How to Improve Efficiency in Budgeting - The Case of Business Intelligence in SMEs

While budgets are highly relevant for a wide array of organizations, the process of budgeting is often subject to critique due to the high resources spent on data processing (Lalli 2003). The aim of this article is to illustrate how standard software for business intelligence (BI) can enable even small and medium enterprises (SMEs) to increase efficiency in budgeting. For this, we participated in a change of the budgeting process at a Chinese-Danish public organization (interventionist research). Our findings provide several contributions to existing theory of budgeting and BI for SMEs: First, we suggest that budgeting inefficiency (terms of the time spent) is caused by low-quality data. Consistent with Miller & Galeaz (2007), this low data quality is rooted in problems that participants of the budgeting process encounter; specifically lacks of understandability, simplicity, and user-friendliness of the IT-solution. Second, we illustrate that affordable, standard BI-solutions can address these problems and substantially improve the budgeting process within short time frames. Third, we develop a comprehensive mediation model of budgeting efficiency for future research.