You might not know it yet, but your financial planning & analysis processes are failing. They’re bloated. They take too much time. Worst of all, they’re incapable of looking forward and performing effective data analysis to affect future decisions.
Spreadsheets and manual calculations might have cut it a few decades ago, but they don’t now, and they certainly won’t in 10 years. Now, you feel it dragging down your company a bit. In the future, a failure to update your FP&A methods could render you completely incapable of competing with other companies.
Here are the top three ways your company’s FP&A is failing and exactly how you can fix it.
1. You’re Still Using Excel
A recent survey from the Association for Finance Professionals showed that 55% of finance professionals rely mainly on spreadsheets for financial planning, budgeting, and forecasting.
However, research shows time and time again that excel is an outdated, increasingly ineffective tool for FP&A. It is slow, error-prone, lacks transparency, and offers very little capability for predictive analysis, something that 90% of CFOs surveyed by Kaufman Hall said they aren’t doing enough of.
This leads me to my next point.
2. You’re Not Spending Enough on Technology
Regardless of how much you spend on analytics technology, a little more goes a long way.
That’s because spending on analytics technology is that sweet spot where a small increase in budget leads to a massive increase in performance.
In fact, a Nucleus Research study found that the return on investment in financial tech is, on average, $13.01 for every dollar spent. It’s a no-brainer.
If you’re looking for one budget adjustment that will bring you an unbelievable ROI, this is it.
3. You Spend Too Much Time on Grunt Work
If your FP&A technology spending is low, and especially if you still rely on excel, your staff is likely spending hours upon hours on unnecessary grunt work.
According to the Association for Finance Professionals, companies that use less than 10% of their FP&A spending to invest in technology use an average of 384 FTE days (the equivalent of one day of work from a full-time staff member) per year just on collecting and manipulating budget data.
What about companies that spend 10%-19% of their FP&A budget on technology? With that incremental increase in spending, the amount of time they spend on collecting and manipulating budget data falls by over 50%, to 154 FTE days per year. Companies that spend 20%-49%? They spend only 62 FTE days per year on gathering budget data.
The main reason that analytics technology spending has such a great ROI is that it automates and unifies financial data, allowing financial staff to drop the busy work and do what they were hired to do.
Those hundreds of extra FTE days you save by ramping up your FP&A technology spending now go toward improving data and predictive analysis – basically, that time is spent growing your company’s revenue instead of on maintenance.
“Greater investment in technology liberates FP&A staff to do what they were hired to do, and what their organizations need them to do: conduct robust analysis and forecasting to better inform their company’s strategic decisions." -Jim Kaitz, President and CEO of the Association for Finance Professionals
While FP&A software used to be almost exclusively backward-looking, it has improved leaps and bounds, even in the last few years. Platforms like OneStream XF now help companies look forward and focus on forecasting and growth.
Finding the Perfect Technology Solution to Ramp Up FP&A
You know that increasing spending on technology is the best way to improve your FP&A, but what exactly should you be looking for in your upgrade from excel?
What your company needs is real-time data that is easy to access and share throughout the business in order to promote data-driven decision-making.
In order to achieve that, you need FP&A software that is:
Unified. It’s important that you can access all the data you need in one place, whether you’re working on operational or financial planning processes.
Agile. You should be able to find actual, budget, and forecast data all in one place to avoid spending hours on busy work.
Transparent. All versions of budget data should be stored and readily available so that everyone can understand changes that have been made, allowing work to be transferred more easily.
Simple. Financial software shouldn’t require an IT professional at all times. It should be cutting edge yet familiar and easy to use.
Automated. Menial work should be as automated as possible so that your finance professionals can spend their time working on developing new solutions instead of fixing old mistakes.
In the survey done by the Association of Finance Professionals, only 9% of respondents said they felt like they had reached the above goals. If you can leverage technology to help you access real-time data that is readily available based on need, shared across the company, and used to drive the company’s decision making, then you can build a highly competitive business.
Using OneStream XF to Beat the Competition
OneStream XF is a budgeting, forecasting, and planning software that is designed around the 5 principles described above: unification, agility, transparency, simplification, and automation.
Access unified actual, budget, and forecast data instantly, all in one place.
For FP&A processes that are agile and unified, it’s crucial that you cut out the need to create, maintain, and support multiple products and applications. This will drag you down.
OneStream XF does this for you by allowing you to view, manage, and compare actual vs. budget instantly in one application. What’s more, the program automatically populates rolling forecasts with actuals as soon as actuals are certified.
When planning and actual processes are unified, forecasting becomes simple.
Version controls allow you to see budget evolution.
OneStream XF’s version controls provide users with a walk through from version to version, allowing them to see both where and how the budget evolved.
This level of transparency means that new users who access budget data can almost instantly gain a level of understanding that is near that of someone who has been working on the budget for weeks. OneStream XF provides companies a tool for ensuring that organizational knowledge is not lost from person to person or week to week. It allows financial team members to work together in a way that didn’t used to be possible, creating a more effective and efficient financial workforce.
It also protects your company from making grave data errors that could end up in million dollar losses. Don’t let yourself get blindsided by excel errors. By tracking changes and updates, OneStream XF makes it easier to pinpoint exactly where and how something went wrong.
“What-if” driver based planning models a variety of scenarios with maximum agility.
OneStream XF’s “what-if” driver based planning lets you model different scenarios based on varying assumptions without forcing you to recreate new metadata with each new model.
That’s because it allows you to move data between scenarios easily and quickly to begin budget process. The system maintains one metadata repository that supports all scenarios.
Being able to clearly and instantly see the impact of business changes before you’ve made them is the key to remaining competitive in the long-run.
Philip Parker is a Managing Director with Holland Parker Consulting. He has over 16 years of experience implementing Corporate Performance Management solutions for a variety of industries including Energy, Retail, Healthcare, Higher Education, Airline, Banking and Manufacturing verticals. Mr. Parker has had the opportunity to speak at several user conferences on various functional and technical subject matters related to Corporate Performance Management implementations.