Financial planning and analysis professionals widely use Excel and technology systems to do their jobs, but nobody is particularly happy about it.
That was the theme survey respondents kept repeating in the 2014 gtnews FP&A Technology Survey, underwritten by WDesk.
“Unfortunately, Excel is the tool of analytical choice, the alternatives are either too expensive or to clunky (and non-dynamic),” wrote one FP&A professional at the Certified Corporate FP&A Professionals LinkedIn group.
Another commenter agreed, writing: “With so many FP&A tasks constantly changing, or one-time ad hoc, or so complex (and full of exceptions—example commissions), options are limited.”
The survey, conducted in March, surveyed 224 financial planning and analysis practitioners. A third of survey respondents (34 percent) were from the Asia-Pacific region, 31 percent from North America, 24 percent from Europe, and 11 percent from Africa.
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 percent) 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 percent 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 percent) are satisfied while a slightly smaller percentage of this group (27 percent) 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 often popular alternatives to the traditional Tier 1 systems. Nevertheless, most organizations that employ FP&A technology systems (76 percent) still depend on traditional Tier 1 systems such as those from Cognos TM1 (IBM), Hyperion planning (Oracle) and SAP BPC (SAP) due to a time-lag affect.
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 percent) whose firms have implemented FP&A systems rate these systems’ effectiveness a “4” or “5” on a five-point scale. Still, 35 percent 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 other spreadsheet programs are the primary tools used for analysis in a majority of FP&A departments. Almost three quarters (73 percent) 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. Users of Excel believe they have the advantage of being able to share their findings more easily in Excel with their cross-departmental colleagues. 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 percent of financial professionals view Excel as particularly effective at sorting through and interpreting large amounts of data. On the opposite end of the spectrum, only one in five of FP&A professionals surveyed indicate that they are actively displeased with Excel’s effectiveness in handling large datasets. This finding suggests there is a large group of organizations and FP&A professionals that continue to use Excel as their key FP&A analytical tool.
Less than half (43 percent) of survey respondents report Excel is “effective in supporting the analytical work in their company FP&A functions,” while 40 percent rate its effectiveness in supporting analytical functions only a “3” on a five-point scale.
Desired functionalities in a FP&A support system
Fully 91 percent of survey respondents cite “accurate reporting” as an important attribute in any organization’s FP&A support system, including 71 percent who indicate it is a very important requirement. A similar share (92 percent) 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 percent)
- Ability to understand and easily update the model (85 percent)
- Ability to slice and dice, and drill-down multi-dimensionally (83 percent)
- Managing FP&A routines easily between different departments in organizations (81 percent)
- Speed (80 percent)
- Ability to easily play different scenarios, risk tests and forecasts (78 percent)
- Capabilities for both bottom-up and top-down planning (76 percent).
Download the survey here.