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Call me glass half-full type of guy, but I have always looked at the positives that come out of any situation. Many of you will know my thoughts about analysts and graphs purporting to measure vendor solutions. If not, perhaps you might wish to read my critique on the Gartner FP&A magic quadrant.

I recently described the Gartner defined xP&A trend as “not so much emperor’s new clothes, more a makeover and fitting by a well-known fashionista”. However, and here comes the positive, suddenly everyone is talking about planning and the role of FP&A. This is a subject and an area that has seen severe under-investment in and now everyone realises how critical it is – see my recent article.

So, the focus is on improving planning and the performance of FP&A. Where do you start to address this?

Getting the right technology

Our research has shown that people remain of primary importance. Upskilling your current team and finding the right talent, then developing the desired culture. However, you cannot reap the benefits of this course of action unless you have the underlying technology platform as a key enabler.

For many, the starting point will be an Excel based model. Don’t get me wrong, Excel is an excellent tool for modelling. However, planning and the role of FP&A extends far beyond technology alone. It is a process that requires many facets, such as control, workflow, collaboration and security. There comes a point where you will need to invest in a suitable technology as Excel only gets you so far – see this article.

The technology landscape

We often talk about ‘planning’ software to address the challenges faced by FP&A. However, the discipline also requires analysis and reporting as standard features. To recognise this fact, we prefer to use the term Corporate Performance Management (CPM) software to reflect this more complete set of requirements.

In recent years, CPM has been identified as an area of significant potential. This is evidenced by the acquisition of smaller CPM vendors by larger organisations and the investment of public money and venture capital in others. This increase in potential this is driven by the changing role of the finance team and the advances in technology, such as cloud/SaaS. This has allowed vendors to develop more cost effective and highly functional CPM solutions. These factors have led to a significant change in the CPM market in the last 5 to 10 years. I provide an overview and history of the market in this short video.

The result, the CPM solutions market is now ultra-competitive with multiple vendors to choose from. So, how do you choose the right one for you?

It is no longer all about capability

The reality is that the capability and functionality of all solutions has improved to such a degree that there is now little discernible difference between them. All have configurable, out-of-the-box capability to deliver core requirements. All support multi-user collaboration, with the ability to build models for different parts of the business. Workflow is delivered as standard allowing a view on progress and control, review and sign-off. The ability to securitise data and capability by user goes without saying. All can deliver driver-based, multi-scenario and rolling processes. All connect to multiple underlying data sources. All can be delivered through a form of cloud deployment.

So, given their functional similarity, how do you differentiate between CPM solutions?

Two key differentiators

In a small number of cases, there may still be some differentiation between the solutions when you have complex requirements. An example of this could be exceptionally high data volumes. However, in over 90% of cases, in our experience nearly all vendors would tick yes to most of the capability and functionality questions in a requirements document. If this is the case, where do you go from here to find differentiation?

In our opinion, organisations looking for a CPM solution, should concentrate on two key areas: cultural fit and time-to-value.

Cultural fit

This is the most important differentiator in selecting a solution. It is also the most under-estimated and the biggest driver of the success of a project. There are several factors that contribute to this:

  • Internal resource skillset
  • Finance team size and structure
  • Vendor partner relationship

In respect of resource skillset, this will determine the ease of usability that you will be seeking from the solution and the way it works. For example, you may want to leverage heavily on the Excel skills of the team which would lead you to focus on a certain subset of the CPM market. Others may have more technical skills in the finance team, in which case other solutions may be a better fit.

The other factor to consider is the size and structure of the finance team. A large finance team may be able to appoint a full-time system administrator, for others it may be a part-time role. You do not want the situation that you have a solution that you are unable to manage and develop yourselves without external assistance.

Of course, there will be a trade-off in terms of ‘bells and whistles’ functionality when making any decision. However, not everyone needs a Rolls Royce if they are only driving to the shops and back every day!

The final point to consider is the relationship with the vendor. It needs to be as a partner not a supplier. It is a long-term relationship where you need to work together. The vendors knowledge, culture and approach must align with your organisation to reap the potential benefits on offer.

Time-to-value

Many organisations concentrate on Return on Investment (ROI). This can be complex to calculate due to the intangible nature of the benefits and the time taken to realise them. We prefer to focus on time-to-value, the time taken to deliver visible benefits.

There are two key drivers. The first is the overall cost of the solution (software plus internal and external resource). Second is the time taken to deliver something that consumers and stakeholders recognise as positive value. Taking this approach focuses the project on achieving quick-wins and a positive momentum.

Cultural fit and time-to-value are key

In conclusion, when looking for a CPM solution, it is unlikely that capability and functionality will provide you with the information needed to differentiate between vendors. You should concentrate your efforts on the cultural fit of the technology and the vendor partner with your organisation and the time-to-value that can be achieved.

This, of course, is easier said than done. Unfortunately, all analysts concentrate on the functionality and capability of the technology and not on the skills and attributes of the people you will be working closely with. This is where the advice of an independent expert, such as GenerationCFO, can be so valuable.