The acronym FP&A refers to forecasting, planning and analysis applications used by finance managers to model their business environment, plan for coming periods and analyse and report on organisational performance.
This represents an important step forward from the accountant’s traditional role of reporting historical performance, but has proven to be a slow burn within the profession. There was a time when accountants in business were pushing ahead with analytic finance applications, but sadly these tools didn’t help them foresee the impact of the global financial crisis. The old giants of financial planning such as Hyperion, Cognos and Business Objects have almost disappeared from AccountingWEB’s radar and their places have been taken by much cheaper and more nimble cloud applications such as Spotlight Reporting, Futrli, Float and, in the past year, Fathom.
Companion tools or built in?
Users of mid-market and enterprise accounting systems from the likes of Sage, SAP, Exchequer, OneAdvanced, Access and Pegasus may already have access to FP&A functions within their existing product suites. However, we do not have enough data on these systems to compare them with the specialist tools listed in our table. Your existing accounting supplier is always a good place to start when looking for these types of application as the tools they offer or recommend are likely to integrate easily with your core accounts. Then compare against the functionality and prices on offer from the specialist tools listed here to see if they offer the optimum solution for your needs.
Cloud or desktop?
This guide focuses primarily on the applications that link to the main cloud accounting engines - Xero, QuickBooks, Sage Online/Live, FreeAgent and KashFlow. This emphasis reflects where growth is taking place in this market, with cloud accounting platforms underpinning increases in FP&A use. The applications featured here are the most prominent ones in AccountingWEB’s data and the online app marketplaces.
Desktop tools are still available from the likes of FD4cast and Palo Alto Software. Many of the corporate solutions built around Microsoft SQL Server, or SAP, Oracle and other mid-market enterprise resource planning (ERP) systems also still function on client/server networks. These tend to be embedded in larger corporate organisations that take longer to overhaul their administrative systems. Some specialist analytic programs like cloud-based Adaptive Planning, or the trusty client/server standby Crystal Reports, have engineered live links to on premise, enterprise systems as well as online programs.
Analytic applications depend on their source data. Links to main accounting engines ought to be a given, but always make the effort to check and get instruction from the vendor on how to set up the correct links.
Increasingly non-financial data such as Google Analytics, CRM forecasts or personnel metrics can form part of the business analysis, so ask what capabilities your prospective supplier offers to incorproate these sources. A good way to test your requirements is to ensure the developer carries out a demo using your source data.
Accuracy versus speed
The sensitivity of your analyses and forecasts depends on what tables the APIs connect to - and how the source system handles transactions. For example, some users comment that bankfeed data sometimes doesn’t match what’s in the general ledger due to clearance quirks in the payment chain. Cashflow forecasts, in particular, are particularly elusive when it comes to pinning down all the data.
As part of your selection process, you need to determine the key purpose of your models and reports. This will help define your criteria and tolerances for speed versus accuracy. Most accountants want accuracy and a single version of the truth. But is supporting quick operational decisions, in which case spotting early trends and directions is more important?
Some tools – Spotlight Reporting and IRIS Insight, for example – are good at generating board report packs and standard business plans to support loan applications or investment prospectuses. They may offer great report generation and editing facilities, but be less flexible on setting up ad hoc analyses or what if scenarios.
After hearing about the demise of Excel for nearly 20 years, the spreadsheet is still as deeply embedded in financial analysis as ever. During the early part of the 21st century AccountingWEB flagged up the importance of Excel PivotTables for management reporting.
Judging from traffic to our tutorials, Any Answers conversations and 26,000 Excel wire subscribers, it’s still just as popular now. For reporting and analysis, the Microsoft technology “stack” of SQL Server and its Analysis and Reporting Services module competes with corporate solutions from the likes of SAP and Oracle. The analytical and reporting possibilities of Excel have been greatly enhanced by the advent of Power BI tools, which expands the volume of data that can be processed. Power BI takes Excel data management and pivot tables into a cloud environment and opens up a wealth of possibilities. But just to confirm that this sector moves tends to move slowly, the use of Power BI-based tools was very limited in our spring 2018 survey.
Advisory tools for practitioners
Some products are marketed to primarily to practitioners and through them to their business clients. Designed as aids to consulting conversations and outsourced financial analysis, these FP&A applications will support multiple companies and data sources, and often include overview screens showing status of client KPIs. These products are signalled with the “Advisory” label in our product data and will often be accompanied by additional services and training for practitioner partners.
Alerts and distribution
The mantra for the always connected, 21st century digital economy is “manage by exception” rather than staying head-down in financial details. It’s always a good idea to work out who’s going to use the outputs from forecasting and reporting tools and how they are likely to consume - and act on - them.
Many managers and accountants still prefer the “paper” report, even if it arrives in the form of an electronic PDF. Modern analytic applications are more interactive and immediate and can publish reports to an online web portal or interactive KPI dashboard. But even this innovation is being overtaken by new features.
Developers are now focusing on adding tools that let you set conditions in reports that will trigger an alert to a specific manager or adviser if a particular indicator exceeds the warning threshold. One or two of the products included in this review are now offering alerting facilities. If they prove successful, more will follow.