If you have ever tried to build and maintain financial reports inside a visualization tool, the answer should be simple. Power BI works well for dashboards, but modern cloud-based corporate performance management (CPM) solutions are the best option for your financial reports.
BI vs. CPM
Let‚Äôs elaborate. Power BI belongs to a category typically referred to as Business Intelligence (BI) tools. While purpose-built, financial reporting and consolidation tools belong to a category referred to as Corporate Performance Management (CPM) Software.
In the business intelligence category, you also find other well-known solutions such as Tableau and Domo. For the most part, BI tools are purpose-built for dashboards with rich visualizations. Also, BI tools are increasingly infused with artificial intelligence (AI) capabilities.
Corporate Performance Management Software:
On the other hand, CPM solutions are specifically designed for accounting teams to consolidate financial data. CPMs often produce professionally formatted financial reports such as:¬†
- Profit & Loss
- Balance Sheet
- Cash flow statements
Most CPM reporting tools offer budgeting modules. And in recent years, the ability to do sophisticated planning such as sales forecasting and modeling.
If the difference between BI and CPM is so clear, why is ‚ÄúFinancial Reporting in Power BI or in a Corporate Performance Management Solution‚ÄĚ even a topic worth covering in a blog?¬†
Well, with the rapid rise in popularity of Power BI for financial reporting and its key competitors, an army of ‚Äúhungry‚ÄĚ consultants have emerged.¬† And, given a strong and flexible tool like Power BI, a sales person with the right technical skills can make almost anything, including formatted financial reports, look good.¬† Many companies have fallen into this trap lately of using Power BI for financial reporting. And, when you ask a skilled, revenue motivated consultant: Can you do that? Chances are that you will get a ‚ÄúYes!‚ÄĚ¬† And after a few weeks‚Ä¶or a few months, and a sizable consulting bill, you may actually have good looking Power BI financial reports.¬† But, as excited as your executives may be to have a single cloud-based portal for both dashboards and financial reports, for most financial executives this has a tendency to turn into a small nightmare.¬† Why?
Because neither Power BI nor its BI competitors were designed to manage a financial reporting process.
A lot of hard coding and hacking is needed behind the scenes in Power BI‚Äôs modeling language. Of course, if you are ready to hire a technical expert or keep your Power BI consultant permanently retained to handle model changes as your chart of accounts grows, your roll-ups change or you need to write a new report, you could survive for a while. Eventually, we can say with certainty, you will be back in Excel to do your financial reporting where your accounting team is comfortable with formulas and formatting.
Alternatively, you can deploy a CPM solution that is built to streamline the financial process. Also, you can deploy a CPM tool to deliver professionally formatted financial statements.
With a CPM solution, you can also move your budgeting process into the CPM tool and run it all in the cloud.¬† Now, it does not have to be an either or.
The Best Way: Use BI Tools and CPMs Reporting Tools Together
An increasing number of CPM vendors offer pre-built integrations to leading BI tools like Power BI.
Two such vendors are Solver and Prophix. As an example, Solver is similar to Power BI in that it is an Azure cloud-based platform, and it comes with a pre-built connector to Power BI.¬† Below is an example of a comparison between Power BI and Solver. It clearly shows that companies looking for both dashboards and financial reporting should use a BI tool for their dashboards and a CPM tool for their financial reporting. Neither tool replaces the other.
As organizations gear up for what can be the “Roaring Twenties,‚ÄĚ having the right tools for the job might be one of the smartest strategic moves a management team can make. On the other hand, trying to fit a square peg in a round hole, could lead to frustration. The frustration is delayed reporting and wasted money. It is increasingly accepted that ‚Äúdata is the new gold.‚ÄĚ When Power BI is integrated with a best-in-class CPM solution and both are running in the cloud, organizations are likely a step closer to success and industry leadership in the years ahead.