What is the importance of automated tools as against traditional methods of finance?
For many years, the traditional method of Finance has been Excel spreadsheets. Spreadsheets are manually distributed to various departments by email, with changes collated into one large spreadsheet. Version control is very difficult, and the process is time-consuming and labour intensive. It can take up to six weeks to create a simple forecast and even longer for annual budgets.
But with market conditions changing rapidly – the economy, a pandemic, oil prices, supply chain challenges – we need to be able to react much faster than in years past. The traditional methods are no longer fit for purpose. We need agile, flexible solutions to speed up planning and budgeting processes and provide more valuable insights into the best way forward. Automating traditional Finance processes that are standardized and repeatable allows companies to more quickly analyse entire data sets to identify the answers that will drive the company forward.
Why does your business need a financial planning tool?
Many businesses don’t know their value drivers, which means they don’t know what’s working and what’s not. Automated tools help to identify data patterns and value drivers – which then enables you to quickly identify how the company is doing, where it should be going, and how you can get there.
More than 80% of companies are still using Excel spreadsheets as their primary tool, which means they’re not making the most of the opportunities that automation offers. Now, automating simply for the sake of automating isn’t useful and doesn’t support identifying those value drivers. Modern financial planning tools that support and optimize value creation will not only be needed to compete in the markets of the future, but vital to success.
How can it help scale business?
If you don’t understand your value drivers, you won’t be able to scale the business. As I mentioned before, automation helps you identify your data patterns and value drivers. And if you understand how your business is working, you can then invest in the right areas, which helps you scale quicker. If you don’t, you’ll be investing in the wrong places again and again – and successfully scaling the business will be extremely difficult.
What areas can it help with?
Modern planning solutions aren’t just for finance, they support the entire value chain – HR, sales, marketing, procurement, IT, etc. They enable a holistic view of business performance and all the details at granular level, so you can understand what’s going well, what’s not, and why.
Every department plans and budgets, and they all need to contribute to achieve that comprehensive view of the organisation. And whenever things change, this is easily reflected on the future balance sheet, P&L, and more with a modern planning solution. Access to real-time data, including collaborative data from every department, is required to achieve this, which these solutions can provide surprisingly much faster than most companies realise.
How to choose the best tools?
If you have a diverse IT network environment, the platform must be able to seamlessly integrate multiple streams of data from various systems. It’s very common to have lots of different systems within one company. for example, one for finance, one for HR, another for IT and a separate one for procurement. If you place any model on the platform, they should automatically work together and connect all the data.
It’s important to opt for a tool that can grow with the company. Our approach is think big, start simple, scale quickly. The technology should also be future proof. For example, if you’re scaling or growing, you might be a part of an M&A with another company and other IT systems might come into play. So, seamless integration of all data sources is an important consideration in choosing the best solution for you.
If your organisation’s goals are to start with automating your Excel spreadsheets, then your requirements may be a bit less complex, but considering long-term goals are also an important consideration. It all comes back to value creation. Do you know what drivers your business, and if not, how do you plan to optimise performance?
Another key consideration is ease of use. How much do you have to depend on your IT to operate the solution? Can it be operated by business users with minimal IT resources? Having a user-friendly solution, especially for a planning, budgeting, and forecasting tool that will be heavily used by Finance. How easy is the solution for business users to navigate? How easily can they run reports they need without having to run that request through two other departments first?