It's accurate to say that FP&A software doesn't have a dominant player. According to popular sampling, the top five tools have a total market share of just 13%. But it doesn't count all the most commonly used FP&A tools, namely spreadsheets.
“The biggest reason people come back to spreadsheets, whether it's Excel or another brand, is flexibility,” says FP&A Guy, a podcaster, FP&A Trainer and Sealth Leader (the first expert in this category).
Spreadsheets are ubiquitous and at FP&A, according to a benchmark survey by the Association of Financial Professionals, acts as the “most common denominator” used to connect data across a variety of systems.
This means that unlike accounting software, FP&A software is not mandatory, but not obligatory for small companies. Finance can be obtained for a long time in spreadsheets for financial planning and modeling as an organization grows. Barnhurst sees a billion-dollar company still using Excel, but “but it's painful.”
However, at some point, spreadsheets can't manage huge amounts of data, says Barnhurst. FP&A software offers repetitive task automation, data validation capabilities, better handling of large data sets and complex models, direct data integration with other systems, version control and audit trails, advanced analytics and security features, and more.
A busy market
The FP&A market may seem intimidating as it appears to be extremely crowded, but it's not, says Barnhurst. Because not all tools compete in the same space.
There are many questions to ask yourself how to segment your market and how to ask yourself.
- How much do you want to spend?
- How complicated is the potential use cases?
- Want industry-specific tools or agnosticists?
- Does the software also need to handle operational plans? How scalable is the software?
- How much time and effort does it take to maintain or adjust your financial model?
- How flexible is the modeling function? Can I quickly change my financial plans and forecasts when an unexpected event occurs?
Spreadsheet integration
One of the easiest ways to segment is by how well the tool integrates with the spreadsheet software. (Integration with ERP, production software, or other major systems is also a major decision point.) From a financial executive and organizational perspective, here are what the two edges of the spectrum look like:
The best of both worlds. “They love their spreadsheets, but they do deal with what I call 'Excel Hell',” says Barnhurst. There is no privacy, collaboration, workflow integration, or automatic reporting with applications.
“Excel is just a mess.”The models are constantly confused. They spent a lot of time with errors and mistakes. They want to leave it. ”
Tool Type
Using spreadsheet integration as a separator makes jobs easier. (The products here are examples, not comprehensive listings.) At least now, the categories are broken down into the following, says Barnhurst:
- Spreadsheet add-in: LiveFlow, XPNA (all done in Google Sheets or Excel).
- Spreadsheet Native: Datarails, Vena, Cube (web apps with their own databases. We recommend working with spreadsheets whenever possible.)
- Integration of high-rise spreadsheets. These are really three segments. For example, at the end of a high integration there are Jedox and Aleph. The ends of the low integral are the ribcage, clockwork, and mosaics. Medium integrated categories include prophecy and planned categories.
- Replacing a spreadsheet: Causality, arithmix.
generation
Another nomenclature we've heard in the FP&A software market is the first generation, second generation, and third generation. The FP&A category is 25 years old and starts with a massive, monolithic tool, says Barnhurst.
The current evolution of the third generation tools came into being in 2018. These are often “low code, no code” and are more focused on the user interface and user experience, but most are less functional, Barnhurst said. “FP&A tools take time to develop,” he says. “So, it may not be the case with third generation software. [yet] Scale too. ”
The fourth generation of tools are under development, and of course AI is the foundation. “The way to think about it is to plan a tool with AI rather than AI,” he says. These tools include AI agents, allowing FP&A teams to tap on even more data sources. At least that's what's been promised. They act according to the spoken language. They have excellent anomaly detection, alerts and commentary.
“I don't know how far we are, but I saw it. I couldn't test it yet,” says Bernhurst.
Find a fit
What are the key points to remember during your selection journey?
It's not easy to leave Excel. Users need to learn the new spreadsheet interface and coding to create reports. Non-financial personnel may alk. However, these applications are multidimensional, making them easy to model and project by customer, product, region/country. “There's no need to rewrite the formula, but I always give up a bit of flexibility because I have a database and structure.”
look forward to. For small mid-market companies, enterprise tools are generally overkilled, says Barnhurst. However, when establishing requirements, consider where your organization is in 3-5 years. “A very rapidly growing company that currently generates $20 million in revenue could have realistically earnings of $1 billion over three years. “They're going to wait [to buy FP&A software] Or overpay early. ”
Implementation is important. Barnhurst says that installing the FP&A software takes between four weeks and six months. “Don't sleep with an implementation partner,” he says. “What's more important or more important than software is the implementation partner because most software has the same core functionality.”
once again For emphasis: “Don't select tools based solely on tools,” says Barnhurst. “Because they're not the vendor that sold the software to you, they're the ones that make it work.”
