The fourth quarter is upon us, and planning for the next year’s SaaS budget is underway. There is one way to avoid copying last year’s budget with our SaaS Planning and Cloud Budget spreadsheet.
An old way of budget planning
In most companies, finance is stuck making significant, broad assumptions as business units offer fuzzy plans for growth. It’s a dizzying exercise of clicking through historical data while trying to make sense of past trends or patterns to guide future planning.
Strategic investment and growth conversations are virtually useless because no one has real certainty on how SaaS spend is actually trending, what tools are being used, and by whom, and where dollars may be available for high-impact projects.
As the holidays approach, the frustrated Finance leader finally opens the planning spreadsheet, inputs a 10% growth rate assumption, hits “Ctrl+C” and multiplies it through every line item across the dozen of departmental budgets passed her way.
There. 2021 budget planning is done.
Of course, while this exaggerates the budgeting experience a bit, finance teams face a not-so-different annual reality.
They gear up to build a clear picture of the company’s financial future based on loose data, anecdotal insights and bureaucratic jockeying from the company’s most persistent departmental leaders.
It’s tiresome and an unenviable, but essential, effort to keep the company afloat.
A better way of budgeting using template
To support planning initiatives, Finance leaders can track historical data and a plan future year planning table in an easy-to-manage Excel spreadsheet (shown below).
This budgeting shortcut comes from Cleanshelf’s all-in-one SaaS spend optimization solution.
Here are just a few of the spreadsheet’s highlights:
- A regression analysis correlates historical employee headcount and customer (or any chosen key metric) growth with departmental spend. Instead of assigning a broad growth assumption, we peg growth to real factors with true departmental sensitivity! Finance, for example, will likely not spend more just because customer count increases. Data Operations and Infrastructure teams have customer volume dependencies in their workflows and likely will.
- Assuming incremental growth based on previous month spend is normal budgeting practice, but creates lumpiness and inaccuracies. Spend may have spiked or declined in a previous month based on contract renewal dates, layoffs, or a quarterly hiring influx. Instead, the model develops future month spend estimates based on a weighted, trailing nine-month basis. Earlier months are weighted less significantly versus nearer ones. This approach smooths spend planning and limits the likelihood of a budget being skewed by abnormal events.
To make this spreadsheet work, all you need to input is past data and projected customer or employee growth rate and, poof!, your SaaS budget done.
An automated way of budget planning
While the planning and predictive challenges for finance are real, for Cleanshelf customers, assessing software spend for new year planning becomes one less thing to deal with.
The technology directly integrates with a company’s financial and HR systems and cloud subscription accounts to let companies track historical SaaS spend.
Instead of waiting on unanswered emails from department leaders to get the spend and growth inputs needed, Cleanshelf builds your plan with data-driven analysis to support overall budgeting.
Not surprisingly, our team sees an influx of prospect inquiries at the end of each year. Leaders are frustrated. If you’re interested in unleashing your finance team’s secret weapon and making this planning season the easiest yet, contact the Cleanshelf team today.