This is a guest blog post from our partner Workday Adaptive Planning, offering three steps to take to disrupt your out-of-date budgeting process.

Disruptive technology is a popular term. No matter how long companies have been in business, many claim that their technology, platform, or business will completely disrupt whatever industry it’s in.

That’s all well and good. But what most organizations should disrupt are their budgeting processes. Here are five ways to refresh your approach to budgeting as you head into annual planning season.

Step 1. Stop relying solely on spreadsheets

Many companies still rely on spreadsheets to do budgeting and planning, and finance departments struggle to compile multiple spreadsheets and consolidate data across the company. Even worse, most spreadsheets contain serious errors, often due to broken links and data integrity issues. Plus, they don’t easily scale, and they’re not secure.

Spreadsheets are great personal productivity tools for ad hoc analysis. But when you have more than one person using them, they become a barrier to collaboration and efficient workflows. Some people spend an enormous amount of time—12 to 18 hours each month—on “spreadsheet maintenance”: updating, revising, consolidating, auditing, and correcting frequently used spreadsheets.

That time sink keeps finance away from more valuable pursuits, such as strategic analysis. And, a Workday Adaptive Planning survey found that 63% of CFOs report lack of time for analysis—primarily due to lengthy data gathering and reconciliation tasks—as a top inhibitor to being a more strategic CFO.

Solution: Automate your budgeting process and make it accessible to business partners at any time, from any location. Look for a dedicated, cloud-based planning and forecasting tool that encourages collaboration, rather than impeding it. Provide a central repository and all users can work from a single version of the truth, so you know your data is right, 100% of the time.

Step 2. Replace multiple budget iterations with continuous planning

We’re all too familiar with the typical budget process. Managers come up with a budget and send it up the food chain to the executive suite. That version gets rejected and sent back. Managers revise their budgets again. And again. And again. It becomes an exercise in gamesmanship and negotiation.

Meanwhile, everyone is budgeting to the “wall,” which is usually the end of the year. By the time the annual budgeting exercise is completed, market conditions have changed and the assumptions are out of date.

Solution: Use a continual planning process to manage funds and raise visibility into future market conditions. Use scenario and what-if planning to model how your plan might adapt to changes in the market. (This is especially important for multiyear projects or budget assumptions that carry over the end of your fiscal year.) The result? Finance helps sail the ship, instead of standing at the back of the boat.

Step 3. Focus on drivers, not detail

Many organizations try to budget at the chart of accounts level, and technology enables them. They add lots of detail, down to the penny, and get caught up in minutiae, thinking that good corporate budgeting is about being precise. But there are only two things you guarantee when you add detail to a budget or plan: You create a lot more work for everyone, and you create more opportunities for errors.

Solution: Focus on significant business drivers like risk, profit, and working capital. Remember the 80/20 rule: If you have 100 or more business drivers, you’ll likely spend 80% of your time gathering data and only 20% on analysis. Drop the number of drivers to 20 or fewer, and that equation flips: Data gathering may take up 20% of your time, freeing the other 80% for analysis.

Step 4. Don’t use the budget to control costs

Some organizations fear that without a budget, costs will spin out of control, so they use the finance department as a club. Some CFOs even punish people for overspending. But this attitude creates some serious problems. Managers won’t exceed their budgets, but they won’t spend any less either because they feel entitled to the funds they worked so hard to negotiate—and they know that next year’s budgets will be based on this year’s spending.

And that freezes flexibility. A budget that’s set in stone once a year can’t shift in response to changing demand, which stresses existing resources and causes service levels to deteriorate.

Solution: Shift to a dynamic resource allocation that works from the latest set of assumptions so that you can respond quickly and flexibly to changes in the economy and your industry. Instead of asking “Do I have the budget for this?” encourage employees to ask, “Is this really necessary? Is it the right thing to do? Does it support my strategy?

Step 5. Tie bonuses to relative performance, not budgets

When you link bonuses and compensation to budgets—rewarding managers when they hit their target numbers—you can bring out unproductive behaviors. Managers set targets they can easily reach—or give guidance below what they know could be achieved—to ensure their bonus. They act conservatively instead of trying to optimize the organization or take advantage of market opportunities.

You may have a good market position that works for a while, but over time, if you’re not running as fast as your market will allow, competitors will overtake you and you’ll find yourself in a much weaker position. Even worse, this lack of transparency creates a game of liar’s poker. You risk destroying the ethical foundation of your company.

Solution: Shift to a system that rewards relative performance instead of meeting fixed targets. Tie bonuses to outcomes—what value employees delivered in the environment they were in. Evaluate how you did compared to the opportunity you had, and your competitors.

Also, if you refocus your budgets on a few key growth drivers, as suggested earlier, it will make it easier to refocus your performance and rewards systems from short-term earnings to long-term growth drivers.

Disrupt has several synonyms: disturb, upset, interrupt, and unsettle, to name a few. All of these words imply radical change—and that can scare people. But disrupting your budgeting process doesn’t have to be scary. Cloud-based planning systems are flexible, easy to use, and quick to deploy, while offering powerful features to manage workflow and encourage managers to collaborate in the planning process.

This blog post was originally published on the Workday Adaptive Planning blog.