While accurate forecasts are crucial for companies introducing new products, contemplating acquisitions or preparing for changes in the economic environment, few companies employ technology specific to corporate financial planning and analysis (FP&A), according to a newly-released gtnews survey report.
Findings from the gtnews FP&A Technology Survey, sponsored by Wdesk, show that chief financial officers (CFOs) and corporate controllers typically rely on spreadsheets for planning, but they aren’t fully satisfied with results. In fact, the survey reveals that the main challenge companies face in monthly reporting cycles is time spent identifying and correcting spreadsheet errors.
Among companies that do use more sophisticated technology, most rely on a few very large systems. Due to the expense and complexity of customising and maintaining these systems, however, financial planning and analysis (FP&A) models are often being used as ‘black boxes’ primarily for consolidating data rather than for planning purposes. Finance teams are forced to build ad hoc spreadsheets to meet specific needs.
“We’re seeing a tendency among companies to put off investment in FP&A support even when they know it’s not enough to merely collect data,” said Graham Buck, editor of gtnews. “Companies must interpret data, understand what future variations may mean, and then be able to act.”
Half of those surveyed reported budgetary constraints as the main barrier to adopting FP&A systems, while another 40% reported the lack of IT support as an obstacle.
“A small, but rapidly growing number of forward-looking companies are using new cloud-based technologies to free their FP&A teams from the continued housing and consolidating of ad-hoc data in Excel spreadsheets, as reported in the gtnews survey,” said Joseph Howell, co-founder and managing director of Wdesk.
“These cloud-based solutions provide greater flexibility, an intuitive user interface, and automation of manual tasks so teams can spend more time analysing data. They also provide up-to-date data in real time, eliminating the need for costly IT support.”
Among the key survey findings:
- Sixty-four per cent of respondents consider the time spent identifying and correcting reporting errors a reporting challenge.
- Fifty-eight per cent use Excel for FP&A-related reporting needs.
- Fifty-three percent do not use systems specifically designed to provide analytical support to the FP&A function. The same percentage said that spreadsheets are the main FP&A tool for analytical support and 53% also find their FP&A system (if they have one) to be effective in meeting the organisation’s analytical needs, indicating room for improvement.
- Twenty-two per cent are displeased with the effectiveness of spreadsheets for the FP&A function.
The findings come from a 20-question survey issued in March 2014 to gtnews subscribers in the corporate financial planning and analysis field, resulting in 224 responses. Respondents were located in the Asia-Pacific regions (34%), North America (31%), Europe (24%) and the African sub-continent (11%) from a wide range of industries.
Download the research on www.gtnews.com/research.
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