Sometimes the best way to understand how to optimize the use of a product is to go straight to the source. Here at Tempo we use our own products, not only because we make them, but to find out the best way to utilize them and continuously improve to solve real life organizational needs. This allows us to bring first-hand experience to our customers.
We use Tempo Folio for JIRA at Tempo to track all financial expenditures throughout the organization and roll up that data on the business level. Since we’re a relatively small, but fast-scaling company, having all our financial data well-organized in Tempo Folio helps us deal with growth a bit more smoothly.
Our VP of Marketing and Communications, Jessie, is using it in a very simple way that saves her a lot of time and effort when creating the marketing budget and tracking planned versus actual costs.
We often discuss how great Tempo Folio is for project and portfolio management, which it is, but it also lends itself well to essentially any kind of budgeting and financial tracking. Let’s quickly explore how Jessie is using Tempo Folio to create and track the budget for marketing expenses.
Side Note: This is a great way to use the tool for anyone in charge of a budget within an organization, large or small.
Creating a budget
Jessie uses Tempo Folio to create quarterly budgets for marketing expenses and to track the entire marketing budget excluding team members and salaries. She then files this folio under a portfolio for marketing and business development expenses for each quarter, which includes separate folios tracking the budget of each team in these two departments. That portfolio is then nested under a portfolio for the entire company for the entire fiscal year of 2016.
She begins by creating a folio using simple costs management and adds planned costs individually by type for the quarter. These planned costs are based on buckets of the budget allocated to different categories and then broken down further by more specific costs. For example, all expenses for campaigns for the quarter are added as one planned cost. After adding a sum for each anticipated expense, the folio looks similar to this example one.
If everything isn’t completely accurate from the beginning, that’s ok. It’s easy to modify, delete, and add expenses at any time while the folio is in draft mode.
This works as a great tool for creating a budget and getting it approved. Jessie uses it this way and creates a proposal in draft mode. She then shares it with our CEO for him to approve and she can easily make adjustments as needed. Once the budget is marked as approved, it sets it as a baseline, but you can still go back and create multiple baselines to compare and contrast different options.
Tracking planned vs. actual costs in real-time
Once all of the costs have been planned and the budget approved by management, Jessie can book expenses in the costs -> actual section. When an invoice is received, she books an expense and adds the invoice as an attachment and describes what kind of expense it is for the accounting department. As actual costs are added, Jessie can see in real-time if she’s under or over budget.
“It’s a really great way to track all of the details that go into conference expenses, since there are so many, or to keep track of what we spend on our marketing tools.” Jessie Vanderveen, VP of Marketing and Communications
In the below screenshot, you can see that a few actual costs have been booked in our example folio.
And here you can see that at this moment in time, the Marketing Expenses Q1 2016 folio is under budget.
Tracking the costs in real-time allows her to aggregate the entire marketing operational costs, which helps calculate the customer acquisition cost.
In this example it is possible that the folio is under budget, because the expenses have not yet been booked. It’s also possible that there have not been as many expenses as expected. In the later case, Jessie can see right away the overall health and make decisions based on this. It could be that she would like to put more money towards advertisements, but needs to know if she has the budget. In this scenario, she clearly has some room to allocate more money to something like ads.
Side Note: This folio is not tied with Tempo Timesheets data, since it is not tracking the costs of the team and its salaries. The marketing team at Tempo is tracking their work with Tempo Timesheets and prioritizing their work using a Kanban board in JIRA Agile. There is a separate folio that is managed at the organizational level that is tracking the salary costs for the marketing team, which is tied with the Tempo Timesheets data.
Creating the next budget
Tempo is using beyond budgeting, which means that we create budgets for 5 quarters in advance and then re-visit the budget at the beginning of each quarter and make changes where needed, based on historical data and expected upcoming costs.
Jessie is able to easily copy the current folio for the quarter for the next quarter and look at how things ended in the past quarters. She can see in no time at all where she was on, over, or under budget and make changes for the future, which better match the past reality.
At the Business Level
How we are using Tempo Folio to manage the marketing budget is an example of how to use the tool at its most basic level. On its own this is a great way to simply track costs, but in our case, it is part of a much larger, well-oiled machine.
All expenses and costs of each team for the entire company are aggregated on the business level, but we’ll cover that in more detail in a separate post.
Next in this series
This blog is part of a series of different Tempo Folio use cases. Next up is how Tempo uses Tempo Folio and Tempo Timesheets to manage all financial data in the organization, so stay tuned.