Purchasing FP&A Tools: Why Building Consensus with Operational Teams is Essential for Success

First let us look at it from the CFOs point of view. What’s important to CFOs in 2023? In order to answer the question, PwC lists six topics that are shaping the finance leaders' agenda this year. They are: navigating economic uncertainty, enabling growth, taking action on ESG, accelerating transformation in their businesses and cultivating finance talent. CFOs cannot do any of this alone, regardless of how capable they are and how well equipped they are with FP&A tools at the cutting edge. The finance team needs to collaborate with all other functional and support service teams and their leaders. 

Today, CFOs are part of the C-suite and are expected to be team players. CEOs also depend on them to work with COOs and others in the C-Suite to set and support corporate strategies and to deliver on the corporate agenda. This is why it makes sense to build a consensus when purchasing FP&A tools that support company-wide collaboration. 

Why we are writing about building consensus 

We, at MODLR, see time and again various FP&A tools performing reasonably well at the reporting and planning function, and serving the needs of the CFO and the finance teams often to their satisfaction. However, all is not well with these companies and many CFOs are unhappy with the status quo. This is because FP&A teams are finding it time consuming to get their routine business planning and reporting done and are having little buy in to targets and budgets throughout the rest of the business. Why? Because the rest of the company is not in sync with the FP&A tools used by the finance team. Either due to lack of trust in the numbers (of sentiments from past spreadsheet mistakes or black-box cross company recharges) or from not participating directly in the target setting / budgeting process. FP&A team may be happy with their software tech and platforms (which 80% of the time is simply Microsoft Excel). But everyone else is not on the same page. In the end, sales and operations lack clear targets and everyone is less productive than they should be.

How much in sync are you with the rest of the company?

We suggest that Finance teams get together to consider their company's current systems and try to answer the following questions, so they know how much they are in sync or not with the rest of the company when it comes to planning, budgeting, forecasting, performance analysis and routine reporting: 

1. Do all the operational, service and finance systems work together?

For most companies, the answer is a resounding NO! This is another reason why many businesses struggle with digital transformation. Their systems are unable to talk to each other and this guarantees regular high volume, low value data manipulations. 

2. Does your finance team and operational teams work on different spreadsheets, different databases and use different technologies?

Most would agree that they do. And then both planning and reporting becomes a nightmare because systems do not talk to each other and often re-entering data is necessary? Yes, of course. That, unfortunately, is the norm around the world, isn’t it? Only a very lucky few have integrated systems that help them streamline both their reporting and planning processes. 

3. Can you get out weekly, monthly, quarterly and annual reporting quickly and easily?

Some of you may laugh out loud about this possibility because in some businesses this process is neither quick nor easy. It takes much effort from both finance and operational teams to get the reporting completed. And you can be sure it takes an inordinate amount of time. This is time that operational teams can work on improving their operations and that the finance team can spend on value adding pursuits like data trend analyses and interpretation and evaluate the strategic implications of upcoming future decisions. 

4. Is the CFO and the FP&A team happy with their FP&A tools? 

They may be, but quite often they see the weaknesses every planning cycle and wish for a better system. Does the current system spare them the trouble of integrating with operational systems around the business? or ensure timely collaboration across teams? We would say not. 

5. Does the use of different data sources or formats across teams affect the planning process?

When the teams depend on different data sources or formats, it can introduce costly time wasting and data inconsistency through human-error, which can significantly impact the planning processes. This can lead to the inaccurate forecasts and unreliable plans, ultimately affecting decision-making and resource allocation. Addressing these differences manually often requires time-consuming data harmonization efforts, diverting valuable resources away from strategic planning activities.

6. Are the operational divisions happy with the reporting processes and the FP&A tools they need to deal with? 

Are they happy with their own management systems from a planning and report perspective? Are these systems working well for them? And if they are, does that extend to the monthly, quarterly and annual business planning, reporting, budgeting and forecasting cycles?

Again the answers would, most likely, be No! This is because most operational software platforms rightly focus on delivering a service or product and lacks the ability to focus on the future. Typically, these systems see reporting as a secondary function leaving operations in the lurch with regard to understanding at a macro level "What happened?", and "Why did it happen?". Without an integrated planning and modelling platform (which finance can offer) they are left with little hope of then understanding "What are we going to do about it?". 

And now, the current teams are still able to carry on their work, but budgeting, forecasting, data integration and performance reporting makes life difficult for everyone. 

If all this sounds familiar to you, and it is very much your day to day reality, it also resonates with people from millions of large and small businesses around the globe. That is just how things are when systems around the company do not play well together and refuse to talk to each other.  

Do you feel it is high time things changed? Just because your teams, both finance and operational, have been dealing with these quandaries in the past does not mean you should continue to do so. 

8 reasons why Finance should collaborate with other functions on FP&A purchasing decisions

Here’s why you should seek to collaborate with other functions before deciding on new FP&A tools systems and platforms:  

1. Consensus helps deliver true corporate-level synergies. 

When data transparency exists, and decision makers at all levels can see their relevant data, performance and trends in real time—as compared to using weeks and months old historic data, they are able to make optimal, well informed decisions. And when the FP&A tools integrate well with other functions to create smooth, quick reporting a reality, that enables the business to benefit from true synergies across the board. 

When some divisions, such as finance have access to the best in class tools, and other teams across the company are still struggling with spreadsheet spaghetti jungles, you are foregoing true potential synergies that the business owners and shareholders count on. For example, cross-function modelling solutions like MODLR can also add higher value by then producing profitability modelling to better understand high cost or low margin operational activities to better understand how operational behavior or customer pricing can be tweaked for better profitability. 

2. Having multiple systems is costly.

If your operations reporting have not moved to the cloud, you need to annually update and renew system support and service contracts for all those various systems from around the business. This is increasingly becoming untenable. 

Even if your operational and other functions have moved to the cloud, still you may need to pay for multiple annual and monthly business intelligence or data processing subscriptions. This too can be costly when there is little integration. Cost wise, as well as for operational efficiency it makes sense to get on board a single performance management platform, with one single subscription. Isn't that what streamlining your systems across the company, seeking sustainable solutions and accelerating digital transformation all about?

If you are open to it, cloud computing is a new frontier that can deliver immense savings, if done right. 

3. Productivity increases; labour costs can be reduced.

When the FP&A tools and systems talk well with other systems such as Enterprise Resource Planning  (ERP), Sales and Operational Planning  (S&OP) and even HR systems, you will be able to reduce labour costs significantly. All duplications of effort and data reentry can be eliminated. Checking, rechecking and dealing with multiple versions of worksheets (such as in Excel) can be avoided. You may want to check out our articles on the true cost of Excel and how it is possible to excel without Excel when making those calculations. 

All of that is only possible in a situation where operational data streams can be integrated for access by the FP&A team. Ensuring that FP&A tools and operational and other systems data streams can easily talk to each other brings immense savings and improves productivity at both ends. How are you going to find and mine those productivity and labour cost savings without talking to other functions before making purchase decisions?

And the ideal solution is if you can find a provider of FP&A tools that also have sales, marketing, operations, inventory and HR systems on the same platform. Then, your labour savings can really add up and help boost profitability.  

4. Saves time and effort on multiple fronts. 

We know from the survey, and from our experience, that CFOs are keen to cultivate financial talent. They need data analytics and business modelling expertise. However, with many companies tightening their belts to brace for a recession in 2023 and/or 2024, opportunities for new recruitment are severely limited. If you can cut down the size of your teams, and optimise performance of the best financial team members by streamlining workflows and cutting down the stupid with automation, that surely is a plus in this cost conscious business climate.  

The same goes for operational teams as well. If your sales teams, for example, can input their performance data promptly into the sales system, that would cut down a lot of clerical work for operational admin staff. And if that data can be approved by team leaders, their managers and all the way up to the COO promptly online, and made accessible to the finance team, imagine how many labour hours can be saved. And how much paper you can save. On both fronts the savings would be quite significant. 

5. Eliminate reconciliations among multiple versions of worksheets. 

This is a recurrent issue in companies everywhere. This happens when your operational or other support teams are working on Excel and other spreadsheet type software. It can even happen when some functions are on proprietary systems which do not talk to or cannot be integrated with the FP&A software. It also happens in instances where operational data streams are integrated well, while others, such as HR and other support teams are still relying on spreadsheets. Either way, it wastes the time for the Finance staff and delays the finalising of all company level reports. The weakest link in the chain makes the entire company slow to report and respond. In all such instances, both Finance and other teams waste their time untangling multiple worksheets and many more versions of the same. 

6. Quick, smooth, error-free reporting. 

We mean quick and smooth for everyone in the business, not just for the FP&A team and the finance division. This too is only possible when all data streams can be easily and smoothly integrated and all operational, budgeting, forecasting and management reporting happens without a hitch. Getting there may be challenging, but making the effort, and finding software tools and platforms that make it possible surely has to be a collaborative decision. 

7. Makes business processes more sustainable and agile. 

ESG is a key concern for CEOs and CFOs of businesses of all sizes in any industry. These concerns need to also be shared by operational and other support teams company wide. However, when there are information silos, lack of integration, unnecessary duplications of effort, excessive printing and time wasted, that negatively impacts the sustainability of your  business. 

When reports are delayed, and fraught with errors that no one can own up to and correct easily, that affects governance as well. And needless to say, agility goes out the back door when error-prone reports are the foundation for strategic analysis and decision making. 

Around the world, the most nimble among businesses thrive while those lacking operational excellence perish. Businesses that want to be agile need to have their FP&A tools well integrated with operational realities and data streams. This not only saves money and time, it also contributes to better strategy making and faster implementation. Isn't that alone a great reason to collaborate with operational teams when updating or purchasing FP&A tools?

8. Helps build resilience.

According to a McKinsey survey, half of (50%) respondents said that their organisations were unprepared to anticipate and react to external shocks. The majority (67%) of respondents saw their organisations as overly complex and inefficient. Brooke Weddle, a Partner at McKinsey defines organisational health as the way in which you run your organisation to effectively deliver against your performance goals. 

Having a consensus on how the different divisions of a business come together—in other words, how they share information, plan, monitor progress, create strategies and implement them—is all about performance. 

Healthy companies focus on six key dimensions to achieve resilience. McKinsey calls these the six flavours of resilience: financial, operational, technological, organisational, reputational and business model. 

FP&A tools and platforms play a critical role in helping you get your financials in order—accurately and on time—having a good control over your operations and optimising technology. That is the foundation for building financial and operational resilience. If these dimensions are unhealthy and suboptimal, your business will be unhealthy and unable to withstand external shocks and survive during uncertain times. 

Take a few moments to consider how well your business health is rated on the six dimensions of resilience. That is another reason why we believe building a consensus is key for making purchase decisions for FP&A systems. You need tools, platforms and technology that helps your organisation be more healthy, resilient and able to deliver all the synergies you can mine from it.  

9 things you must consider when buying FP&A tools, software and platforms 

If the time is right to change your systems, get everyone on board for deciding where you want to be with the new systems. This would lead to a future in which performance management and business intelligence are harmonious, sans chaos. If that is the future you aspire to, it makes sense to reach a consensus with all divisions in making the purchase  decisions. 

Here are 9 things to consider before making FP&A purchase decisions: 

• Automation opportunities
• Collaboration features
• Functionality & Versatility of FP&A tools
• Performance management tools
• Data integration 
• Data security
• Enables digital transformation and migration to the cloud
• Supports corporate ESG agenda
• Initial investment and the ongoing operational costs 

Automation, collaboration, versatility of FP&A and performance management tools, quick and easy reporting, data integration and data security are basics that your new system must have. It is also critically important to see to what extent the new tools and platforms help meet the corporate ESG agenda. Modern businesses must also explore how cloud based tools and platforms can make the business more effective and whether the new tools are cloud based, and would enable and help speed up the company’s digital transformation efforts. Last, but not least, what is the initial investment and what are the ongoing operational costs for the new system you are purchasing?

Let us examine in detail why each factor matters. 

1. Automation opportunities

Automation is all about streamlining your processes and eliminating the stupid. Does the new system help automate all possible routine functions, leaving only those steps and processes that require intervention, approval, interpretation and review to humans? This is something you should look into. 

Automation is not just about cost cutting or job cuts either. It can help improve productivity and speed up processes across the business. In times of high labour inflation, and immense pressure to cut down costs, this should be a key consideration for all new technology purchases.  

2. Collaboration features

Do the new FP&A tools you propose to purchase enable collaboration with teams and functions company wide? How about collaboration with teams spread across the globe and in diverse locations around your country and elsewhere? Does the system have features that enable teams to join and engage from anywhere? 

Are the tools scalable? Are there limitations on how many users can login and participate at any moment in time? Your new software tools or platform should facilitate easy collaboration and meetings, saving time and effort for all. Does it come with features that help optimise running costs?

The best way to find out whether it serves the needs of all is to get the other functions to the table when evaluating the proposed system. Ask each operational and service team what they need to be more productive at their jobs. If the process of reaching a consensus encourages discussion, and leads to a better understanding of their needs, that fosters better collaboration over time. Removing physical and emotional silos is a good thing. 

Reaching a consensus is also about gaining buy-in from other functions. It is about being seen as reaching out to collaborate. Give them a fair hearing and consider the specific and unique needs of the other functions across the company before making your decision. This seeming willingness to collaborate with help break down some silo walls.  

3. Functionality & Versatility of FP&A tools 

Naturally you want to ensure that the reporting tools for your new FP&A system are fit for purpose. They need to fulfil the needs of teams company wide, not just the needs of the finance team. Ensure the tool aligns with your specific FP&A needs, including budgeting, planning, forecasting, reporting, and analytics. It should enable anyone with authorisation to access the relevant information, review metrics and measure performance against key performance indicators (KPIs). 

Performance management across the business and ensuring the adherence to corporate strategies becomes easier when your new FP&A system offers quick, easy, versatile, customisable reporting tools, ideally with visualisations to interpret trends and highlight variances. .  

4. Performance management

Corporate performance is linked directly to the collective individual performance of employees and the success of their teams. The corporate performance cycle begins at the point of defining strategic business goals. They are then converted to operational plans and goals for different functions and teams within the business. Managing business performance is a continuous cycle that includes planning, tracking and analysing performance and where needed, making adjustments. 

Workforce planning and managing performance of individuals and teams is directly linked to effective business performance because all plans of a business are implemented by its people. It is fair then, to say, that the success of a business depends on implementing a successful performance management system for its people. In the absence of one, employees and teams cannot clearly  know what is expected of them. And leaders from supervisors to team leads to division heads and the COO and CEO, will be unable to offer clear, meaningful feedback to their subordinates. 

Lack of clear performance management metrics can impact employee motivation and retention. Lack of clarity can impede employee development efforts. Employees who do not know how their performance is measured and what they need to achieve to move up to the next higher level would not be motivated. The seeming lack of future prospects can drive away the more dynamic employees. 

Why discuss all this when talking about FP&A tools and systems?

We, at MODLR, believe that corporate performance management—watching and dealing with the business success metrics such as sales revenue, net profit margin, gross margin, monthly recurring revenue (MRR) and other KPIs—is only truly effective when KPIs are linked directly to employee performance. When an FP&A system is integrated with the performance management of the company, with workforce planning and the performance management of its people, then only leaders can see the gaps that occur between business forecasts and actual performance. 

When the ability to link shortfalls in business results to performance of divisions, teams and individuals becomes routine, it will help business leaders, and indeed team leaders correct their course before it is too late. This makes companies more agile and proactive. 

In that sense, performance management of both businesses and individuals is like driving a car safely. You cannot do it by only checking the rear view mirror or by looking through the wind-screen. You need to balance the past, present and the future performance in order to chart the business on its chosen strategic path. When driving a car, you also need to consult side mirrors. These can be likened to external environmental and market trends and other external factors and data sources in the current moment that have a bearing on business performance, today or in the future. . 

When considering a new financial planning and analysis tool, software or a platform, check whether it has the capability to draw clear links between overall business metrics and business performance and the performance management of its employees. 

5. Data integration

First, understand how well integrated or poorly integrated your business systems are. Do they talk to each other, quickly, easily, in real time? And if they do not, you already know how much trouble, delays, stress that causes and how much the lack of integration negatively impacts the productivity of your business. 

In getting new FP&A tools, software or a platform, you need to correct those existing issues. So look for solutions that help improve integration. It is even better if you can find solutions, like MODLR, that have the capability to integrate multiple business functions on the same platform, doing away with most dysfunctional integration factors. 

Your business also uses various external data sources in strategic and operational planning, forecasting and budgeting, in business negotiations, supply chain management including vetting of suppliers. The ideal FP&A system should be able to integrate those diverse external data streams and sources on an ongoing basis, sparing the need to manually input that information. 

If some functions and divisions in your business are still depending on Excel, or other commonly used business software platforms and databases including  ERP software, Microsoft Business Central, Oracle, NetSuite, SAP, TechOne, Jobpac, Xero, MYOB, Quickbooks and Sage, among others. Find out whether they too can be integrated with the new system. If not, you are asking for trouble, yet again, and loss of precious time and productivity. 

6. Data security

You can say the only good thing about information and data silos is that, if one faces a breach, others are still safe. But for the sake of efficiency and economy, the silo culture should be driven out of a business, either promptly, or gradually. Still, the idea of integrating company wide data systems still faces some resistance, as does embracing the cloud.

MODLR uses two factor authentication, two-factor authentication enhances security by introducing an extra layer of verification beyond basic passwords, thereby safeguarding users. Moreover, versatile access controls offer comprehensive user access management, ensuring robust data protection and integrity. Additionally, employing advanced data encryption secures information by transforming it into an unreadable format, effectively shielding it from potential cyber risks. 

7. Digital transformation and cloud migration

Embracing the cloud delivers many benefits at both operations and strategic levels. Gartner explains the business benefits of cloud as follows:

"At a technical level, cloud integrates applications, deployments and networks to produce more seamless business solutions. At a strategic level, cloud creates opportunities for organizations to create new digital services for customers and employees, make workloads more cost-effective and efficient — and generally enable the enterprise to respond at speed to changing needs during periods of disruption. High inflation and the threat of recession are only increasing the focus on whether to accelerate the movement of workloads to the cloud."

That said, Gartner also acknowledges that capturing those benefits can be challenging. Companies are best served by cloud technology when they consider cloud migration from the lens of strategic business goals of the company. These goals can include creating new revenue opportunities, expanding the customer base, improving customer experience or cost optimisation. 

Can your new FP&A software support your cloud migration efforts? This is an imperative for  businesses currently undergoing digital transformation or those with plans to do so. Evaluate how best the new systems and platforms help you get on that path. This requirement makes the purchasing decision for new tools even more complicated.

It must also be noted all workloads should not be moved to the cloud without streamlining and modernising the processes. If you neglect to do so, you may end up increasing operational costs and fail to enhance the agility of your business. 

Ask whether the proposed FP&A system is able to help by automating all routine procedures and eliminating time wasting steps in your workflows. Then and only then would you reap the true benefits. If the software does not form part of the solution, it would become part of the problem. 

8. Supports the corporate ESG agenda

Modern companies seek ways to make their businesses more resilient by pursuing sustainability on all possible fronts. Measures to improve performance on environmental, social and governance (ESG) aspects are no longer purely altruistic or optional. ESG performance is fast becoming a critical competitive factor for consumer facing (B2C) businesses as well as (B2B) businesses  who serve other businesses up and down the value chain. 

Ensure that your new FP&A system can support your ESG agenda. What features stand out on this front? 

Also, can it be adapted to evaluate in-company ESG efforts? Will it be able to help evaluate ESG performance of your suppliers, if you are seeking ESG compliance down the entire value chain? 

9. Initial investment and ongoing operating costs

When making purchasing decisions for software tools and platforms, companies need to look at both the initial investment as well as ongoing operating costs. When making the purchase evaluation, remember to factor in the potential cost savings the new system can deliver. 

From proprietary systems to cloud based subscriptions

Currently many financial planning, analysis, business modelling, accounting and reporting tools are moving online. Proprietary systems have become increasingly more expensive to both set up and maintain. Subscription based software-as-a-service (SaaS) model has become immensely popular for both ease of use, conveniences and relatively affordable pricing strategies. These services can be accessed securely from any PC or a mobile device. 

Subscription model helps improve cash flows and offers flexibility

Since the applications are hosted by the service provider, you are spared the cost of installing and maintaining the software locally and paying hosting charges. Instead, you just pay a monthly or annual subscription to the service provider. The subscription model helps improve cash flows and make outright cash payments obsolete. This is a plus for any business. 

Most subscription services offer instant registration as well as ‘any time cancellation’. The flexibility offered by the ability to ‘test-drive’ helps you pick the platform that best suits your unique business needs. If one doesn’t, you simply move onto another, paying just the cost of a monthly subscription. For this reason, the cost of transitioning from one system to another is no longer prohibitive, a situation very different from the business model for proprietary software.

Scalable applications that can grow with the business

The subscription for ongoing use can be tailored for specific business needs. Most SaaS services are priced according to the number of users and can be scaled up as a business grows in terms of business volumes, product range, geographical spread and the number of users. 

Often, to improve their own cash flows, enhance MRR and ensure ongoing loyalty, most SaaS cloud based companies offer annual subscriptions at an attractive discounted rate.

Making the decision

In this article we discussed why building consensus with operational and service teams outside of the finance function is useful and how it helps choose FP&A tools, software and platforms that offer the best fit for your business. 

Consensus helps deliver corporate-level synergies. A company-wide systems that integrates well saves time and effort and in doing so, reduces costs. Moving away from multiple systems helps save money. You can expect significant productivity increases and save on labour costs.  Integrated systems support better performance management and helps the business to be more proactive. Collaboratively chosen FP&A purchases will also help your business become sustainable, agile and resilient. We also discussed 10 things that companies need to consider before making FP&A purchase decisions. 

We hope that we have provided CFOs and FP&A teams with an appreciation for the need to collaborate with others across the company in purchasing new systems and the factors that need to be considered in  those collaborative purchasing decisions.

Do you need more information on MODLR?

MODLR supports collaborative decisions making on FP&A purchasing because we have seen first hand the dysfunctions that can occur in the lack of such consensus. We have also strived to create a platform that can work with many function specific solutions so that FP&A teams and other operational teams can collaborate smoothly and without issues. 

If you want to know more about MODLR, just contact us and schedule a demo session. You can also register and enter the waiting list to get yourself a free account to test drive MODLR to see the platform and solutions in action. Remember to visit MODLR on YouTube to see our videos on Short Guides, the Corporate Planning Model Series and a selection of user group sessions.