FP&A Software Solves Four Key Requirements
When evaluating FP&A software solutions, it helps to align your requirements with a vendor that solves for your challenges. The first thing to do is break down your needs into the four key functions that FP&A software solutions provide:
Information Delivery: Financial Statements with and without operational data, charts, graphs and KPIs
Accounting Support: Reclassification of expenses to direct costs, intracompany eliminations, top-side journal entries, allocations
Planning: Modeling future revenue and expenses
Data Analysis: Discovery and analysis of data from financial and operational systems
Each vendor prioritizes and delivers these requirements differently. As part of your software evalation, you should consider your priorities against the vendors priorities.
Information Delivery details how a system communicates information, whether the traditional row & column financial reports, charting capabilities and dhasboards. Just as important is the method of that delivery (i.e., on screen dashboard vs emailed reports, PDF, Excel files, Google Sheets). Some systems focus on building out PDF files that can be automatically emailed to constituents. Other systems expect those constituents to log in and run reports through a browser or application.
Many GL systems cannot support the consolidation of multiple general ledger systems and/or reclassification of expenses from below the line to above the line. We consider Accounting Support of an FP&A solution to be the functionality to support financial consolidations, allocations, reclassifiction and intercompany eliminations as some typical examples.
Planning & Modeling capabilities are how a business allocates resources going forward. Some vendors will prebuild solutions for specific requirements like headcount or capital planning. Other vendors provide frameworks to allow you to tailor planning to your specific requirements. How a vendor allows you to build your plan, can be a key component of their solutions.
The ability to discovery data analomolies or uncover business insights in an ad-hoc manner is the functionality we consider Data Analysis. A systems ability to make it easy for finance and/or business owners to discover this data, or to use AI to uncover insights can be a key function of an FP&A solution.
When you are starting to evaluate FP&A tools, be sure to understand your requirements and map your priorities to how your FP&A vendors solve for these four key requirements.