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Using Analyst Rankings to Help Select the Best CPM Software Apps

This article is part 8 of an 8-part series on evaluating the best CPM tools for your business. Part 8 focuses on why and when to use third-party rankings from analysts when evaluating the best CPM software applications.

 

While some companies don’t need to go through a detailed selection process to come up with a list of the top Corporate Performance Management (CPM) software solutions for their organization, others have their work cut out for them. If you belong to the latter category, here is a vendor evaluation tool that may be of help.

One of the key items on many CPM product evaluation checklists is to look at how third-party firms, usually referred to as analysts or analyst websites, review and rank vendors.

Below, we will discuss the use of analysts to help evaluate and score the best financial reporting and planning solutions for your business requirements. This type of third-party research can complement the findings and opinions from your internal team.

When analyst firms are of less importance

Before we go into detail about analyst firms, let’s briefly cover some situations where analyst reports with CPM vendor rankings are not as useful and, in some cases, cost extra time and money in the selection process. One such example is when there is already a leading CPM solution partnered with your ERP vendor and offering pre-built integrations and other benefits that outweigh other potential vendor differences.

Another example is when multiple people on your staff have deep knowledge of a leading CPM solution that they have used before, ideally while they worked at a company from the same industry to ensure that there is still a fit.

Which analyst firms should you use?

While there are a few firms with analysts that are CPM industry experts who do months of research every year to analyze trends and rank vendors, there are many more analysts that are a waste of time or are even directly misleading in their rankings.

  1. Examples of professional CPM analyst firms
    • Analyst and survey-driven rankings: Gartner and Dresner Advisory Services
    • User-driven rankings: G2
  2. Unqualified or misleading “analyst†firms
    • Clickbait websites that will come up with their own vendor lists with no proper research, purely to get ranked on a search engine in order to sell advertising or get “sponsorship†money vendors pay to be on (e.g., a “Top 10 CPM Vendors†list)
    • Websites owned by CPM vendors ranking themselves
    • “Research reports†from “analysts†paid for by a specific CPM vendor

So, if you consult analyst reports to help find the best CPM tool for your company, be conscious of who or what is proving the advice.

How do you know if analyst reports are biased or fair representations of vendors?

It is clear that almost all research performed by a human being is biased one way or another, either consciously (e.g., based on vendor sponsorships or who they speak with the most) or unconsciously (e.g., based on the knowledge of the analyst). Even a firm as well-known as Gartner arguably has some bias in their reports because they include analyst comments, and they include vendor revenue as one of the drivers in their “Magic Quadrants†– something which may or may not indicate who a “leader†should be in a specific industry. Especially with the pace of technology changes and acquisitions in the marketplace, the best CPM solution for your business 6 months ago may no longer be the top choice today.

Other analyst reports or vendor rankings are websites that are driven by user feedback as compared to analyst research. You could argue that these websites provide the most neutral feedback although not as detailed and analytical as the major reports produced by full-fledged analyst firms.

Then there are the countless firms that provide “awards†and rankings based on payments from vendors. These are highly biased and should be avoided. It is fairly easy to detect them by reviewing the firm’s website and observing the lack of depth in CPM research and content.

What professional analysts get right (and sometimes don’t)

The top CPM analyst firms typically do one major CPM report per year. All or parts of the data in the report is driven by customer surveys completed by each vendor’s customers. Because of all the work that goes into these reports and because customers don’t want to be constantly bombarded with surveys, the reports will represent data that is up to 15-16 months old. This lag is because customer surveys typically start 3-4 months before the report is released and then the report will be out on the market for a year until next year’s report is out.

Because many cloud software vendors have monthly releases, and new features arrive all the time, these reports could be missing important vendor features. Websites like G2 and others are starting to follow the same model; they are constantly updated whenever a customer decides to leave their feedback. However, they are less detailed and structured.

Examples of analyst firms that review CPM software

There are a number of companies that provide CPM vendor reviews and market research. Here are examples of three different categories of such firms:

  1. Gartner: Analyst + customer survey-driven vendor rankings. Also provides research reports across almost all categories of IT firms. A major CPM report is produced once per year.
  2. Dresner Advisory Services: Customer survey-driven vendor rankings. Also provides research reports. Almost exclusively focused on CPM (they refer to it as EPM, or Enterprise Performance Management). A major CPM report is produced once per year.
  3. G2: Customer feedback driven. Ranking reports are produced automatically on their website (g2.com). Rankings are continually updated as customers enter their feedback on the G2 website.

How much does it cost to use an analyst firm?

Some CPM vendor research reports are free while many are licensed by the CPM vendors themselves and shared with customers. However, be aware that vendors naturally will only license and share research reports that shed a good light on their product, so there is a bias here to be cognizant of.

Some analyst firms also provide selection services, either as paid calls with their CPM advisors or as full-blown gigs where they will lead or participate in the entire selection process as a “consultant.†In past years, they used to then provide clients with RFP templates with hundreds of pre-defined questions. These have become less popular in recent times as both vendors and internal evaluation teams dread lengthy narratives always shaped to sound good, or they can miss entire functionality areas that are up and coming.

In any case, it is almost always beneficial to do your own homework first by listing your current pain points in as much detail as possible and quantifying ($$) the cost and effort of running the current reporting and planning processes. This “homework†should also include the management team’s vision of the business benefits they want to achieve with a new CPM solution.

Conclusion

The leading cloud CPM software solutions have a lot of features and functionality, and changes and improvements are being released all the time. So, when you and your internal team are coming up with a shortlist of the best CPM solutions for the company’s needs, it is advisable to do your own research, review product demonstrations, and make sure the top candidates integrate easily with your ERP and other important systems. If you have special complexities or a lack of time and evaluation skills on your team, then an analyst firm can assist you in various ways.

Links to useful software research and evaluation assets

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Using Return on Investment (ROI) to Help Select the Best CPM Software Apps

This article is part 7 of an 8-part series on evaluating the best CPM tools for your business. Part 7 focuses on methods for calculating ROI to find the best CPM software applications.

 

A business software selection process can be exhausting, involving weeks or months of product demonstrations, meetings, vendor scoring, and other time-consuming tasks. Usually, the most attention is paid to the product demos. However, one of the most important but ignored areas of a vendor evaluation is a Return on Investment (ROI) estimate.

As the name implies, an ROI calculation aims at estimating the return the company is expecting to get over time based on the investment they put into the software subscription, training, and implementation.

A best practice to select the best CPM software and vendor is to perform an ROI calculation and make it part of the total vendor score as you compare the finalist candidates with each other. Here is a free interactive vendor comparison tool that has three dashboard pages:

  1. Scoring of 8 major functionality areas (insert screenshot below this section)
  2. Calculator to arrive at ROI
  3. Summary dashboard comparing your top two CPM software finalists

Your team can use the sliders to adjust all scores according to your evaluation results:

Vendor Comparison Tool

Why should ROI always be used when you evaluate business software?

Many companies skip or miss the ROI step in their evaluation process to compare the top CPM vendors on their finalist scorecard. Why are so many organizations missing this ROI step? Usually it is due to one or more of these reasons:

  • They don’t have an ROI calculator
  • They feel there are too many variables to come up with a good ROI estimate
  • They have a bias toward a solution known or recommended to them
  • The vendor in the lead does not want to be compared to the runner-up competitor

However, because the vendors’ CPM features and prices both change over time, a good ROI estimate helps capture this to provide a picture of what business benefits would look like compared to the investment in subscriptions and implementation services.

How to calculate ROI for the best CPM software selection

It is almost always easy to get software costs and implementation estimates from the vendor because these are already part of standard price lists and quoting tools they use in their sales processes.  However, what is harder is to calculate your own costs and savings related to the project.

It is important to do your own homework first by listing and quantifying ($$) the pains of NOT having the new solution. Many organizations do list current pains before approving a new software purchase. Such metrics are also valuable after the project implementation in order to validate the degree of success. It also helps keep vendors and internal project members accountable for promises of outcomes, and keeps them focused on what is most important when there are obstacles in the implementation and to help support hard choices that have to be made.

Here is a list of the typical ingredients in an ROI calculation:

Vendor ROI Tool

  1. Benefits

This part of an ROI calculation is always the hardest to estimate. Here is where you quantify the annual value (amount) your business expects to gain from the improved and speedier decisions you expect to achieve from the CPM vendors you evaluate. Try to put a number on the resulting benefit to the business when managers can make faster and better decisions because the new solution provides self-service access, drilldown to answer questions, charting for better analysis, more accurate budgets, and other advantages.

Note: Don’t include any costs or time savings from the cost section (see below).

  1. Costs

Here is where you capture the costs of the new and old solutions. Your numbers should include software, hardware, and labor expenses.

Cost of New Solution:

  • Annual software subscription
  • One-time implementation services

Cost of Old Solution:

  • IT costs to operate: This includes any server hardware and electricity, upgrade costs, annual maintenance/renewal costs, etc.
  • Cost of manual labor: This should be the excess time your IT and finance staff spends compared to what you expect from the new solution. Use a fully loaded hourly cost of own and/or contractor staff.
  • Cost of risk: This is where you capture the estimated annual cost of risks like errors in monthly reports, and the resulting cost of managers not having access to timely and detailed information.

If you leave all the figures in the ROI calculation as positive numbers, then the calculation can look like this: (Cost of Old Solution – Cost of New Solution + Benefit of New Solution) / Cost of Old Solution

Using one year or multiple years in your ROI calculation

Although there may be some firms that provide industry benchmarks to quantify the standard ROI of a new CPM software solution and its expected automation of financial reporting and planning processes, results can be highly individual based on how good or bad the old solution was and how well the new solution is implemented and utilized.

In very special cases, you may achieve a positive ROI in year 1, but in most cases it will take longer. For this reason, a good rule of thumb is to calculate both the 1st year and the 5-year (accumulated) ROI. This will also better capture discounts that vendors provide for one or more years before their price resets to list price.

Also, when you ask for the 5-year subscription cost from each vendor, make sure it includes annual price increases.

Vendor Evaluation Summary Dashboard

Do ROI calculations have an extra cost?

All decision makers like to see ROI calculations when staff members propose investments in new technologies. Sometimes, these calculations can be the major deciding factor in a decision if all other areas are somewhat equal. In other words, it may be well worth the hours it takes to come up with the estimates for ROI.

If you are using a professional software selection firm or third-party consultant to help with your selection, make sure to ask if their services include assistance with an ROI calculation or if this a separate cost.

You can use this vendor comparison tool, which includes an ROI calculator. It has three tabs: 1) Feature comparison, 2) ROI comparison, and 3) Summary score. You can use it as-is, or it may give you some ideas if you want to apply it, for example, to an Excel spreadsheet model that calculates ROI in a different way.

Conclusion

The best CPM software solutions have a lot of features and functionality. They are also very flexible. This means that implementation estimates can vary greatly based on the number of your reports or the complexity of your budget and forecast models.

Assuming you have a successful implementation, it is typical to stay with a solution for five to ten years or more. In such time periods, and if you choose a stable vendor, you can expect to see numerous improvements along the way that should further support your managers in making faster and better decisions. This future expected value can be captured in your multi-year ROI calculation to help ensure that you are making the best possible decision to pick the top CPM vendor for your organization to partner with.

Links to useful software research and evaluation assets

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Top Microsoft Features in the Best CPM Software Apps

This article is part 6 of an 8-part series on evaluating the best CPM tools for your business. Part 6 focuses on the many Microsoft integration capabilities to look for in the best CPM software applications.

 

Most organizations in the world use one or more technologies from Microsoft. So, when selecting a new cloud Corporate Performance Management (CPM) solution the benefit of close Microsoft alignment can be from “slight†to “very important†or “required.â€

As the world’s businesses have migrated one application after another to the cloud, they have had to re-establish whatever connectivity they had between their solutions when they hosted them in their own server room.

For the reasons mentioned above, most of the top CPM vendors have integrations to the most popular Microsoft technologies in order to increase their customers’ productivity.

Here are some of the top Microsoft integrations to look for in the best CPM solutions

Based on which Microsoft technologies your organization uses, one or more of these integrations may be beneficial (or even highly important):

  1. Microsoft Office / Microsoft 365 integration

The below CPM integrations to Microsoft Office / Microsoft 365 can probably be ranked in this order of importance to a Finance and Accounting team:

  • Excel integrations can offer everything from the CPM report designer being an Excel add-in, to report export to Excel and data import from Excel.
  • PowerPoint integrations are typically used to display and refresh reports or dashboards within a corporate financial presentation.
  • Word integrations are less popular but can be critical for governments and other organizations that need to refresh financial and other figures inside lengthy annual or quarterly report documents.

Example of a Power BI dashboard live inside a PowerPoint presentation:

Power BI inside PowerPoint

  1. Power BI integration

Power BI (closely followed by Tableau) has risen to be the most popular dashboard tool in the world. A large number of companies use it already and more will do so in the future. For this reason, an increasing number of CPM vendors have developed Microsoft-certified connectors that easily transfer data and dimensions to Power BI.

Some CPM vendors even go as far as offering Power BI as their main best-of-breed dashboard solution and include out-of-the-box financial dashboards to get customers ramped up quickly. If you already own or plan to buy Power BI, this approach eliminates the need to buy a CPM vendor’s proprietary dashboard licenses and enables the finance team to learn only one visualization tool.

  1. Microsoft Teams integration

Teams is Microsoft’s widely popular collaboration portal. Numerous third-party vendors have built apps to surface their cloud applications inside the Teams portal.

While all of the best CPM solutions can export fully formatted reports to Excel, and these can be imported to Teams, not many have built apps that enable you to open the CPM app from Teams and, for example, run reports while inside a Teams group discussing profitability or liquidity with other managers.

  1. Microsoft Dynamics integrations

Dynamics 365 Finance and Dynamics 365 Business Central are Microsoft’s cloud ERP applications. If you already own or plan to implement one of these ERPs, it is important to closely review how well the CPM vendors you are evaluating connect to those solutions.

A tight and easy integration between your ERP system and the CPM solution enables dynamic reporting, as well as budgets and forecasts that have updated historical data. Some integrations even allow for easy write-back of budgets to the General Ledger (GL).

If you are on a legacy Microsoft Dynamics ERP such as GP, SL, NAV, or AX, the new CPM solutions integration is equally as important. If you plan to migrate to Dynamics 365, you can even use the CPM as a storage of your old historical ERP data, making the migration to the new ERP faster and easier.

  1. Azure deployment

Since CPM vendors manage their own cloud applications, it is typically not visible to an end user which cloud platform, such as Azure or AWS, their CPM portal is running on. Azure may be more important for certain IT departments if they already have plans or projects using other Microsoft Azure tools such as Power Apps.

Does deep Microsoft alignment have an extra cost?

This will depend on each CPM vendor. The cloud platform (in this case Azure) is always built into vendor pricing, but oftentimes vendors charge a price per integration connector (e.g., to Power BI, PowerPoint, or Dynamics 365).

While it is important to do your homework to ensure that the vendor you choose has the key Microsoft integrations needed for a successful and efficient deployment, the total savings in time and effort, as well as improved decision making, are just as important.

Here is a free vendor comparison tool to help you compare vendors across a number of different features. This tool also includes a simple return on investment (ROI) calculator that is part of the total vendor score.

Conclusion

In summary, ensuring that a new CPM solution integrates well with productivity and ERP applications helps ensure longevity of the solution as well as user satisfaction. In other words, integration should be on the checklist of features to review in demonstrations and vendor conversations.

Links to useful software research and evaluation assets

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Top Data Warehouse Features in the Best CPM Software Apps

This article is part 5 of an 8-part series on evaluating the best CPM tools for your business. Part 5 focuses on data warehouse considerations to focus on as you are evaluating the best CPM software applications.

 

In the Digital Era, companies that make faster and better decisions than their counterparts are the most successful – yet accurate decisions require accurate information. Because all businesses have numerous data sources in addition to their ERP system, it takes a lot of time and effort to extract and compile information from all the internal systems. The fact that most of these systems are now based in the cloud does not make it easier.

This fast decision-making requirement has led an increasing number of companies to now implement a cloud data warehouse in order to streamline data collection, reporting, and analysis. Some of these data warehouse platforms are included with Corporate Performance Management (CPM) solutions. Because CPM solutions already use databases to store financial data and budgets, these vendors sometimes offer an expandable CPM that can also serve as a data warehouse. More about this later.

However, implementing a corporate data warehouse can be risky and expensive without proper technology selection and planning. And, of course, the return on investment (ROI) needs to be positive.

When working through a software selection process to find the best data warehouse platform for your organization, there are some features that are more important than others.

Here are some of the top features to look for in a data warehouse app

While most vendors can probably showcase more than 100 features in their product — something which can make software selection a virtual nightmare — there is a clear 80/20 rule that can be applied to zoom in on critical success factors.

Here is a list of five major functionality areas to consider:

  1. Data warehouse platform

In today’s world, IT departments and business managers are eager to move their applications out of their server room and into the cloud. Therefore, most new data warehouses are now being deployed in the cloud. All the big database vendors offer their own data warehouse platforms including Microsoft, Oracle, Amazon (AWS), IBM, Snowflake, and others.

Internal knowledge, cost, and other factors should be evaluated when choosing a solution. Any cloud CPM vendor that has a solution that expands into a full data warehouse generally also runs on one of these platforms, either with the cloud vendor’s database or a proprietary database.

  1. Homegrown versus commercial data warehouse

In the past, the majority of all businesses either managed to operate without a data warehouse or they purchased a database license like Microsoft SQL Server or Oracle and designed a homegrown system. For a mid-sized company, such a project could take upwards to nine months or more and often cost more than $100,000 in consulting fees (much more for a large enterprise).

Today, however, there are a number of commercial cloud-based data warehouses with user-friendly interfaces that provide menu-driven configuration requiring few technical skills to run. As a result, most companies, especially smaller and mid-sized businesses, utilize commercial cloud data warehouses that are pre-designed and configurable through a web interface.

Of course, it is critical to easily get data in and out of a data warehouse, so any good data warehouse must provide application programming interfaces (API) to allow integration tools and business intelligence (BI) solutions to connect to it.

Here is an example of a commercial data warehouse interface:

  1. Separate data warehouse or combined with CPM solution?

If a selection process is driven by an IT department and the data warehouse solution will be managed by their team, they often prefer a stand-alone commercial data warehouse or may already have an enterprise data warehouse in use. A CPM solution that includes data warehouse functionality becomes a one-stop reporting and planning database that can leverage the data stored in the enterprise data warehouse (where one already exists), as well in the ERP, payroll, and other systems.

This combination approach may offer a lower cost and has the added advantage that CPM tools offer strong report writers, which make it easy to query the reporting and planning data warehouse directly without purchasing yet another third-party reporting tool.

  1. Data extraction, transformation, and loading (ETL)

ETL tends to be the most technical and tedious part of a data warehousing project. This is because it involves extracting data from various transaction sources, transforming it into the format required to store it in the data warehouse, and then setting up automated data loading. Many of the leading data warehouse and CPM solutions offer their own native ETL tools, often with pre-built connectors to popular data sources. In addition, there is a whole industry of third-party ETL vendors that can be “middleware†between your transaction sources and the data warehouse. Of course, these come with their own subscription cost.

You should always request detailed information about the vendor’s integration to your systems, including the time and cost it takes to get them configured. A really good, pre-built integration should take at the most an hour to configure while “toolboxes†can take days to set up and connect to each data source. Which one your vendor offers will therefore usually become clear when you see their estimates for the integration step in the implementation.

Without good, automated integrations to your source systems, your users will end up spending a lot of wasted time on loading and possible “cleaning†of data.

  1. Modules, dimensions, and trees

In general, data warehouses store transactions and dimensions and connect these in their schema. In commercial data warehouse user interfaces, an administrator can typically add business logic to dimensions (accounts, companies, etc.) by setting up hierarchies represented as graphical trees or attributes. These hierarchies are then used by report writers and dashboards to automate reporting and consolidations.

To select the best data warehouse solution for your business needs, it is advisable to get a demonstration of the web portal. This gives you the ability to see how user friendly (or not) it is to manage the dimensions and data, and also to understand the effort it takes to set up user security as well as control access rights.

How much does a data warehouse solution cost?

Cloud-based data warehouses are sold on a subscription basis and vendors have various pricing models that could include factors like:

  • Number of users
  • Number of data source connectors
  • Number of transactions stored in the database
  • Amount of data processing

Vendors that offer multi-tenant solutions versus stand-alone systems per customer have a cost advantage as upgrades are simpler and processing resources can be shared.

Beyond features and the quoted price, here are some things to think about when you get prices from your vendor finalists:

  • Does the annual subscription from each vendor contain the same user count and modules?
  • If you are receiving a discount, how long until it resets to the list price?
  • Does the vendor provide a written policy for annual price increases?
  • Are the implementation estimates from each vendor for exactly the same work?

A good rule of thumb is to ask each vendor for the total subscription cost for the first 5 years. Make sure this includes any potential price increases. And, if the vendor is owned by a private equity firm, chances are that they will be sold while you are still a customer, so ensure that you receive a document stating their policy for price increases in the future, including stipulations if they are sold to another company.

Here is a tool to help you compare vendors and calculate return on investment (ROI).

Why not use the ERP system as a data warehouse?

Some ERP vendors and implementation partners suggest that customers use the ERP system as a data warehouse. This could work if all or most of the data is from the ERP system itself. However, most data warehouse use cases do not work well inside an ERP database for these reasons:

  • Major data loads and processing could slow down the ERP system and make daily work difficult for accountants.
  • Licensing requirements for the ERP may become more costly than expected.
  • Some ERP APIs may not be suitable for flexible and fast data import and export.
  • ERP databases are generally not built to easily handle lots of detail from other data sources such as CRM data, helpdesk information, or other solutions.
  • ERP systems typically don’t offer best-of-breed reporting, budgeting, and dashboards so chances are that you will end up exporting data out of the ERP “data warehouse†and into CPM and BI systems anyway.

Conclusion

In summary, choosing a new data warehouse solution to centralize your important data in order to support front-end tools that drive better and faster decision making has increasingly become a strategic priority for organizations across all industries. As we discussed earlier, certain features are more important than others and can be key success factors – in addition to a well-executed implementation process.

Here is a free vendor comparison and ROI tool to help you compare vendors across a number of different features. This tool also includes a simple return on investment (ROI) calculator that is part of the total vendor score.

Links to useful software research and evaluation assets

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Top Dashboard Features in the Best CPM Software Apps

This article is part 4 of an 8-part series on evaluating the best CPM tools for your business. Part 4 focuses on evaluating the range of dashboard features within the best CPM software applications.

 

While the financial reporting, consolidations, and budgeting functionality of Corporate Performance Management (CPM) tools are highly valuable to accounting and finance professionals, most executives want to also see the organization’s key figures represented graphically.

Graphical analysis tools generally fall into two categories: 1) Static charts; and 2) Interactive dashboards. Both can be desirable because static charts can significantly highlight the most important information in financial reports such as revenues, profits, and margins, while well-designed interactive dashboards provide deep, user-guided analysis.

When you are looking to acquire a new financial reporting or planning solution and you are comparing your vendor finalists, it is important to review which of the above graphical analysis methods they provide.

Here are some of the top dashboard architectures to look for in the best CPM software solutions

In general, one or more of these three types of graphical analyses below are provided by leading CPM vendors:

  1. Charts embedded inside financial reports

These are typically bar charts, column charts, pie charts, or trend charts embedded inside of financial statements like Profit & Loss reports and Balance Sheets. While financial report writers are purpose built, and much better than dashboard tools, to manage account structures and financial statement formatting than dashboard solutions, they can significantly benefit from charting and traffic lights to highlight the most important figures. This type of “hybrid†report is offered by some CPM vendors and should not be confused with dashboard solutions.

P&L – Variance, Modern Design

  1. Native dashboards in CPM portal

A number of CPM vendors have developed proprietary dashboards inside their cloud portals.

A benefit of native dashboards is that they typically derive from the same data structure/tables as the CPM solution’s reporting and planning module. Another benefit is therefore a shorter implementation time and one place to set up user security. However, companies are increasingly investing in purpose-built dashboard solutions like Power BI and Tableau, and therefore it is less efficient to use multiple dashboard tools than one enterprise-wide solution that can easily be supported internally.

Additionally, these purpose-built solutions like Power BI and Tableau offer much more advanced capabilities than most proprietary dashboards.

  1. Integrated best-in-class dashboards

Professional dashboard solutions have risen in popularity over the years, and solutions like Microsoft’s Power BI and Tableau have become market leaders. Because of the singular focus the vendors of stand-alone dashboard solutions can put behind their products, the pace of development is rapid and the breadth and depth of functionality is very solid. As a result, a large number of organizations have deployed these solutions as a standard across one or many departments internally and use them to present data from their various transaction systems including their CPM solution.

Based on their customers’ standardizations for these best-of-breed dashboard solutions, a number of CPM vendors have built connectors that make it very easy to pull data, dimensions, and database logic from the CPM product and into the dashboard tools. The result is a quicker implementation of dashboards, as well as a lower learning curve and a lower license cost compared to also implementing a proprietary dashboard inside the CPM solution.

Distribution – Revenue and Margin Analysis

How much does a dashboard solution cost?

While it is important to do your homework to ensure that the vendor you choose has the key features needed for a successful deployment, the total savings in time and effort as well as improved decision-making capabilities are just as important.

Here are some things to think about when you get prices from your vendor finalists:

  • Does the annual subscription from each vendor contain the same user count and modules?
  • If you are receiving a discount, how long until it resets to the list price?
  • Does the vendor offer a written policy for annual price increases?
  • Are the implementation estimates from each vendor for exactly the same work?

A good rule of thumb is to ask each vendor for the total subscription cost for the first 5 years. Make sure this includes any potential price increases. And, if the vendor is owned by a private equity firm, chances are that they will be sold while you are still a customer so you must ensure that you receive a document stating the policy for price increases in the future – including if they are sold to another company.

Here is a free vendor comparison tool to help you compare vendors across a number of different features. This tool also includes a simple return on investment (ROI) calculator that is part of the total vendor score.

Conclusion

In summary, choosing a new dashboard solution to compliment the company’s financial reporting and budgeting tools is increasingly becoming a strategic priority for organizations across all industries. As we discussed earlier, certain features are more important than others and can be key drivers of success, in addition to a well-executed implementation process.

Links to useful software research and evaluation assets

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Top Excel Features to Look for in the Best Planning and Financial Reporting Software Apps

This article is part 3 of an 8-part series on evaluating the best CPM tools for your business. Part 3 focuses on Excel functionalities that strengthen the best planning and financial reporting software applications.

 

Almost every financial professional both loves and hates Microsoft Excel. It seems like we can’t live with it and we can’t live without it!

So, when you are looking to acquire a new financial reporting or planning solution and you are comparing your vendor finalists, how well each solution interacts with Excel tends to be part of the top user requirements.

It should be noted that while an increasing number of cloud solutions emerged between 2010 and 2015, the popular sentiment from the browser-based vendors was that their tools would completely get rid of Excel. But, in short order, their customers started to miss the formatting and calculation power of Excel (as well as its familiarity) when they were creating reports and budget models. As a result, the early cloud vendors added Excel add-ins to provide an alternative design experience for Excel fans, and several newer vendors such as Vena and Solver made Excel an integral part of their cloud solutions.

For most companies, Excel functionality is THE key to success when using the best planning and financial reporting software.

Here are some of the top features to look for in reporting and budgeting Excel add-ins

Most finance, accounting, and budgeting users would consider strong Excel integration to be one of the top 5 or top 10 features when evaluating and comparing planning and reporting vendors. Below, we will discuss some important features to consider in this regard.

  1. The difference between Excel export/import and Excel add-ins

While pretty much every reporting, planning, and corporate performance management (CPM) solution can import data from and export reports to Excel, these processes should not be confused with Excel add-ins, which are plugins to Microsoft Excel that appear on its ribbon.

With an Excel add-in design tool, users build dynamic, parameter-driven reports that pull data from the ERP or CPM database. Data can be refreshed and written back (budgeting and forecasting) without any type of export and import process, which provides self-service for end users.

On this page you can find hundreds of examples of reports and budgeting forms built with an Excel add-in and made to run in a browser. Reviewing vendor examples of the types of templates you want to build with your new solution can be a very good assurance that the design and layout capability in your chosen solution is going to take care of your organization’s needs.

  1. Examples of pure Excel tools versus web portals with Excel add-ins

In the past, Excel add-ins were stand-alone reporting tools that needed to be installed on every user’s desktop (or virtual machine). So, if you had 50 users your IT department would be maintaining and upgrading 50 Excel add-ins. Luckily, this has changed. Since cloud architectures emerged in the CPM market, almost all vendors have built multi-tenant web portals that are managed and automatically upgraded by the vendor.

Today, there are still a few of the classic Excel add-ins left and most have the ability to connect to cloud ERPs and “trickle†the data to Excel when reports are processed. All major vendors, however, have web portals where reports are stored and, in some cases, also executed in the user’s browser without requiring Excel to run them. This architecture is particularly useful for planning processes where a significant number of end users can simply open their browsers and enter budgets and forecasts that are stored directly in the CPM solution’s cloud database.

  1. The importance of dynamic Excel rows and columns versus static ones

Most organizations add accounts, departments, and other dimension members to their ERP during the year. For older Excel add-ins, this usually requires manual maintenance of reports and budget templates in order to insert new rows or columns, or to maintain the content of dropdowns for parameters (e.g., a list of departments). This is because these add-ins can only put formula references at the cell-level in the spreadsheet.

With modern Excel add-ins, you can have dynamic listing of rows or columns and global report parameters.

Here are some quick examples:

  • Dynamic rows

If you have, for example, 20 Operating Expense accounts, you can create a range formula on a single row in Excel that automatically expands out to 20 rows. If someone adds 1 new account number in that range, you automatically get 21 rows in the report (or budget form). In older Excel add-ins, you have to manually create each row and, since they are static, new accounts will not become new rows automatically.

  • Dynamic columns

Let’s say you want actual data from January up to the current month and a forecast from next month through December. In a modern Excel add-in this report can be done dynamically, regardless of which month you run it for. With static, legacy Excel add-ins, you will need to manually change the formulas each month, make 11 versions of the report, or do major “tricks†in the report to make it more dynamic.

Template design with dynamic rows and dynamic columns

Template design with dynamic rows and dynamic columns

  • Dynamic global parameters

Typical examples of these are report filters for company, department, period, or budget version. In legacy Excel add-ins, these are designed as regular Excel dropdown boxes that populate based on data (e.g., a list of months or departments) hidden somewhere in the workbook. In modern Excel add-ins, these parameter selectors are dropdowns on a side menu or in the Excel sheet that pulls their content directly from the database.

In other words, they are always fresh and don’t need hidden dimension lists in each report or budget template.

In summary, modern Excel add-ins with dynamic rows, columns, and global parameters provide quicker report design and less maintenance work. They are also less likely to produce wrong reports because they can automatically include new accounts and other ERP dimension members that tend to change.

  1. Is Excel the primary design tool or an additional solution to learn?

Finance and accounting people tend to be very busy and few like to spend more time than necessary to build or maintain reports. As we discussed earlier, this is a major reason that Excel add-ins are so popular and have returned as part of cloud CPM solutions. However, when you compare vendors with Excel-based report designers, it is important to research whether their Excel tool is their second (“optionalâ€) report writer or THE report writer.

Cloud solutions where there is a proprietary web designer, plus an optional Excel designer, result in users having to not only learn two tools but also having to constantly deal with decisions regarding whether a new report should be built in Excel or in the proprietary browser tool. Making a monthly package of reports from both tools, if possible, can be messy and lead to too much manual effort.

Solutions with a single, purpose-built Excel designer have the advantage of delivering one single tool to learn for users, and packaging and distributing reports can all be done in one place.

  1. Built for cloud

While some legacy Excel add-ins are still pure on-premises tools, most can now connect to cloud ERPs. The latest generation of Excel add-ins can not only be managed (installation, user security, etc.) from cloud portals, but some, like Solver, can even “convert†templates automatically from Excel to web reports and input forms. In these tools, users can choose to run the same report as a web report without requiring an Excel add-in. Alternatively, they can use the Excel add-in to open the report in Excel and execute there.

In other words, part of the research and comparison of the vendors’ reporting and budgeting solutions should be to find out if their planning and financial software relies on legacy tools or purpose-built cloud architectures.

How much does a CPM solution with Excel-based reporting and planning cost?

While it is important to do your homework to ensure that the vendor you choose has the key features needed for a successful deployment, your total cost and savings in time and effort matter – as does your improved capacity for better, faster decision-making at your company.

Here are some factors to consider when you get prices from your vendor finalists:

  • Does the annual subscription from each vendor contain the same user count and modules?
  • If you are receiving a discount, how long until it resets to the list price?
  • Does the vendor have a written policy for annual price increases?
  • Are the implementation estimates from each vendor for exactly the same work?

A good rule of thumb is to ask each vendor for the total subscription cost for the first 5 years. Make sure this includes any potential price increases. Also, if the vendor is owned by a private equity firm, chances are that they will be sold while you are still a customer, so you will want to ensure that you receive a document that states their policy for price increases in the future (including if they are sold to another company).

Here is a free vendor comparison and return on investment (ROI) tool to help you compare vendors across a number of different features. This tool also includes a simple return on investment (ROI) calculator that is part of the total vendor score.

Conclusion

In summary, choosing one of the best financial reporting software solutions to automate monthly reporting, as well as to cover other management reporting needs, will ultimately drive better and faster decision making at your company. This is why the task of finding the best planning and financial reporting tools is increasingly becoming a strategic priority for organizations across all industries.

As we discussed earlier, certain features are more important than others in the evaluation process and can act as key drivers of success – in addition to a well-executed implementation process, of course.

Links to useful software research and evaluation assets

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Top Features to Look for in the Best Financial Reporting Software Apps

This article is part 2 of an 8-part series on evaluating the best CPM tools for your business. Part 2 focuses on feature sets within the best financial reporting software applications.

 

Financial reporting software that also offers consolidations and planning functionality belongs to a software category typically referred to as Corporate Performance Management (CPM). Some also refer to this as Enterprise Performance Management (EPM). Since most organizations are either currently planning to or have recently moved their ERP systems to the cloud, cloud-based financial reporting solutions are now more popular than ever.

While native ERP report writers are able to produce financial statements and sub-ledger reports, they are generally not great at formatting and advanced formulas. Plus, since they are built into the ERP system, they can’t report on data in other data sources. So, almost always, companies export some or many of their reports to Excel to finalize and assemble them there.  As a result, an entire industry of cloud-based reporting solutions has sprung up to take companies’ reporting automation and month-end close processes to the next level.

There are numerous software vendors that now deliver independent reporting solutions, either stand-alone or as part of a CPM suite. As a result, during a software selection process you’ll need to carefully choose the solution that is RIGHT for your business. This means that the functionality must be right for your unique business and that it should support your industry-specific requirements. And, of course, the return on investment (ROI) needs to be positive.

When working through a software selection process to find the best financial reporting software for your organization, there are always some features that are more important than others.

Here are some of the top features to look for to find the best financial reporting software

While most vendors can probably showcase more than 100 features in their product (something which can make software selection a painful process), the main success criteria can be narrowed down to a few key areas. Each one is listed and discussed below.

  1. Advanced report formatting

Per definition, all good report writers have a “template designer†to create reusable, parameter-driven reports. In addition to the pre-built reports that leading vendors should provide out of the box, the report designer is where a trained user or consultant can build new templates such as Profit & Loss reports and Balance Sheets specific to the needs of the business.

About half of the CPM vendors offer add-ins to Microsoft Excel where templates are designed. This typically provides the best formatting and layout flexibility. Plus, almost all finance department team members are very familiar with Excel already, so having a report writer built into Excel shortens the learning curve. Other vendors have built proprietary report designers so users can design financial reports, but these never contain all the formatting capability of Excel. A few vendors not only provide Excel report design, but they provide a cloud web portal where end users can run the templates as web reports from any device and with no Excel add-ins needed.

P&L – Variance Report

P&L – Variance Report (Copyright – Solver, Inc.)

Note 1: Be aware of CPM vendors that offer two report designers because that means twice as much training for power users. It can become messy in the month-end close process, report packages, and other areas if templates are created with two different technologies. The reason for two tools is almost always that the functionality in the vendor’s proprietary designer was not enough for their customers, so they later added an Excel designer to handle complex customer models with a lot of formatting.

Note 2: In addition, be aware of sales pitches that use “sexy†dashboards to draw your attention away from questions around great formatting in financial statements. While dashboards are awesome management tools focused on graphical analysis, they are NOT built to be financial report writers that can easily develop and maintain things like GL account structures behind Profit & Loss, Balance Sheets, Cash Flow Statements, and other critical reports.  

Without a report designer in your new planning solution, you are at high risk of significantly having to change your favorite report formats to fit the capability of the vendor’s tool. In many cases, you may even find yourself and your staff relying still on your overloaded Excel spreadsheets because you’ll be exporting reports to Excel and then manually reformatting them every month.

Here is list of about 500 examples of reports, dashboards, and budgeting templates. It is a good idea to ask your vendor candidates if you can see examples from their template libraries. The more examples they provide, the more you can be assured that their solution has a good report designer.

  1. Advanced formulas

Financial reports are some of the hardest reports to build due to diverse accounting calendars, complex or changing charts of accounts, and the custom ratios and calculations needed to measure performance. These formulas and ratios, typically created in Excel, can be difficult or impossible to translate into a solution that uses proprietary formulas or pre-set calculations.

Formula familiarity is also important. Again, Excel is the de facto standard, not just in formatting but in formulas. For this reason, most reporting vendors either create their report designer in Excel or try to mimic Excel formulas in their proprietary tool.

Without a strong and familiar formula capability in your new report designer, there is a high risk that you will be dependent on consultants to help with report design on an ongoing basis, and/or that your finance team will waste hours every month dumping reports into Excel to “fix†them.

  1. Advanced consolidations

While all financial report writers can aggregate data across accounts and departments, a much smaller number of solutions can perform true consolidations. In addition to consolidating financials across subsidiaries and divisions to produce high-quality corporate reports, important features include:

  • Manual intercompany elimination entries with comments and audit trail
  • Automatic intercompany eliminations
  • Currency conversion
  • Roll-up of balances from subsidiaries with different chart of accounts
  • Ability to enter and track additional “topside†adjustments where needed

A best-of-breed solution will also have business rules such as trees and/or dimension attributes that automatically include new accounts without having to manually update reports or run the risk that monthly financial reports are wrong or incomplete.

Some ERP systems do a pretty good job at handling this internally, but usually with a lot less flexibility than a true CPM reporting solution.

  1. Advanced closing and reporting process checklist

While most modern cloud-based CPM reporting solutions offer a workflow module, checklists are rarer. A financial reporting process checklist is typically a chronologically organized list of all the items a controller has to perform or oversee in the month-end close as it relates to reporting. Sometimes this includes 100 or more individual tasks with many people involved.

Major steps include:

  • Closing of the books in the ERP system and transferring the data to the reporting solution
  • Viewing exception and reconciliation reports to flag issues and reconcile items
  • Running trial balance reports
  • Adjusting entries (in ERP or CPM tool)
  • Running of all month-end reports
  • Performing variance and trend analysis with comments
  • Publishing (web viewing, email, or Excel) monthly reports with comments
  • Sending PowerPoint presentations to the executive team

The top reporting solutions offer interactive checklists to help ensure that everything gets done on time. They often include functionality like checkboxes, descriptions, responsible people, links to activity, deadlines, and notifications.

Interactive Checklist for Monthly Reporting

Interactive Checklist for Monthly Reporting

Without a good workflow module and checklists, chances are good that you are spending a lot more time reminding people of deadlines and asking them for feedback or comments. This level of constant follow up can get even more frustrating and complex if you are stuck managing tasks manually in companies that have multiple subsidiaries and large accounting teams involved in the month-end close.

  1. Pre-built ERP integrations

All good CPM reporting solutions, by definition, have to be able to integrate with your ERP system’s General Ledger balances at the minimum. However, not all tools are great at reporting on other data. Along the same lines, some reporting solutions have better integrations to certain ERPs than others.

Here are some questions to ask different vendors during your evaluation process:

  • Is the integration to your ERP in real time or is data exported to the CPM solution’s cloud database? (There are pros and cons of both.)
  • How frequently can the data from the ERP be refreshed within the reporting tool?
  • Is the ERP integration pre-configured or do you have to map and configure it?
  • Does the report writer only work well with GL data or can you also bring in sub-ledger transactions and non-ERP data?
  • Will the integration pick up changes such as new accounts and companies?

When you are evaluating different CPM vendors for your financial and operational reporting needs, you should request detailed information about each solution’s integration to your systems, including estimates on the time and cost it takes to get them configured. A really good, pre-built integration should take at the most an hour to configure, while “toolboxes†can take days to set up and connect to each data source. Which one your vendor offers will therefore usually become clear when you see their estimates for the integration step in the implementation.

Without good, automated integrations to your source systems, your users will end up spending a lot of wasted time on loading and possible “cleaning†of data.

  1. Built for cloud

While on-premises financial reporting solutions were the standard technology for decades, today it is cloud solutions that rule. CPM reporting tools that are built with native cloud architecture offer many benefits over the classic on-premises solutions. These benefits include back-end functionality such as multi-tenancy to allow for efficient and frequent upgrades, spreading of processing and data loads across hardware resources, and otherwise taking advantage of what large public cloud data centers and platforms have to offer.

As an example, in the old on-premises world, it was normal to do an annual upgrade for your software, while in the cloud world it is the norm to expect completely free and automated monthly updates. These regular updates also provide users with a continuous stream of new features and bug fixes.

Highly flexible cloud solutions will still allow end users to run and view reports in both Excel and their web browser (no software installation needed on users’ computers). Make sure that both interfaces use the same report definitions (not two different reporting technologies) and allow for live drill-down into transaction details whenever the user needs to analyze at a deeper level.

Without a purpose-built cloud architecture, a vendor will fall behind their competitors over time. A number of the legacy on-premises vendors did not rebuild their technologies to be optimized for the cloud and, as a result, they will at some point have to rebuild their product or their customers will migrate to other vendors.

How much does a financial reporting solution cost?

While it is important to do your homework to ensure that the vendor you choose has the key features needed for a successful deployment, it is also important to consider your total cost and savings in time and effort, as well as the solution’s potential to improve decision making at your company.

Here are some things to think about when you get prices from your vendor finalists:

  • Does the annual subscription from each vendor contain the same user count and modules?
  • If you are receiving a discount, how long until it resets to the list price?
  • Does the vendor have a written policy for annual price increases?
  • Are the implementation estimates from each vendor for exactly the same work?

A good rule of thumb is to ask each vendor for the total subscription cost for the first 5 years. Make sure this includes any potential price increases. And, if the vendor is owned by a private equity firm, chances are that they will be sold while you are still a customer. In these cases, it is a smart choice to ensure that you receive a document that states their policy for price increases in the future, including if they are sold to another company.

Here is a tool to help you compare vendors and calculate return on investment (ROI).

Why not use Excel or the financial reporting functionality in my ERP system?

Excel is by far the world’s most popular reporting tool because it is free (if you already own Excel), incredibly flexible, and almost all accounting and finance professionals know how to use it. If you have a simple chart of accounts and not too many business units and departmental users, Excel may very well be the best financial reporting software for your business.

However, everyone knows when it is time to replace their homegrown spreadsheet reports. Warning signals include:

  • Painful manual report distribution
  • Troubles with consolidation of spreadsheets
  • Broken links
  • Poor reporting flexibility
  • Lack of user security
  • Versioning issues
  • and so on…

All ERP systems have basic reporting functionality, but these tools usually fail at great formatting, their ability to include non-ERP data, and their flexibility to manage account and company hierarchies dynamically within report definitions. The truth is that, regardless of an ERP vendor’s promotion of their built-in reporting features, companies almost always end up back in Excel for some of their reporting even after they buy a brand-new cloud ERP solution. Then, when Excel gets too painful, they acquire a CPM solution.

Conclusion

In summary, choosing a new financial reporting solution to automate monthly reporting, as well as to cover other management reporting needs, promises to ultimately drive better and faster decisions at a company. This is why financial reporting ease is increasingly becoming a strategic priority for organizations across all industries. As we discussed earlier, certain features are more important than others and can be key drivers of success in addition to a well-executed implementation process.

Links to useful software research and evaluation assets

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Top Planning Features in the Best Budgeting and Forecasting Software Apps

This article is part 1 of an 8-part series on evaluating the best CPM tools for your business. Part 1 focuses on evaluating planning capabilities within the best budgeting and forecasting software applications.

 

Planning software, used to streamline budgeting and forecasting processes, belongs to a software category typically referred to as Corporate Performance Management (CPM). Whether caused by economic uncertainty or a more competitive marketplace, this type of cloud software is rapidly increasing in popularity right now. After all, companies that can deliver accurate budgets to plan for their resource allocations, and that continuously update their forecasts to help predict results, get an edge over businesses that don’t have this capability.

However, just implementing a CPM software to streamline the planning processes is not the entire solution for delivering an optimized system for budgeting and forecasting. While there are now dozens of software vendors that can deliver CPM software with planning features, you also need to make sure that the solution is RIGHT for your business. This means that the functionality must be right for your unique company and its budgeting and forecasting needs, and it also has to support industry-specific requirements. And of course, the return on investment (ROI ) needs to be positive.

When working through a software selection process to find the planning software for your organization, there are some features to look for that are more important than others.

Here are some of the top features to look for to find the best budgeting and forecasting app

While most vendors can probably showcase more than 100 features in their product (something which can make software selection a virtual nightmare), there is a clear 80/20 rule that can be applied when you are ready to zoom in on critical success factors.

Here is a list of five major functionality areas:

  1. Flexible input form and report designer

All the best budgeting and forecasting solutions have a “template designer.†In addition to the pre-built input forms and reports that a CPM solution should provide out of the box, the template designer is where a trained user or consultant can build new templates or tailor existing ones to the specific needs of the business.

About half of the CPM vendors have built add-ins to Microsoft Excel where templates are designed. This typically provides the best layout and the richest formula choices, and, of course, most finance departments are very familiar with Excel already which shortens the learning curve. Other vendors have built a proprietary template designer, often with formulas that are similar to Excel.

Payroll Example from Excel add-in

Note: Be aware of CPM vendors that have two template designers because that means twice as much training for power users. It can become messy in workflows, report packages, and other areas if templates are created with two different technologies. The reason for two tools is almost always that the functionality in the vendor’s proprietary designer was not enough for their customers, so they then added an Excel designer to handle complex customer models with a lot of formatting.

Without a strong template designer in your new planning solution, you are at high risk of either significantly having to change your favorite budget input formats to fit the capability of the vendor’s tool or, in many cases, of keeping a portion of your planning models in manual spreadsheets.

Having a flexible and user-friendly template designer also allows for the creation of budget reports that can be run throughout the budget process to see real-time budget updates and identify potential areas of concern. This helps you address issues quickly and early in the process – meaning you will have better visibility and more accurate projections.

Here is list of about 500 examples of reports, budgeting, and forecasting forms, as well as dashboards. It is a good idea to ask your vendor candidates if you can see examples from their template libraries. The more examples they provide, the more you can be assured that their solution has a good template designer.

  1. Line item detail and comments

Especially in annual budget processes, these are very important features to ensure proper documentation and justification of sales figures, expenses, or other figures that a user enters in their department. Typical examples of areas where line item detail and comments are frequently used include Travel Expenses and Office Supplies. When end users are actively using line item detail and they enter comments wherever an explanation is needed, it also tends to increase their sense of ownership and accountability in the budget they are submitting.

corporate forecasting software dashboard

Input of expenses at the GL account level. Includes line item detail, spreading, etc.

Without line item detail, an end user may have to keep detailed build-ups in spreadsheets. Alternatively, they may simply enter higher level figures with no bottom-up calculation behind their numbers. Both of these approaches may result in more inaccurate budgets, as well as delays in the budget process as budget approvers and reviewers often have to ask department heads and other end users to provide explanations and additional detail to back up their numbers.

  1. Workflow and checklists

Organizations that decide to buy a planning software typically have 10 or more users and sometimes hundreds of users. Strong workflow functionality can be a huge time saver by managing:

  • Deadlines
  • Open and closed budgets
  • Budget statuses (submitted, approved, rejected, etc.)
  • Which input forms should be used by different departments
  • And more

While most modern cloud-based planning solutions offer workflow modules, checklists are rarer. A budget checklist is typically a chronologically organized list of all the items a budget manager has to perform or oversee in a corporate planning process. A checklist could start with strategic goals and steps to forecast the rest of the current year, then go into the actual budget process, and finish with reporting and consolidation of the final budget and executive presentations. Checklists help ensure that everything gets done on time and often include functionality like checkbox, description, responsible person, a link to activity, deadline, and notifications.

Planning and reporting process manager

Planning and reporting process manager

 

Without a good workflow module and checklists, chances are good that you are spending a lot more time reminding people of deadlines, asking if their numbers are final and ready for approval, and otherwise managing the process. Processes can get even more frustrating and complex to manage manually in companies that have multiple budget versions to keep track of.

  1. ERP and payroll integrations

While all good CPM solutions can import actual data from source systems such as ERPs and payroll software, the quality and complexity to configure automated integrations varies a lot. Complexity grows when you have data sources spread between cloud and on-premises. For example, it is not unusual that a company’s ERP system is a legacy on-premises or hosted solution and they have other data sources such as payroll that may be a cloud solution. This results in multiple different direct and/or file-based integrations.

When you are evaluating different CPM vendors for your budgeting and forecasting needs, you should request detailed information about each solution’s integration to your systems, including the time and cost it takes to get them configured. A really good, pre-built integration should take at the most an hour to configure, while “toolboxes†can take days to set up and connect to each data source. Which one your vendor offers will therefore usually become clear when you see their estimates for the integration step in the implementation.

Without good, automated integrations to your source systems, your users will end up spending a lot of wasted time on loading and possible “cleaning†of data.

  1. Built for cloud

While on-premises planning solutions were the standard technology for decades, today it is cloud solutions that rule. Planning solutions that are built with native cloud architecture offer many benefits over the classic on-premises solutions. These include back-end functionality such as multi-tenancy to allow for efficient and frequent upgrades, spreading of processing and data loads across hardware resources, and otherwise taking advantage of what large public cloud data centers and platforms have to offer.

As an example, in the old on-premises world it was normal to perform an annual upgrade of a software, while in the cloud world, it is the norm to provide completely free and automated monthly updates. This practice also provides users with a continuous stream of new features and bug fixes.

Without a purpose-built cloud architecture, a vendor will fall behind their competitors over time. A number of the legacy on-premises vendors did not rebuild their technologies to be optimized for the cloud and, as a result, they will at some point have to rebuild their product or their customers will migrate to other vendors.

How much does budgeting and forecasting software cost?

While it is important to do your homework to ensure that the vendor you choose has the key features needed for a successful deployment, the total cost and the savings in time and effort, as well as improved decision making, are just as important.

Here are some things to think about when you get prices from your vendor finalists:

  • Does the annual subscription from each vendor contain the same user count and modules?
  • If you are receiving a discount, how long until it resets to the list price?
  • Does the vendor have a written policy for annual price increases?
  • Are the implementation estimates from each vendor for exactly the same work?

A good rule of thumb is to ask each vendor for the total subscription cost for the first 5 years. Make sure this includes any potential price increases.

Also, if the vendor is owned by a private equity firm, chances are that they will be sold while you are still a customer. It is a smart idea to ensure that you receive a document from the vendor that states their policy for price increases in the future, including if they are sold to another company.

Here is a tool to help you compare vendors and calculate return on investment (ROI).

Why not use Excel or the budgeting and forecasting functionality in my ERP system?

Excel is by far the world’s most popular budgeting tool because it is free (if you already own Excel), incredibly flexible, and almost all accounting and finance professionals know how to use it. If you have a simple budget model and few users, Excel may very well be the best planning software for your business – but everyone knows when it is time to replace their homegrown spreadsheets with something better.

Warning signals include:

  • Painful distribution
  • Troubles with collection and consolidation of spreadsheets
  • Broken links
  • Poor reporting
  • Lack of user security
  • Versioning issues

All ERP systems have basic budgeting functionality, but that is rarely enough to handle full-fledged budgeting and forecasting processes. And, regardless of an ERP vendor’s promotion of their built-in planning features, almost always companies end up back in Excel with their budget models even after they buy a brand-new cloud ERP solution. When Excel gets too painful, they acquire a CPM solution.

Conclusion

In summary, choosing a new CPM solution to automate the planning process, as well as to support better and faster decisions, is increasingly becoming a strategic priority for organizations across all industries. As we discussed earlier, certain features are more important than others and can be key drivers of success, in addition to a well-executed implementation process.

Here is a free vendor comparison tool to help you compare vendors across a number of different features. This tool also includes a simple return on investment (ROI) calculator that is part of the total vendor score.

Links to useful software research and evaluation assets

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Will Personal KPIs Become A Part of Strategic Workforce Planning?

Workforce Planning

One of the most significant changes to businesses during COVID-19 has been  the large-scale work-from-home policies that almost all companies implemented. While some businesses may have partially or fully practiced this for a few years already, it has never in the history of the world been at this level. 

As many business owners are eager to get their staff back in the office, they may find that a majority of their team members have enjoyed their newfound freedom of working from home with zero commute time and no travel costs.

Some companies have already announced that they will be completely work-from-home going forward. Some employees may switch companies to find a more flexible employer if pressure to show up in the office five days a week is too high. 

Chances are that the remote work trend that was accelerated by COVID-19 will not fade away. There will be other trends that will continue to shape work-from-home habits such as:

  • Virtual reality technology
  • Video and collaboration technology (Teams, Slack, Zoom, etc.)
  • Longer commute times due to re-emerging traffic congestion
  • Hassle of all the new “cleanliness rules†when coming into the office
  • Real estate prices driving workers to live further away from work  
  • Commercial real estate prices and parking rates
  • Security concerns as home internet often is less secure than being in office 

If work-from-home is becoming the new normal for many organizations, a number of new questions arise including: 

  • How do companies assure that their team members are as- or more efficient as they were when working at the office? 
  • How do managers operate when they rarely ever meet their team members other than virtually on video calls?

Let’s take a closer look at both of these important items.

Efficient Workforce Planning Strategies and KPIs

Increasingly, executives are doubling down on two-way transparency. In other ways, the sharing of how you are doing as a company and how each team member is performing against agreed upon goals. In order for this to work, employ performance-based compensation plans and processes. 

Next, tools must be implemented to track metrics and provide reports. Imagine dashboards and scorecards with personal KPIs  and traffic lights. This is the recommended approach according to many management gurus.  Use top down sharing of strategies and goals that support the KPIs, broken down from company to department to individuals. Then, as results come in, bottom-up sharing of how team members as well as departments performed versus goals. 

Specifically, with likely strong growth in work-from-home trends, executives are already pondering how to ensure that employees are engaged, efficient and goal driven as they conduct their work from their bedroom or living room. With limited oversight and old-school micromanagement quickly fading, personal KPIs for work are rapidly growing in popularity. However, setting the best possible goals for employee KPIs can be a bit of science in itself.

Often attributed to the management guru, Peter Drucker, and first used by George T. Doran in 1981, the acronym, SMART, is used to guide goal setting.  Here is an overview of SMART goals: 

  • Specific – simple, sensible, significant
  • Measurable – meaningful, motivating
  • Achievable – agreed, attainable
  • Relevant – reasonable, realistic and resourced, results-based

In the years ahead, organizations both in public and private sector, will increasingly explore and try out individual KPIs, and those that are most successful with it are better equipped to build thriving organizations that are “future proofâ€. 

Key Elements of Remote Workforce Planning 

Managing and growing employees successfully has always been an area that can put a company ahead of its competitors. Companies spend money on benefits, training, education, and compensation plans to improve their staff. However, organizations promote from within, without experience, and do not train the new managers. This was a failing process and the future will require better managers with a higher percentage of employees working from home.

Define Job Descriptions 

The starting point is the most important. For each position, a manager needs a job description with the six to eight main responsibilities of the role along with the KPIs that will be set each year. Define what makes a successful candidate and a candidate that would fail in the role. Each employee receives this document from the manager and then the manager reviews it in a meeting to ensure both understand the expectations.

There are many ways of coming up with the main roles and responsibilities of the position. Interview people currently in the role, research online, talk to the HR department, and discuss with other managers. Keep the list of responsibilities concise, but include details. The more details around each role will enable the employee to understand the role and improve their chances of success.

Pinpoint the KPIs that will Define the Role.

The manager should explain how he/she will measure each KPI in the role and what is a success or a failure. Describe where the data comes from and how the KPI is calculated. Then sit with the employee and document what the goals for each KPI by a specific period will be. Ensure that the employee is onboard and agrees that they can achieve their goals. If numbers are set that they do not believe in, then you may lose the employee early on in the process.

Review and Finalize the KPIs 

Historically, managers would have an annual review that tried to encapsulate what happened over the year, but typically only highlighted the last few months as that is all that most remember. In a year like 2020, it becomes even more difficult with the rapid shift to remote work. 

Start now – meet with the employee monthly, show the KPI goal, the results to date, and a variance. Include a traffic light on each KPI to show whether the employee is succeeding (green), failing (red), or in the middle (yellow). For all yellow and red items document action items that the employee needs to do to improve upon those that are below the goal. 

Now, when you meet, the manager simply reviews the numbers and the prior action items. Many of the work from home efficiency concerns go away and it is all about productivity.  Below is an example of a simple scorecard for a manager to review with a consultant that includes actual data, the goal, variance with traffic lights, and goals for the next four quarters.

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By doing this across the board, the culture changes to become a highly productive workforce. Good employees want to work with other good employees. This culture helps build a profitable company with high growth. Terminate the employees that regularly do not meet their goals, but in a way that is clear from day one. 

 

Benefits of Automated Workforce Planning Software and KPI Management

Whether your KPIs and workforce planning requirements are simple enough to be handled in Excel or currently using a modern planning and budgeting tool, now may be a good time to think about ways to combine budgeting, workforce planning, reporting and KPI management into a single solution. 

So, whether caused by an unfortunate virus outbreak or technology trends affecting your industry, having effective workforce planning tools and plans to be ready for a reforecast is always going to reduce stress and blood pressure for the organization’s management team. 

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How to Forecast Cash Flow in Uncertain Times

liquidityriskanalysis

Nobody likes a budget that is far off target, especially when it could result in a liquidity crisis. Luckily, most companies rarely have to experience such a stressful event. Although, in a turbulent economy where interest rates and stock indexes move up and down like yo-yos and news about corporate layoffs are part of daily news headlines, strong financial clarity does not seem like a bad idea.

So, what does a cash flow forecast mean to most people?

Here is a definition: A cash flow forecast is a plan that shows how much money a business expects to receive in, and pay out, over a given period of time. 

Based on the definition above, it seems logical that all businesses should have a cash flow forecast perfectly ingrained in their corporate processes, but is that the reality? Let’s take a closer look at this.

What are Cash Flow Budgets? 

Cash flow budgets are a set of elements.  In particular, capital requirements, cost of goods, development expenses, operating expenses, and sales and revenue are all highlighted by a cash flow budget.  And like every other quality budget, your cash flow projections rely on past performance data.  In order to forecast your cash flow, you will begin by looking at your estimated sales for the next year, related to the percentage of business volume produced monthly.  You’ll divide each month’s sales by cash and credit sales. 

Your cash sales can be recorded in the cash flow report in the same month they’re generated.  As for your credit sales, they are not credit card sales that are treated as cash, but instead, they have invoiced sales with agreed-upon terms.  Therefore, you will want to look at your AR (accounts receivable) records and figure out your typical collection period.  You won’t be able to log your credit sales as cash until 5-10 days after the period ends because you are waiting on another bank to receive payment.

Next up is other income.  More specifically, the next line item on a cash flow statement is the revenue you get from investments, interest accrued on loans that have been extended, and liquidating any assets.  The sum of cash sales, receivables, and other income is your total income.  In your first month of cash flow budgeting, it will typically be comprised of cash sales, other income, and any receivables from the previous budget that have matured to a collection point during the first month of the current budget.

Are All Businesses Doing Cash Flow Forecasting?

As much as it seems to make perfect sense to have a good estimate of your future cash outflows and inflows, many companies never get around to doing it. This is especially true in small and mid-sized businesses. Some of the reasons for the lack of cash flow forecasting models are the following:

  • The finance staff don’t have time to prepare it
  • Lack of tools that automate cash flow forecasting
  • Complexity in creating a good cash flow model
  • Lack of accuracy in past models leading to reduced appetite to repeat it
  • Other business tasks or fires keep executives focused in other areas
  • The financial planning team is exhausted after then annual budget process with no time or motivation to re-forecast the budget during the year

Regardless of the reason for not doing a cash flow forecast, healthy cash flow is the lifeblood of all businesses, so there is no lack of motivation.

Let’s look at the potential benefits of accurate cash flow forecasting.

Why Do Companies Want to Project Their Future Cash Outflows and Inflows?

Most executives know they would sleep better at night if they had a mechanism that fairly accurately could tell them if the liquidity of their business is healthy or not in the months ahead.

Below is an example of a report using simple color indicators and charts to help managers analyze the company’s projected cash position based on underlying cash flow forecast.

liquidity risk analysis

There are several very logical reasons why a company can benefit from regular cash flow forecasts, including:

  1. Reduce the risk of insolvency – by having a clear idea of any upcoming liquidity issues, management can react early and avoid drama and stress
  2. Move faster on investment opportunities – if you, thanks to a cash flow forecast, early on know that the business will be flush with cash in the months ahead, you can start planning acquisitions, down payment of high interest debt, purchases of strategic capital assets, etc.
  3. Satisfy bankers to enable debt financing or other bank-backed financial transactions

In other words, solid cash flow forecasts can be of tremendous value to a management team. However, if many financial teams dread the additional work of doing planning and performing a cash flow analysis, how can companies still get it done?

How to Automate Cash Flow Forecasts?

As in many other cases, technology can help automate laborious tasks. In the case of cash flow forecasting, there is a cloud software category often referred to as Corporate Performance Management (CPM) solutions that includes vendors such as Adaptive Insights, Centage and Solver that specialize in planning, budgeting and forecasting.

Benefits of CPM tools include scenario forecasting to predict “greatâ€, “good†and “bad†scenarios so managers can plan accordingly. In other cases, CPM solutions provide entire driver-based forecast processes. Driver-based means that the forecast includes assumptions that help automate and simplify creation of sales, payroll, expenses, balance sheet and cash flow forecasts.

Sometimes managers don’t have the time or the need for a full forecast to analyze projected liquidity, in which case they can use simulation models to quickly adjust elements of their cash outflows and inflows to see the impact on the cash position as seen in this example:

cashflowanalysis

Most executives would agree that accurate cash flow forecasts provide numerous benefits to their business. During economic turmoil cash flow forecasts can help lower the risk of running into liquidity problems and increasing the chance to be ready to jump on investment opportunities. Regardless of the motivation, there are good tools available to help automate and simplify such financial planning processes.

At Solver, we offer Corporate Performance Management Solutions that help you establish cash flow forecasts and analyses and prepare for uncertain times. Contact one of our expert team members to learn how we can help you improve your cash flow processes.

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