In the last year, a new type of software has emerged that’s been doing the rounds in the finance and FP&A domains. In this article, we’ll talk about what this new software is all about, the reason for its sudden popularity, and why you might need it.
What is a Strategic Finance Platform?
A strategic finance software is also commonly referred to as financial planning and analysis (FP&A) software. It is built specifically for today’s CFOs and finance teams.
It helps finance leaders with
- Business Budgeting & Planning
- Tracking Budget and Forecast vs. Actuals
- Higher-order analysis tools for faster decision-making
What will a Strategic Finance Platform do for you?
The role of the modern CFO has evolved from a role largely focused on financial management and reporting to being a strategic business advisor to the CEO. Apart from playing a significant role in driving business performance and efficiency, CFOs are now also expected to democratize critical data across the organization so that everyone has access to the data they need to make informed decisions, better manage risks, and quickly identify new opportunities to accelerate growth.
Spreadsheets continue to be the tool of choice to support all the above crucial tasks. While spreadsheets are great and enable finance teams to manage most of their day-to-day tasks they are not scalable. Most fast-growing organizations reach a point where spreadsheets simply don’t cut it anymore. They become a blocker in proactive and data-driven decision-making.
Here is how a strategic finance platform can enable finance teams to make better decisions, faster:
- Provide real-time monitoring capabilities of important business metrics such as LTV:CAC, ARR:FTE and Rule of 40, etc.
- Ability to model different scenarios and ‘what-if’ situations so that you can identify the best path to meet your business targets.
- Plan, budget, and forecast at the speed and granularity demanded by your business.
- Maintain a single source of truth by combining your financial data from ERP with your business data from CRM, HRIS, and Billing systems.
- Collaborate seamlessly with all key stakeholders across all teams to build interconnected plans.
- Have all data and KPIs available on-demand and remove any dependency on the IT or analytics team to share data.
How is a Strategic Finance Platform different from a BI tool?
While on the surface you might see some similarities with a Business Intelligence (BI) tool, a financial planning and analysis platform is marginally different.
A BI tool is used to collate data from different sources and visualize it to identify trends.
However, they do not understand the logic required for building financial plans and models.
A strategic finance platform will aggregate data from your ERP, BI, and other business applications to provide real-time monitoring, integrated modeling, and interactive dashboarding capabilities.
How do you know if you need a Strategic Finance Platform?
You should consider evaluating a strategic finance platform for your business if you notice the below signs at your company:
1.You don’t have real-time visibility on the performance of your business.
To prepare monthly reports, FP&A professionals first gather data from various business applications such as ERP, HRIS, and CRM. Then consolidate this data into a spreadsheet, review and correct errors, and finally massage the data to get into a usable state.
This entire process takes 2-3 weeks of effort, making it impossible for you to determine how your business is doing at this very moment. While it’s okay to not have real-time visibility on every metric, some such as pipeline changes require day-by-day monitoring to identify risks and opportunities quickly.
2.You are not able to plan/budget/forecast as frequently as your business demands.
As your business scales – you expand into new markets, add new product lines, update pricing models – your models need to scale with you. You’ll need to plan and forecast at new dimensions which would be too cumbersome to do on spreadsheets. Pulling more data from an increasing number of data sources will take even more time, limiting your ability to plan frequently.
3.You are not able to respond quickly to changing business conditions.
Finance teams spend the majority of their time collating and massaging data rather than analyzing it. Time that would rather be spent identifying unprofitable areas and making decisions around headcount changes, and redirecting resources to initiatives driving growth.
4.You are facing issues collaborating and aligning different business stakeholders.
Building a plan and budget requires input from various stakeholders across the organization. If it seems like every stakeholder has their interpretation of a metric, their way of modeling, and is using outdated numbers to build their plans, then you know that getting alignment will be difficult to achieve.
All the above issues can seriously hinder the growth of your business. If you are struggling with one or more of the above pains, it’s time to look at arming your finance team with a strategic finance platform. Here is a list of top financial planning analysis software for your consideration.
