As an important figure in the finance department and a driver of decisions, the controller has a lot on his or her plate—and a lot of ways to tackle it. From analytics solutions to ERP, there are a variety of tools that can be used to better inform the decisions that need to be made. One option for this is financial planning and analysis software.
What Are Financial Planning and Analysis Solutions?
According to Gartner, Financial planning and analysis solutions support the office of finance’s efforts to manage financial planning, budgeting, modeling and performance reporting.
What Do FP&A Solutions Do?
Built to deliver improved analytics, actionable financial insights, and smarter decision making, FP&A connects the budgeting, planning, and analysis process to simplify business growth. As demand for analytic-driven decision making across the business has continuously increased, it has in turn driven increased adoption of these products to deliver.
In fact, according to Gartner, finance leaders have a lot to gain—as high-quality financial planning and analysis can improve decision outcomes by up to 1% of sales.
Why do Companies Look at FP&A?
FP&A solutions are used mostly within the office of finance to add efficiency and control to financial budgeting and planning processes. It has always been the responsibility of finance leaders to advise and guide executives in using financial information to make better decisions in managing corporate performance.
As discussed in the Magic Quadrant, companies opt to use FP&A products to create internal and operational efficiencies, improve business agility, and to enhance decision making. These solutions continue to evolve from centralized, finance process support solutions to enable more-collaborative FP&A and performance reporting.
Core Functionality of an FP&A Product
In their annual FP&A Magic Quadrant, Gartner notes that FP&A should deliver at least two of the following:
Financial budgeting and planning:
The financial budgeting process sets short-term targets for revenue, expenditure and cash generation, usually with a one-year horizon. It typically uses financial classifications found in the general ledger to classify financial goals and targets.
Traditional office-of-finance-oriented planning and forecasting processes consist of a financial modeling engine, with integrated profit-and-loss balance sheet and cash-flow forecasting. These capabilities support the creation, review and approval of financially focused plans and forecasts, as well as their associated workflows. These capabilities should also maintain an audit trail of all associated activities.
Integrated financial planning:
This area joins the financial planning components of other business domains, such as workforce and sales, with those of corporate finance. More-innovative initiatives can also be used to meet organizationwide requirements in specific areas, thereby improving overall performance management needs.
Financial forecasting and modeling:
Capabilities in this area are enabled through corporate planning and modeling and “point” solutions that provide best-practice capabilities, especially for the more-flexible, end-user-driven corporate planning and modeling initiatives.
Management and performance reporting:
Performance reporting takes management reporting to a new level of inclusion and ease of use. Its collaboration capabilities transform traditional management accounting reports into “performance playbooks” that take a more inclusive approach to explaining results. Performance reporting incorporates operational results, financial results and enhanced narratives (narrative reporting).
Providers of FP&A Products
Though there are dozens, if not hundreds of financial planning and analysis software providers, the following are tested and trusted for use in midmarket and large organizations:
- Workday (Adaptive Insights)
- Planful (formerly Host Analytics)
- Kaufman Hall (Axiom Software)
- CCH Tagetik
- BOARD International
- Vena Solutions
One of the Many Solutions Controllers Should Know
Financial planning and analysis products have become increasingly powerful, diverse, and affordable. More flexible and intelligent than ever, Gartner has found that these solutions have been embraced by the finance department and can deliver rapid time to value.
Just one of the many solutions available for today’s finance department, many companies have found immense value in implementing FP&A products. If you’re looking to take command as a controller, these solutions could help you, your department, and your organization as a whole to thrive.
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