Time to debunk another set of myths about FP&A software.
In part one of this series, we covered some of the most common myths about FP&A software and misconceptions CFOs and CEOs in fast-growing businesses have about their readiness for it.
To recap, they’re:
Today we want to debunk a second set of myths, about FP&A software capabilities. So let’s get started!
There are generally two extremes of FP&A software. On one end, most basic FP&A software require customers to adapt a fixed approach pre-baked into the software. A business has to adapt its processes to the software, and there’s little potential to customize.
Systems like this look appealing, but can quickly turn into an expensive toy. One of the most important ways FP&A teams add value is by assessing strategic options. There’s no limit to the potential market situations, variations, options, and opportunities that the business might face, and clearly you can’t tell the CEO and Board “we can’t analyze the impact of that idea because it’s beyond our software’s ability” — you’ll just end up back in a spreadsheet.
On the other extreme are functionally rich, highly customizable FP&A software systems that are ten- or one-hundred times more expensive.
What’s a growing company to do? Finding the middle ground in a sea of choices might be your best bet.
Pay attention to features such as self-service capabilities, customizable visualizations, and integrations with other systems, and you’ll have what you need to create models suited to your needs.
Although many finance professionals and small organizations are very comfortable with using Excel, switching to FP&A software can bring huge benefits:
Adopting modern FP&A software doesn’t replace Excel or Google Sheets, of course. Some FP&A software keeps the same formulas and structure you’re used to and even allow you to interact with models directly in Google Sheets and Excel, all while adding functionality specific to the needs of FP&A teams.
FP&A software also includes advanced features such as process and version control, role-tailored dashboards, customizable access permissions, creating scenarios with the click of a button, and many other advantages spreadsheets can’t deliver.
When new software asks too much of users—to change their routines and to learn a new and complex approach or interface, it’s much more likely to end up sitting on the shelf, unused.
The trick in FP&A is finding software that doesn’t ask so much of your team. That makes things easier, rather than harder. That lets finance continue to use a spreadsheet interface—and even the spreadsheet itself if they prefer.
When you pick software that’s familiar, you can take advantage of what you already know while benefiting from its great new capabilities, without having to push through adoption pain to get there.
Think about it this way: your team is much more likely to walk up a few steps to get to a kitchen full of delicious food than to walk over a mountain to a nice restaurant in the valley on the other side.
QuickBooks and Xero are easy to use and relatively inexpensive. But they’re more focused on looking at historical data rather than forecasting features like scenario planning, rolling forecasts, or BvAs.
Good FP&A solutions integrate with Quickbooks and Xero, import their data, and add to their capabilities by connecting the dots and letting you see projections. They also tie in operational data from sales and marketing to help you create plans in every department that generate the financial outcomes you expect.
By building off your existing model, dedicated FP&A solutions aren’t changing it—they are upgrading it.
A lot of finance leaders would rather postpone adopting FP&A software until the company grows, figuring they can manage well enough in spreadsheets for now. After all, spreadsheets are endlessly flexible in a period of rapid change, and it’s reasonable to worry that getting bogged down in tools and processes could just slow things down. But from an FP&A perspective, the truth is the other way around.
If you want your business to grow rapidly, you’ll need to manage that growth. The key is finding an FP&A tool that can scale up and adapt to your company’s needs as it evolves. In a previous post, we mentioned how companies that rely on Excel or Google Sheets for FP&A tend to expand their models incrementally rather than by design. The road to hell is paved with good intentions.
As a company adds new layers of complexity and data, tracking what’s where, protecting consistency, and maintaining data accuracy just gets harder and harder. The best FP&A solutions were built so it’s easy to extend, adjust, and expand your models without creating a monster you can no longer manage.
Rapid growth leads to expectations and needs that constantly change. One day you need to see weekly revenue; the next day, monthly revenue. In one meeting you need to show quarterly variances, and in the next, Quarter to Date variances. While you can code and record a spreadsheet to show any of these, it costs you time and risks errors. Spreadsheets aren’t convenient for toggling back and forth between a lot of different views of the data.
Not sure you’re ready for FP&A? Make sure you know the facts. If you’d like the OnPlan team to show you why it’s a good idea to get a dedicated FP&A solution—especially if you’re positioning your company for growth, feel free to book a 30-minute demo with us by clicking on the button below.
Ed note: Want to dive deeper into essential FP&A topics? Check out OnPlan’s most popular posts of all time here:
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