Retail Budgeting for Microsoft Dynamics AX

This article covers budgeting and forecasting for Retail companies that rely on Microsoft Dynamics AX, with a specific look at modern feature and functionality offerings.

No matter if you are budgeting, forecasting, or analyzing what-if scenarios for your company, they all consist of historical actuals and projections, so you can plan specifically for managing your retail organization, circumventing obstacles and maximizing your momentum in the coming period.  There are several tools that can assist retail companies using Dynamics AX to expand their planning processes, whether you choose to craft your own method, rely on the native Dynamics AX budgeting function, or opt for an independent software vendor (ISV) solution.  In this article, I’ll discuss your top options for today’s budgeting, forecasting, and modeling, specifically to meet your retail planning objectives with Microsoft Dynamics AX.

Let’s start out by pinpointing some primary criteria that you should be seeking in a planning tool.  This could seem obvious, but ease of use should be priority #1.  Business user friendliness should include accounting logic, efficiency in process, and reusable templates.  Financial planning tends to be a team activity, which is another reason that ease of use is important.  In fact, collaboration should drive the experience with any ISV planning solution.  The product should enable you to get rid of long e-mail threads with separate spreadsheet attachments that clog your inbox – and instead of piecing all of this data together, you can facilitate teamwork in budgeting through today’s technology.  In collaborating, you need quality security for all of your sensitive information, like payroll.  Security measures should allow users to access budgets without classified information getting in front of the wrong eyes.  Security offers ownership to budget contributors because they can securely access and shape budgets that they have to manage through the year.  Easy enough, right?
Not every software is going to meet modern demands.  Let’s utilize ease of use, collaboration, and security to compare how the following budgeting tools help retail companies with Dynamics AX: homegrown Excel budgets, Microsoft Forecaster, Oracle’s Hyperion, IBM’s Cognos TM1, and Solver’s BI360.
We’ll start with the globally trusted spreadsheet tool, Microsoft Excel. Around 90% of businesses today still depend on Excel for manual budgeting processes.  This program is easy to use due to its ubiquity for the past couple decades, but Excel isn’t equipped with a database that allows for teamwork – or the requisite security to keep your data safe.  Because Excel has static input templates, several problems can pop up when you manually link spreadsheets for a complete budget.  On the other hand, Microsoft also offers Forecaster, a solution focused specifically on budgeting.
More than 2,000 businesses, including retail companies, have used Forecaster for planning tasks ever since it came to market, demonstrating the strength of the Microsoft brand.  However, the program is in maintenance mode regarding development since it is at the end of its life cycle.  Forecaster is a proprietary interface, even though Microsoft also produces Excel.  Therefore, users have to learn a completely disparate set of formulas, features, formatting and coding, which typically translates to a lengthier learning curve and more dollars spent on training.  Moreover, Forecaster is arguably too simple for modern budgeting demands, specifically when you look at ISV offerings.  Finally, it is commonly known that plenty of Forecaster users are piecing their budgets together in manual spreadsheets outside of the product, so layouts and calculations can be achieved for processes like revenue budgets or complex payroll.
Two planning tools that have been on the market for some time: Oracle’s Hyperion and IBM’s Cognos TM1.  Both offerings were well-received when they emerged in the early 1990’s.  There’s a significant following for all of Oracle and IBM products in the upper end of marketplace, which is no different for Hyperion and Cognos.  Their age contributes to their power, but they are also technically complex and use proprietary OLAP cubes as their databases, so they usually need more internal resources to maintain the technology.  Some Excel has been built into the products, as well as Web front end functionality for larger retail companies or those that don’t prefer Excel-driven offerings.  For the rest of us, these tools require adapting to proprietary formulas and coding, not to mention their OLAP cubes (i.e. Hyperion Essbase, TM1) – for financial planning, managing and/or consolidating data, and configuring rules.  Their technical complexity is essentially due to years and years of development.  That all said, they are both part of Business Intelligence (BI) suites, typically pricey and not as “fully integrated” as marketed due to multiple acquisitions from different vendors over the years.
A comprehensive BI suite means that you only work with one team of sales, consulting and support professionals who are able to help with all of your BI tools for Microsoft Dynamics AX.  Solver’s BI360 offers a fully integrated, complete BI suite.  BI360 is third generation Excel add-in – and also provides the flexibility of Web budgeting and forecasting.  The hybridity allows users to simply and securely collaborate when designing and using input templates, whether in Excel or through a browser.  You can also host BI360 in the Cloud by several Dynamics AX providers.  Because Excel drives both the add-in and the Web-based interfaces, installation and training is much more business user friendly.  BI360 hasn’t been around quite a decade, and because of that, modern functionality has been built right into the product, multi-year budgeting and rolling forecasts as an example, in addition to other features like a Web portal, which is the result of consumer demands for ease of use, collaboration, and security in planning.  Let’s zoom in on retail budgeting needs.
In terms of budgeting and forecasting forms, you should invest in a tool that expands your planning tasks for richer retail analytics.  Establishing informed sales and performance goals should enable you to view comparables and set key performance indicators (KPIs).  Sales budgeting and forecasting provides critical view into upcoming revenues and demand by key dimensions like product, store, regional manager and sales person.  An inventory planning module allows you to plan by focusing on cost, pricing, and quantity.  An expenses module invites you to organize your projected numbers for overall and departmental expenses.  Benchmarking is another important part of planning where you can view your own organization’s key metrics versus publically available data from competitors listed on the stock exchange, and then use this for short or long term planning scenarios.  You also have options for effective, collaborative, and secure budgeting for all contributors, but consider time dimension flexibility and custom dimension scalability as important aspects when selecting a tool.  Solver would be happy to answer questions and generally review BI360’s easy-to-use Planning solution for collaborative, streamlined decision-making capabilities for retail companies using Microsoft Dynamics AX.