If you are considering a new FP&A automation solution, you've probably already been taking transformative steps toward enhancing your finance department's operational performance.
Whether you're hoping to move from a world of legacy on-prem systems and inefficient Excel or Google Sheets spreadsheets or looking to replace your current FP&A system, this complete guide will assist you as you prepare for your FP&A purchase.
According to a report published by PwC, 60% of executives say digital transformation is currently the most crucial growth driver. As a finance professional, finding the right FP&A automation software is your digital transformation tool.
To ensure that you have the information you need before purchasing FP&A software, we'll cover how to assess your current situation to know which features your solution must have and the trends shaping the future of FP&A automation.
We've also included a checklist of things you should consider asking to ensure you find the right FP&A software solution that checks all the boxes for your unique needs.
Many companies have yet to fully embrace FP&A automation. However, advancements in this technology drive the future trends of FP&A automation to enhance operational efficiencies.
Trends shaping FP&A automation in 2023 include AI and machine learning adoptions, more integrated FP&A processes and driver-based performance management.
When researching which FP&A automation software is right for you, check to see whether it can identify bottlenecks in current processes and enable continual improvement.
Your FP&A software solution should be able to evaluate lead time, be easy to use, scale as needed, integrate with legacy systems and offer top-notch security.
Approximately 82% of finance teams that already have planning software still use offline spreadsheets for core FP&A processes.
We cannot overstate the significance of the role of FP&A in an organisation's growth. However, many companies have yet to fully embrace FP&A automation.
Some aspects (i.e., strategic planning and budgeting) are viewed as some of the most essential roles, ignoring the rest. In turn, forecasting and analysis are often an afterthought.
The thought process is that time gets wasted as teams try to gather baseline data. A proper FP&A requires a strategy that ensures you can access information beyond just baseline data.
Assess your current FP&A processes, address the pain points of inefficient protocols and evaluate which automation solutions your organisation needs to optimise your FP&A methods.
FP&A automation streamlines forecasting and budgeting tasks to help teams improve their productivity. Advancements in FP&A technology are driving the future trends of FP&A automation to further enhance operational efficiencies.
Uncertainty was the name of the game, so to speak, in 2020. In 2021, the financial sector had to learn to adapt to what analysts quickly dubbed "The New Normal."
In 2023, we are working to navigate through "The Next Normal" as organisations work to not only recession-proof their operations, but also provide for agile forecasting based on trends and unforeseeable circumstances.
As we move into the future of FP&A automation, financial professionals will experience relief when manual tasks are automated and more time for analysis is possible. The only challenge initially will be adoption as people learn how to use the new system.
That's why software and IT professionals recommend looking for an Excel-based solution--finance teams are simply more familiar with its interface. Besides Excel integration, here are a few of the trends impacting FP&A automation the most:
As you can see from the chart below, these ten trends shaped the FP&A automation market in 2021. Experts agree they will continue into 2023 as a push towards more digital transformation adoption in all sectors and industries.
Now that we have covered why you need to assess your current FP&A automation solution and the trends impacting the integrations of this software, let's review some of the must-haves your FP&A automation program should feature.
Here are some questions to ask when considering the ideal solution for your organisation:
Bottlenecks create inefficiencies that finance teams cannot find a workaround for without the help of automation. If updating forecast models with actual data takes too long or team members make avoidable errors, your current system creates bottlenecks.
Easily resolve these inefficiency issues with FP&A technology. Here is a list of FP&A responsibilities that automation will make more efficient:
Financial modelling: Automation makes updating financial models easy with just a few clicks to accommodate changes in your organisation's business trajectory.
Financial forecasting: Forecast the company's health with data from the financial models mentioned above.
Asset evaluation: Monitor your organisation's cash runway use to ensure that the company invests it in ways that direct overall business growth.
Financial health metrics: FP&A-affiliated teammates stay on top of an organisation's financial health thanks to available financial metrics and ratios. FP&A technology makes this data readily available for analysis.
Department cost efficiency: Keep track of department spending no matter how large (or small) an organisation you manage. Use the company's cash and runway statements to determine each department's budgetary allotment.
Budgeting: FP&A teams must work with department heads to generate budgets for each department and the company as a whole. FP&A automation places this information at the fingers of the decision makers who need it most.
Internal report creation: Maintain consistent business reports that accurately reflect your organisation's financial trends over several periods.
Much like discovering which bottlenecks impede your productivity, it is critical to be clear as to what an ideal FP&A automation solution looks like and whether it has what you need and want.
Put together a wish list of about three to five benefits that'll make your work life faster and easier. With your newfound extra time, you can spend more time analyzing data instead of collecting it.
You'll find that the more you use the FP&A automation software, the more comfortable you will become using it and the more confident you'll be in trusting the data to be accurate.
If integration is your concern, add to your wish list that you need a system that will not create unnecessary or lengthy downtime.
By now, you have probably made a list of programs you are considering. Now is the time to ask yourself, what are people saying about the FP&A automation solutions you are researching? If you are not sure where to start, we recommend:
Talk to someone in the firm's IT department and ask them for recommendations on things to look for that will integrate without issues with your organisation's current IT infrastructure. Ask them if there are any provisions the software must fulfill to meet the minimum system requirements.
Check product reviews. See how many stars the product has earned and whether people recommend the program to someone in their industry.
Pay close attention to reviews with one or two stars. Note the pain points the software did not resolve (or made worse) and compare that to your organisation's need in FP&A automation.
Lastly, ask for a demonstration of the product. See if you can review how the software will work with your current tech stack without fully committing to one solution.
You don't want to choose the ideal solution only to find out it will take six months before the system is ready for users. The onboarding process is crucial to digital transformation.
Ask yourself, what will complete integration cost the company in downtime? Will implementation get outsourced to a third-party contractor? If so, expect delays and consider doubling what timeframe they quote you.
If you find a solution that takes weeks or months to fully integrate, note that it's worth the time to research other options. Also, look into whether you can import the company's existing models into the system or if your team will have to recreate them.
Plan for failure because it's better to plan for the worst in this scenario. That way, you are prepared financially and professionally for issues. Consider whether reverting to your old systems will be expensive if the system integration does not work or the project stalls out.
Before you commit to an FP&A automation solution, you must know what the learning curve will be and how long adoption will take.
A solution that takes two or three weeks to implement but months to comprehend is not ideal for operational efficiency. Consider these questions to ask during your buying process:
The best FP&A automation software is flexible and agile--not a box lacking transparency.
FP&A automation should make life easier for your team, so it's vital to understand how the tools you are considering affect the daily functions of their jobs. Month-end, quarterly reviews and year-end activities should not be cumbersome once the integration is complete.
We recommend learning how your FP&A solution choice will change daily operations in the following ways:
You should consider whether the ease of use translates to faster, more efficient reporting. For example, the Kansas City Chiefs could obtain reports 95% faster than their previous manual processes using Vena's agile FP&A technology.
At some point, you will need to consider how the program manages documentation. Financial statements, contracts, vendor agreements and other legally binding paperwork require secure storage on a platform that offers the latest in malware and ransomware detection.
Your solution must offer robust document collection, storage and management in a central database so your team can access data quickly and easily.
Most companies will post this information on their websites (search for the term "knowledge base" or similar). You can also opt for a separate platform, such as Zendesk.
Ask yourself these questions to help you evaluate the document management process of your FP&A solution:
If you are purchasing an FP&A automation solution, you are also buying a customer support team. That's why you must consider the quality of the support you will be buying.
Customers want a professional, knowledgeable and friendly support staff invested in the success of your team and your organisation at large.
The best way to get answers to your questions is by talking to an existing customer of the program. If you do not know anyone who already uses the FP&A software you are considering, speak to a sales representative regarding customer testimonials.
Next, we will cover scalability, and you need to know how your solution must grow with you and your company. Review these questions and consider how they apply to how your finance professionals will use your FP&A automation solution:
Once you have a firm grasp on how your FP&A technology solution will scale with you according to market demand, it's time to evaluate your firm's legacy systems.
Connections and integrations are likely more critical factors for you to evaluate in the various FP&A solutions you research. According to a Battery Ventures survey, 15% of respondents believed the lack of integrations is their most significant issue with their existing FP&A automation solution.
A solution with more integrations is more future-proof and agile--and its integrations affect your buying decisions. The more source systems your FP&A automation software can connect with, the better.
Why? Let's review some of the reasons:
Do you want to be able to experiment with how you use a solution? If that's the case, make sure you do not get FP&A software that locks you into a specific method.
Take the "Glove Test," meaning see how close a fit your choice of FP&A is to your legacy systems, current or upcoming processes and future software integration. Does it fit like a glove?
Here's a list of things to help determine if your solution passes the "Glove Test."