A budget can be planned at one time granularity in the first year e.g. monthly, then quarterly, then annually as the years go on

Description

Time granularity in Corporate Performance Management (CPM) software refers to the level of detail in the time period of the budget planning. This feature allows a budget to be planned at different time granularities as the years progress. For instance, a budget can be detailed on a monthly basis in the first year, then on a quarterly basis, and then annually, such adaptation cater to the evolving business needs and management focus over time.

Example Use Case

Scenario: A mid-market manufacturing company is implementing a CPM software for effective budgeting and forecasting. In the first year of operation, they require detailed tracking and hence, plan their budget on a monthly basis. As their operations stabilize over the years, they switch to a quarterly budget in the second year and then finally to an annual budget in the third year onward.

Solution: The CPM software they implement allows different time granularity for budget planning. They initially set the system to generate monthly plans. In the second year, they adjust the settings to generate quarterly budgets, and in the third year transition to an annual view. This flexibility enables them to monitor operations at early stages and streamline the budgeting process as their operations stabilize.

Considerations

Some products will allow this, but still will populate the lowest level time granularity no matter what. For example, let's say you plan at a monthly level for two years. After that you switch to quarterly. When a quarterly value is entered, the system will divide that evenly by 3. It also may give you an option on how to divide that. Either way, it populates the individual months. The benefit here is that when you decide to plan at months in those future years, data already exists. And if there are exceptions to the way plans are built over time, they can be easily accommodated by editing a specific month (or day, or week).

Questions to Ask a Vendor

• Adaptability: How easy it is to change the future-looking time granularity in your system? Is it specific to a certain version, or does it apply to the entire system?
• Breakback: When we plan at a higher granularity, like annually, how does the system break back the information? Or does it at all?
• Reporting: Can we produce reports in a more summarized way for farther-afield reports? For example, can we summarize certain accounts based on the time granularity?