The survey, conducted in March, surveyed 224 financial planning and analysis practitioners. A third of survey respondents (34%) were from the Asia-Pacific region, 31% from North America, 24% from Europe, and 11% from Africa.
Only about 10% of all respondents said their organisations plan to invest in a dedicated FP&A system over the next year, despite a growing demand for better functionality from FP&A. The primary barriers to greater investment in FP&A support systems are reportedly budget constraints (50% of organisations) and a lack of IT support (40%).
FP&A-related Technology Support
The ideal FP&A technology system can free up financial professionals for important tasks while reducing business risks and minimizing errors from manual processes. Nevertheless, most organizations are not taking advantage of these tools. The majority of survey respondents (53%) are not currently using a specific system designed to provide analytical support for their FP&A function. Indeed, only about a third of organizations do so. Furthermore, only 10% plan to install an FP&A system within the next 12 months.
FP&A professionals are split in their views regarding the effectiveness of their organization’s current FP&A-related technology support system. One-third of respondents (33%) are satisfied while a slightly smaller percentage of this group (27%) is dissatisfied.
FP&A Systems Deployed
Traditional Tier 1 systems from technology vendors such as IBM, Oracle and SAP are very complex and require dedicated IT support. They are often developed by consultants and require specialized programming skills to function efficiently. Consequently, they can be challenging to maintain and manage in FP&A departments. As a result, over the years FP&A models have been transformed into “black boxes” that are often used more for consolidation of data than for planning purposes. Also, due to the inflexibility and complexity of Tier 1 systems, financial professionals are often forced to build ad hoc Excel spreadsheet models and input results generated from the analysis.
There are also Tier 2 systems designed specifically for an FP&A department. Since these systems do not require specialized programming and can be maintained by FP&A professionals, they are more flexible and dynamic to facilitate more accurate decision making. These systems are designed for complex reporting that FP&A teams face. These systems do not require specialized programming and can be maintained by FP&A professionals – eliminating the need for IT involvement.
A small majority of FP&A professionals are at least somewhat satisfied with the level of technological effectiveness and capabilities of the FP&A system that their organization uses. Over half of the survey respondents (53%) whose firms have implemented FP&A systems rate these systems’ effectiveness a “4” or “5” on a five-point scale. Still, 35% rate their systems “in the middle” (a rating of “3”)—midway between the rating of very effective (5) or not effective at all (1).
Excel and Spreadsheets
Excel and PowerPoint are the primary tools used for analysis in a majority of FP&A departments. Almost three quarters (73%) of FP&A professionals surveyed indicate that Excel is still the primary tool they use in more than half of all their FP&A analytical work, even if they also have a standalone system.
The perceived convenience of Excel and the relative lack of training required to use it often overshadows the potential advantages of a standalone technology system. All these factors make Excel hard to put aside as an analytical tool, despite fears about data entry mistakes and concerns about Excel’s lack of presentational tools or deeper analytical functions.
Interpreting Large Datasets with Excel: Sub-optimal
Despite its wide use, only 38% of financial professionals view Excel as particularly effective at sorting through and interpreting large amounts of data. Survey respondents identified a number of drawbacks to using Excel, including:
- Time spent identifying and correcting reporting errors (64%)
- Manually updating reports for changes made during the review and approval process (63%)
- Verifying accuracy and seeking confirmatory sources for data from untrusted sources (61%
- Manually collecting and compiling loose, non-system data (60%).
Less than half (43%) of survey respondents report Excel is “effective in supporting the analytical work in their company FP&A functions,” while 40% rate its effectiveness in supporting analytical functions only a “3” on a five-point scale.
Desired Functionalities in an FP&A Support System
Fully 91% of survey respondents cite “accurate reporting” as an important attribute in any organization’s FP&A support system, including 71% who indicate it is a very important requirement. A similar share (92%) of FP&A professionals indicate they want tools that promote efficient reporting.
Beyond accurate and efficient reporting, FP&A professionals also look for a number of other valuable attributes in their FP&A reporting tools, including:
- Automatic updates for actual results (89%)
- Ability to understand and easily update the model (85%)
- Ability to slice and dice, and drill-down multi-dimensionally (83%)
- Managing FP&A routines easily between different departments in organizations (81%)
- Speed (80%)
- Ability to easily play different scenarios, risk tests and forecasts (78%)
- Capabilities for both bottom-up and top-down planning (76%).
The role of financial planning and analysis (FP&A) is evolving. More than ever, the FP&A function needs to be quick, flexible, dynamic, delivering plans and analytical insights accurately to help organisations achieve their business goals. To accomplish this, adopting new technology is a must.
Download the survey here.
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