Here’s how you can make the right choice when every solution looks the same.
Selecting the best FP&A tool for your company is a complex decision. Whether you’re moving away from a spreadsheet-based system or find yourself in growth mode, you need a solution that can scale in a structured, controlled way.
However, that’s far from the only criteria you should consider when making your choice. FP&A solutions should be easy to use for everyone at your company, including non-finance people.
They should enable cross-company collaboration, save your FP&A team’s time by automating repetitive tasks, and help you adopt what’s known as a ‘strategic finance’ mindset.
Strategic finance is a way to transform previously siloed processes and functions into a unified, integrated view of your operational and financial performance. Strategic finance is based on having an overview of how all aspects of a business are intertwined and affect one another.
If your finance teams are spending most of their time on repetitive, time-consuming activities, their contributions to the conversations that truly matter will be limited.
A strategically-minded FP&A function empowers all senior decision-makers by helping them make more data-driven decisions. This is possible with the help of a modern FP&A platform capable of helping you prepare, update, and present data with the click of a button.
Given how many moving parts you have to consider and the fact this is a decision with long-term consequences for your team, it’s easy to lose track of what to focus on.
That’s why this post covers the six most important areas to consider when looking for the best FP&A tool in a sea of choices.
The most important aspect of choosing the right FP&A software is finding a solution that allows you to create forecasts to evaluate a range of potential scenarios and sensitivities.
The business environment can change in the blink of an eye. When that happens, and you need to update multiple scenarios, doing so manually can make a rapid response very challenging. It may even require you to wait for the person responsible for models to run the sensitivities. Which creates an additional bottleneck.
This delays your entire decision-making process, as you don’t know what course corrections are needed until scenarios are updated.
That’s where an FP&A tool can be a tremendous accelerant. It allows you to run scenarios more quickly than with spreadsheets and propagates of structural changes from your base case model to all of your scenarios automatically. This makes it easier to understand how various scenarios can impact your business.
For example, you could assess how missing your sales objectives by 20% in the current quarter would impact your cash runway, combined with an operating expense 10% higher than expected across all departments (“Low Case” scenario). On the other end, you could assess the positive impact of overperforming on your sales objective while sticking to your forecasted operating expenses (“High Case” scenario). The “tunnel of possible” thus created between your High Case and Low Case scenarios would then give you a better sense of the universe of possible futures for your business, as opposed to simply trying to assess your room to manuever based on a static Baseline Scenario.
Scenario planning becomes much simpler once you have to have a system you’re comfortable with, that is understandable and flexible.
Even more importantly, what sets great FP&A software apart is the ability to help you communicate your findings really easily to decision-makers–even if they’re not very technical. Simplifying the creation of board-ready scenarios can speed up the decision-making process and make your key stakeholders more confident about the actions they should take.
One of the most important characteristics of FP&A software is the ability to integrate with other tools and data sources. Ideally, you want a single source of truth providing you with live data without manual input. This minimizes the risk of human error and saves your FP&A team a lot of time that can be used for more valuable activities.
One of the unique strengths of great FP&A software is that it combines the power of a database (or multiple databases) with the simplicity of using a spreadsheet. This means your organization will benefit from integrations with data sources such as Quickbooks, Salesforce, Hubspot, BigQuery, SnowFlake, and others without having to sacrifice the practicality of Excel and Google Sheets.
Thanks to integration capabilities, you’ll no longer have to stitch fragmented, siloed data or manually update historical information. In that regard, a versatile solution will automate much of your team’s repetitive tasks and ensure there are no errors in your data.
Apart from cost- and time-savings, your organization will benefit from being able to focus on more important activities such as identifying trends and their causes and improving the accuracy of the model.
If you’ve ever shared information through Excel or Google Sheets, then you’re likely aware of the workarounds required to prevent unauthorized access to sensitive information like salary data. With no real ability to restrict access based on role, your only option is to pull out the data you want to protect into a different spreadsheet. This complicates the process, as you have to work with two or more spreadsheets at the same time. Working with multiple sheets increases the likelihood of corrupted data from broken links.
With the right FP&A software, protecting data while enabling collaboration is straightforward. For example, it lets you give anyone on your team customized, role-based privileges. This allows your team to share and access the data they need without the danger of accessing sensitive information.
Another strength of FP&A software is that it shows you a timestamp and audit trail for every login and action in the system. This means that if there are multiple people who’ve accessed or made changes to data, you’ll know exactly who did what.
This also allows you to see how often your staff is using the software. If you notice that someone has not logged in for a while, talking to them may be the best way to increase collaboration at your company. While Excel and Google Sheets do offer certain audit functionalities, they can’t restrict information based on role and thus aren’t great for protecting sensitive information.
Another huge advantage of a great FP&A solution is the ability to create tailored visualizations and reports with real-time data at the click of a button.
Giving stakeholders role-specific dashboards that connect the dots between operational metrics and their financial implication help to present the story of the business and support decision making
For example, the dashboard of a Head of Sales could help her understand how changes to quota or sales ramp will affect :
The CFO’s view could show how the same sales modeling assumptions affect cash balances and overhead costs. And the CEO could see the affect on Net Dollar Retention and ARR, along with key metrics from across the business, in support of capital raise discussions with potential investors..
To recap, an FP&A tool can automate board reporting for your company and provides powerful visualizations tailored to specific roles on your team. It presents a single source of truth, and streamlines comparing scenarios and variance analysis.
As your organization grows, your needs will become more complex. The only sustainable way to support further growth is by finding an FP&A tool capable of extending your models in a structured way.
Scaling up comes with certain challenges—the more services or product lines you introduce into your offering, the more difficult it will become to update your models manually. This includes challenges with ensuring data integrity, single-person dependency (as there will likely be just one person who understands where all the inputs are), and others.
A high-quality FP&A tool allows you to scale up much more efficiently because it’s built to support growth in a structured fashion. After implementing one, you’ll be able to quickly run or update scenarios, which is crucial for companies in growth mode that constantly have more and more data points to process.
According to The 2020 Pulse of Performance Management Survey, “ease of use” was the most important FP&A software feature for survey participants. Additionally, when asked to identify the pain points with their current budgeting systems, the top three responses were “labor-intensive,” “takes too long” and “not easy to administer.”
It’s certainly true that some FP&A tools have historically required learning new programming syntax in place of standard Excel and Google Sheets formulas, or have clunky interfaces that require 7 clicks to make a simple change. And some systems have a heavy reliance on ongoing services and long implementation periods. While this might be acceptable to massively complex Fortune 500 companies, fast-growing and smaller companies can’t support this kind of burden. Luckily, the best of the latest generation of FP&A software systems have a flat learning curve and are accessible to all users—even to those who are not familiar with using spreadsheets.
For FP&A users, driver/assumption-based sheets and time-based calculation sheets in the software that allow you to see GL accounts, lines on the income statement, headcount, etc in rows will feel familiar and intuitive, and cells can contain standard spreadsheet formulas, dropdowns, dates, long text notes, checkboxes, and more.
On the other hand, customized dashboards within some FP&A tools allow non-finance staff to look at the data they need without having to dig deep to find it. The fact that users can generate reports and presentations with the click of a button also makes the user experience and onboarding process much simpler.
Another thing that defines a great FP&A solution is its adaptability. Instead of forcing you to do things a certain way, it adapts to your needs. All of this contributes to a more streamlined user experience and easier onboarding for both finance and non-finance users.
Buying the right FP&A software is rarely easy. To recap, the key areas to consider are:
If you’re a company in growth mode or simply want to move away from time-consuming manual data entry and the troubles of using spreadsheets, OnPlan could be the perfect fit for you.
Click on the button below to book a 30-minute demo with us and we’ll show you how OnPlan could work for you.
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