Good news for finance professionals: there is now a wealth of dedicated software available to speed up your workflow and allow you to focus on more strategic output. Read on to see how dedicated vertical software products, especially SaaS platforms, are used in the FP&A (Financial Planning & Analysis) space.
Vertical software are applications purpose-built to solve the needs of a specific industry within a specific market. Verticalization of software has been happening steadily over the past several decades. Buyers now have access to specialized software tools to accomplish virtually any task imaginable, no matter how broad or narrow their needs may be. Most of these are now subscription SaaS (Software as a Service) platforms. SaaS has usurped on-premises software installations in most cases, since they bring advantages like instant functionality upgrades, access from anywhere, no need to host hardware, and a pay-for-what-you-use approach.
FP&A software can broadly be described as tools to help finance teams create more strategic output in less time via automation. Of course, there are many different flavors of how they work – we’ll tackle some of the larger and more popular categories here.
These software components emerged over the last 40 years, but they are legacy in name only – all are still in daily use by finance teams across the globe.
Without question, modern FP&A arose with the advent of spreadsheet software. The first widely distributed spreadsheet program, VisiCalc, was created for the Apple II computer in 1979. Combined with the proliferation of IBM and Macintosh personal computers, and the evolution of spreadsheets from VisiCalc to Lotus 1-2-3 to Microsoft Excel in the 1980s, finance teams finally had the ultimate tool to build flexible and responsive financial models. To this day, Excel remains the dominant business spreadsheet tool, though many organizations are adopting Google Sheets as its collaborative nature is perceived as superior to Microsoft’s.
Peachtree Accounting and Intuit’s QuickBooks launched personal computer-based accounting software virtually simultaneously in the late 1970s and early 1980s. Though primarily used by accounting, their output in the form of reliable, structured P&Ls was readily consumed by FP&A teams to load into spreadsheets and trend into the future. QuickBooks has remained the number one choice for most small to medium businesses, with Xero also supporting customers in the same market. As businesses get larger and more complex, many migrate to using NetSuite, a more sophisticated cloud accounting software tool now owned by Oracle.
In the early 2000s, both Adaptive Insights (now known as Adaptive Planning by Workday) and Anaplan launched. As some of the first true “cloud” software for finance, their goal was to abstract the desktop spreadsheet calculation engine and move it onto hosted servers, so that the data could be managed by multiple individuals from anywhere in the world. Both Adaptive Insights and Anaplan remain leaders for large enterprise planning.
Once the purvey of only the largest enterprises, newer software tools have emerged over the last few years to bring FP&A automation to the masses. “The FP&A Guy” Paul Barnhurst has put together a very thorough segmentation based around two key axes: the size of the intended customer and the software’s integration with existing spreadsheet tools.
Since legacy vendors still dominate the enterprise segment, we will focus here on the tools for small to medium businesses.
The tools in this section essentially replace Excel or Google Sheets as your business planning tool. Mosaic, Jirav, and Basis are the more well known brands here. When you adopt these products, you, along with professional services employees at the vendor, typically spend several months rebuilding your existing spreadsheet-based business model inside of their cloud tool. Once migrated, you now manage your model inside that tool.
The benefit to these tools comes from the finance team being able to assign individual model components and business drivers to specific non-finance employees, so that those permissioned SMEs (Subject Matter Experts) can input and modify assumptions directly into the model. The downside is that this software usually comes at a significant cost in both dollars and time – not only months to migrate your model, but also time to master a new tool, including the opportunity cost of foregoing the tried-and-true spreadsheet. Pricing typically starts in the mid five figures annually.
Instead of replacing the spreadsheet as the prior companies do, these tools add functionality directly into Excel or Google Sheets to bring live financial data directly into your spreadsheet. OnPlan, Cube, and DataRails are three of the more popular solutions in this set. After integration, you can do database-like data exploration inside your existing model and compare versions side-by-side.
The benefit to these solutions is that they preserve the well-understood spreadsheet workflow and they sync data from multiple systems into Excel. The downside is that they also take weeks or months to set up properly, they are highly technical, they are typically used solely by the finance team instead of more widely distributed inside the organization, and they are expensive, usually at the similar mid five figures annual cost.
Telemetry brings you the benefits of each of the above – working with the familiarity of spreadsheets and building a platform for both finance and operators – while doing so at an affordable price point and fully onboarding in less than an hour. Telemetry built intuitive plugins for Excel and Google Sheets that allow it to access your business model where it currently exists, no data migration necessary. The combination of its spreadsheet integrations and the Telemetry web app allows for the automation of consistent FP&A tasks: budget vs actual reporting, post-close data sync, scenario management, dashboarding, and even the creation and sharing of discrete P&Ls for each of your operators. All for a few hundred dollars a month.
Head over to telemetry.fi to try it for free.