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6 Common Misconceptions About FP&A Software Solutions

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FP&A software solutions can encompass a broad category of programs that widely vary in terms of user experience and complexity. The multitude of FP&A use cases creates some confusion about what this software can and should do for your business. While no one-size-fits-all approach exists to FP&A solutions, there are definitely some common misconceptions about FP&A solutions we find it necessary to address in this blog.

Read on to discover why:

  • FP&A solutions are not about building financial intelligence into your systems to reduce finance consulting costs and related processes.
  • Limited dimensionality is not the friend of FP&A functions that benefit from being able to access a wide range of financial and operational data.
  • One of the main differences between FP&A solutions and Excel-based FP&A software is the greater resiliency the latter can offer your finance department and business.
  • You can adopt FP&A solutions that scale with your company's growth. 

1. You Can Reduce and Simplify FP&A Functions With Built-In Financial Intelligence

When you hear about FP&A software solutions, you may imagine a financial intelligence platform with preset dimensions for accumulating, organizing and generating data sets. You assume that establishing dimensions within your system will allow you to reduce your FP&A consulting costs and simplify your forecasting process. 

The reality, however, is that financial intelligence can severely limit your FP&A operations. Business leaders sometimes fail to appreciate the important difference between FP&A and accounting functions. Creating built-in financial intelligence burdens FP&A with the rigidity that comes from preset dimensions and well-defined structures that are more akin to your accounting practices. FP&A work, in contrast, is about being able to pull from a variety of financial and operational data sets to create a better understanding of your business forecasting and variance analysis. 

As a result, using FP&A software solutions for built-in financial intelligence can mean incurring unnecessary IT costs that come from complicated scripting processes and formula creation. You may also experience duplicated operations when your built-in financial intelligence does not provide the forecasting answers you need. The best FP&A solutions reduce costs through automating integrations of data but still give your FP&A team the flexibility it needs to create and execute business planning operations.

2. You Need Limited Dimensionality for Performing Variance Analysis

Variance analysis is one of the most important jobs of your FP&A team. Understanding the who, what, when, where and why behind differences in forecasted versus actual data is key for improving business performance. There's a misconception that using limited dimensionality functions is necessary for quickly arriving at answers for variance analysis.

On the contrary, variance analysis is naturally a process for identifying the context and meaning behind your forecasted expectations that depart from reality. Performing variance analysis using an FP&A solution that has broader dimensionality offers more opportunities for making connections between your data for the people who interpret it.

Predictive_PlanningSource:  FP&A Trends

3. The Unlimited Dimensionality of FP&A Solutions Is Too Difficult To Manage

FP&A solutions that offer a wide range of use-case opportunities can be overwhelming for CFOs and other business leaders. The initial sense of an uphill climb can quickly lead to user sentiment that unlimited dimensionality is too much to manage. The key is to prioritise the functionality that matters the most within your organisation.

FP&A software solutions require the skilled analytical minds of your team to manage in a way that is useful to your business ends. While the alternative of a solution with limited dimensionality may seem preferable from an ease-of-use perspective, the resulting application will eventually be unsatisfactory. As soon as your analysis needs go beyond the application's parameters, you'll have to return to the even more cumbersome spreadsheet.

4. FP&A Solutions Are a Replacement For Excel-Based Programs

Some finance professionals might be quick to shoot down the overall value of FP&A software compared to Excel or other spreadsheet-based software, arguing that the functionality is ultimately the same. However, FP&A software solutions can be an important complement to your existing Excel systems that make integration with Excel data more useful. The benefits include:

  • Access to data in real time 
  • More institutional resiliency by not having to overly rely on individuals within a finance department to control your data sets
  • Less potential for human error that can lead to corrupted information

5. You Should Wait for Certain Growth Targets To Adopt FP&A Software Solutions

A common excuse for delaying the implementation of FP&A software is the feeling that adding solutions will over-complicate matters and not easily scale with your company's rapid growth. You keep telling yourself that you will wait for certain growth targets before adopting an FP&A solution. However, this approach of kicking the can down the road only prolongs the pain of eventually integrating your Excel data and committing to a system that will give you greater insight for business planning. Additionally, if rapid growth is your expectation, then FP&A software is precisely what you need to have instant access to a wide range of information that allows you to make key decisions nimbly and with accurate data.

Maturity_LadderSource: FP&A Trends

6. FP&A Solutions Will Result in Loss of Team Members

CFOs and other finance leaders may also express hesitancy over FP&A software because they fear it will send the wrong signal to the people within their departments and lead to turnover. Loss of jobs is not an uncommon fear when it comes to technology and automation, but it is a misguided one. 

Finance departments should embrace FP&A solutions as an investment in technology that helps current team members create more time for job functions that add value to the business because tedious and error-prone data entry tasks are automated and removed from their day-to-day job activities. Instead, team members can focus on core FP&A responsibilities such as increased forecasting models and more in-depth variance analysis.

Excel at More With Vena

At Vena, our mission is to help businesses Plan To Growâ„¢. We offer a wide range of solutions in FP&A, workforce planning, regulatory compliance reporting and other business planning functions. The Vena Complete Planning platform can benefit all industries, but we do have tailored programming for fields such as banking, insurance, higher education, professional sports, healthcare and many others. Transform how your company accumulates and shares data to jumpstart innovation across your company's products and operations.

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