The most common myths about FP&A software – part 1

What are the most common myths about FP&A software you’ve heard?

After two very unpredictable years, finance leaders around the world have recognized the importance of acting quickly and making course corrections to help their businesses recover. 

Finance departments are increasingly looking for solutions to help them make more proactive, data-driven decisions and connect the dots between finance and business operations teams to improve collaboration in strategic planning and budgeting.

As a result, FP&A software is growing in popularity. For example, Gartner reports that sixty-nine percent of board directors say that the effects of the COVID-19 pandemic are accelerating their digital business initiatives. Gartner’s report added that “controllers and heads of FP&A have spent significantly more time in 2021 on critical digitalization goals compared to previous years.”

Despite this, a lot of CFOs or CEOs still have concerns about their own readiness to adopt FP&A software. So we wanted to address these concerns head-on. Let’s go!

We can’t afford FP&A software

One of the most common reasons CFOs and other finance leaders dislike the idea of getting FP&A software is because they think it’s too expensive. While it’s true that some of the most well-known software systems in the market are extremely expensive to purchase and implement, there are also much less expensive options more suited to small and medium growth companies. Moreover, the best of these systems should be considered investments in the effectiveness of the finance and executive team.

For the finance team, the right FP&A software frees up a lot of time. Most FP&A teams still spend an absurd amount of time revising or updating models and checking or reconciling data. If, for example, you’re paying people $50/hour to plug numbers into Excel, you’re wasting money and time that could be better spent elsewhere.

More critically, the right software will improve decision-making in two ways. First, your most talented people spend less time on repetitive activities and more time analyzing trends and performing meaningful analysis. Second, the right system will give your executive team outside finance clarity about the connection between their sales, marketing, or hiring metrics and financial outcomes. They’ll make smarter, more holistic decisions that optimize for the whole business, and more easily spot and analyze red flags ahead of time. 

FP&A software is too hard to learn

One of the biggest reasons teams avoid adopting new software is because old habits are hard to change. They’re convinced FP&A software will either disrupt their routines, mess with their formulas, or present them with a steep learning curve.

In the case of the best FP&A software on the market, none of this is true. These systems were designed using the formulas and syntax your team is already used to–the same formulas as Google Sheets and Excel–and are user-friendly, even if you’ve never worked with spreadsheets before.

Implementing FP&A software will require us to run the software and model in spreadsheets at the same time

It’s a common fear among companies that implementing FP&A software will temporarily increase their workload until they can switch from their old models and processes to using the software.

With the right FP&A software, your model can be imported and enhanced very quickly with a variety of extra features and superpowers without disrupting your day-to-day operations. 

Implementation will take forever

Traditionally. Implementing FP&A software took months. Any executive with experience implementing it in the past might remember their past frustrations. The good news is, times have changed for some vendors (but, caveat emptor!). In the best cases, you should see value practically from day 1.

FP&A software is for big companies

This claim is partially true. Large companies have complex needs that can dictate very special tooling, and they have the budget and staff to invest accordingly.

However, this doesn’t mean that smaller companies can’t find FP&A software suited to their needs at a reasonable price. Instead of living with the mess of spreadsheets, smaller companies should focus on finding software that can scale with ease and support them at various stages of their growth. 

With the right partner, they can deliver improvements in scenario planning, forecasting, board reporting, and self-service analytics in days, so they can make faster, better decisions.

You need an FP&A team to be able to use FP&A software

This is simply not true. There are solutions on the market that can accommodate the needs of companies that don’t even have an FP&A function or a big finance team.

These solutions are easy to learn—even for non-finance users—and make it possible for everyone to look at the data they need, and not all of the data.

This includes customizable, unique views for your leadership team, such as marketing and sales directors, your CEO, or any other key stakeholder at your company. It also includes process controls and role-based privileges that prevent people from altering data in ways they’re not supposed to.

Conclusion

Despite some finance leaders’ misconceptions, more and more companies are investing in FP&A capabilities.

According to Hackett Group’s 2021 Key Issues Study, the biggest imperatives driving FP&A transformation include freeing up time for FP&A leaders, greater collaboration through self-service capabilities, and greater cost-efficiency.

While companies that still rely on Excel and Google Sheets will avoid having to invest now, they’ll be missing out on these critical advantages that can help position them for sustainable growth in the future.

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Ed note: Want to dive deeper into essential FP&A topics? Check out OnPlan’s most popular posts of all time here:

• SaaS profit margins: how to calculate them and what are the benchmarks?
• An Introductory guide to rolling forecasts 
• Sales forecasting in Excel: How to do It + free template download
• How to use a headcount planning model to determine your next office location
• Best practices for building a remote-first workforce planning model
• Bookings vs billings vs revenue: What’s the difference?
• What does the SaaS magic number mean for business growth?
• How CFOs can prepare for the Great Resignation