.

3. Package decisions for review, prioritization and approval. Whether a government budgets incrementally or uses a zero-based approach, it is essential to provide tools to create and manage budget decision packages for software service level and other programmatic changes.  Decision packages allow governments to manage budget enhancement or reduction throughout the budget process and to quickly rank, prioritize and approve decisions in the context of available resources or reduction targets.

4. Link budgets to goals and objectives. Governments need budgeting tools that integrate strategic planning, budgeting and performance management into a full lifecycle solution that provides a foundation to manage scarce resources. With such tools, governments can more effectively allocate resources based on expected outcomes and provide greater transparency to the public.

5. Partner with public sector budgeting experts. Find a budgeting systems implementation team who knows government budgeting and has extensive experience successfully deploying budgeting solutions in government. Seasoned consultants with expertise in public sector budgeting and budgeting systems best practices can help governments better leverage these tools to improve their budget processes. Inexperienced consultants, more often than not, lead their clients to pave the same old cow path by implementing the software to support their legacy functionality and processes without regard for opportunities to improve.

Other considerations come into play when selecting a new budgeting solution for government, but addressing this list will help lay the foundation for a successful solution. To further discuss government budgeting systems, contact Jason Beal.