Does a modern-day army have horses, elephants, swords, spears, bows & arrows, clubs, cannons, etc.? Do they hire large groups of mahouts and horse caretakers? Do they use stables for horses and elephants? Do they use long, detailed, elaborate maps drawn out on rolls of paper?

No, they do not.

Armies today worldwide instead use tankers, aircraft carriers, submarines, supersonic aircraft, nuclear missiles, state-of-the-art machine guns, grenades, mines, and GPS-enabled maps. They hire the best engineers, scientists, negotiators, and spies who are adept at using technology. They deploy state-of-the-art technology innovation centres for the safety of the nation.

Why is this? The government does this to ensure that the nation's armed forces are up to date regarding weaponry, technology, tactics, and war strategy, ensuring the nation's safety and sovereignty.

The same applies to all organisations worldwide, whether a charitable foundation, a driving school, an engineering college, an art museum or a fast-growing business organisation.

To survive and thrive in this volatile, uncertain, complex, and ambiguous business environment, it is essential to upgrade and update according to the changing times and evolution of technology.

How does this impact FP&A teams of business organisations? What does it mean for FP&A teams? Does your FP&A team still work with a room full of papers, files and folders? Does your FP&A team spend the entire day scrolling long Excel sheets and spreadsheets?

It's time to move on. It is time to update, upgrade, and embrace the technological solutions available in today's FP&A market.
 

What are the FP&A solutions available in the market?

Let us quickly look at the broad range of solutions available for fp&a teams to budget and forecast. There are broadly two types of solutions available in the market today which are:

1. Excel/spreadsheet-based solutions

2. Software-based solutions (SAAS)

Excel-based solutions

Excel or spreadsheet-based solutions are most commonly used by FP&A teams across industries. Generally, they complement the software solutions already being used. In the case of small and medium companies, the FP&A teams rely entirely on spreadsheet solutions.

While Excel continues to be widely used and trusted, many challenges arise as an organisation scales its FP&A practice. To overcome these challenges, fast-growing and large organisations rely on software-based solutions.

Software-based solutions

These software-based solutions can be further categorised into on-premise solutions and cloud-based solutions. On-premise solutions are a thing of the past. These solutions were market disrupters in the past and are not very relevant as of today.

The cloud-based solutions on the other hand are gaining prominence. Most organisations with global operations prefer cloud-based solutions. Many of these solutions also come with an Excel interface or Excel add-in. This is because while many organsations have purchased cloud-based solutions, they continue to use Excel.

Now that we have a basic understanding of what options are available, let's get into the details.

Key capabilities of Budgeting & Forecasting software

Integration with existing systems

Integrating the existing systems ensures seamless data flow across the organisation. In a typical business environment data is generated and stored in various systems such as ERP, CRM, HCM, Accounting systems and other specialised systems.

The FP&A team generally have to pull out the relevant information from each of these data sources and manually ensure data collation. The manual data transfer between disparate systems is time-consuming and prone to errors.

These errors come from data entry mistakes, misinterpreting data formats, or simple copy-paste mishaps.
 

Thirty-three percent of finance leaders say, “not user friendly” is a key challenge of budgeting and planning solutions, as per BPM Pulse Survey 2024.

Budgeting and forecasting software that integrates with existing systems automatically pulls relevant data from various data sources, eliminating the need for manual data entry.

This ensures that the data used in financial planning is reliable and timely, leading to more accurate forecasts and budgets.

Also, since all departments work with the same data, it ensures that financial reports, budgets, and forecasts are based on a single source of truth. This consistency is vital for maintaining accuracy and reliability in financial planning.

In summary, integrating with existing systems is a key capability for budgeting and forecasting software because it facilitates seamless data flow, reduces manual data transfer & its associated errors, and ensures consistency & comprehensive data analysis, ultimately leading to more accurate, reliable, and timely financial planning.

Realtime data access

Real-time data access are crucial for effective budgeting and forecasting. In a fast-paced business environment, it is critical for businesses to be agile with their decision-making.

It is a herculean task for the FP&A team to manually collect real-time data on revenue, expenses, cash flow, etc. Therefore, it is important to use budgeting and forecasting software that can access data and perform analysis in real-time.

This capability ensures that decision-makers always work with the most current information. If a company notices a sudden change in customer demand, the real-time data allows it to adjust this particular change in its forecasts and budgets immediately.

The real-time data from production lines and inventory levels of supply chains can inform the FP&A team about any unexpected delays or cost increases, which can be factored into the forecast immediately.
 

“If you want to get beyond basic analytics, then a spreadsheet is not the answer. You can have the right mindset, processes, and people; but if you lack the right technology, you will not get where you need to be regarding decision support.” ―Brian Kalish, FP&A expert and consultant

In summary, real-time data access and analytics are key capabilities for budgeting and forecasting software because they provide up-to-date information, facilitate informed decision-making, and improve business responsiveness, allowing organisations to react quickly to changes, make accurate forecasts, and manage their resources dynamically.

User Friendly interface

A user-friendly interface is crucial as it allows all team members, regardless of their technical expertise, to use the software effectively. Such an intuitive design simplifies complex processes, making it easy for users to navigate the software, input data, and generate reports.

A budgeting and forecasting software that has a user friendly interface helps reduce training time because new users quickly understand and start using the software reducing the need for extensive training sessions.

Also, since the team members find it easy to use the software, they can perform the tasks more efficiently which increases productivity and translates into faster budgeting and forecasting cycles.

This also reduces the likelihood of errors, as clear user navigation, well-organised menus, and straightforward input fields help users avoid mistakes arising from confusion and misinterpretation of complex software interfaces.

JustPerform achieved outstanding ratings for ‘Ease of Use’ from customers as part of the BPM Pulse Awards 2024, with high customer satisfaction of 4.93 out of 5. We thank our customers for their high ratings and incredible support.

A key aspect of user-friendly is the ability to make changes to the budgets and plans. Operating in an ever-changing business environment, organisations should be able to maintain flexible budgets and financial plans.

In order to keep the budgets updated, typically the finance teams have to go back to the technical teams to make the relevant changes to their models, etc. But with solutions such as JustPerform, this can be done on the go, without relying on technical teams. This is the true meaning of user-friendliness, flexibility and agility.

Collaboration and accessibility

Since modern businesses work across geographies and time zones it is critical to ensure seamless collaboration among multiple users and teams working together.

Modern budgeting and forecasting software can facilitate team collaboration by allowing multiple users to access input and edit data simultaneously. This is relevant for all stakeholders, including FP&A managers, finance directors, departmental heads, etc., who can contribute to budgeting and forecasting processes in real-time.

Not only that, but all communication between teams spread across different geographies can happen in real-time and on the platform itself instead of sending a large number of emails to and fro. This truly improves communication and the ability to collaborate with ease.

Another advantage of this capability is the version control and audit trail features. These ensure that the changes made are tracked and that previous versions of budgets can be accessed if needed, providing complete transparency and accountability. This is particularly important for maintaining data integrity and ensuring that all the changes are documented and reversible if necessary.

It is nearly impossible to do all of this manually without any errors. For example, the sales team can update revenue forecasts while the marketing team adjusts their budget based on new campaign plans, all within the same platform. The FP&A manager or the finance director can view which team member has made what change to the data.

All of this being available on the cloud makes it extremely crucial for staff to work from different locations, whether from home, different office sites, or while travelling.

Cloud solutions also enable real-time updates to collaboration, ensuring that everyone is working on the most current data. This also makes it easily scalable, accommodating a business's growing needs without requiring significant infrastructure changes.

Additionally, the service provider manages maintenance updates and data backups, reducing the burden on IT resources.

For example, a global company with offices in multiple countries uses cloud-based budgeting software to facilitate collaboration among its finance teams. Team members from different regions can simultaneously work on the same budget document, putting their local data and forecasts. This approach ensures the global budget is comprehensive and up to date, reflecting inputs from all the regions.

Therefore, we can see that collaboration and accessibility are key capabilities for budgeting and forecasting software as they facilitate seamless team collaboration, allow multiple users to work together efficiently, and provide remote and real-time access through cloud-based solutions. This enhances businesses' ability to respond quickly to changes and work effectively across dispersed and diverse teams.

Advanced forecasting techniques

Traditional forecasting methods might miss out on certain patterns and trends that can be easily analysed by AI and ML algorithms. Therefore, it is important that the budgeting and forecasting software has the AI capabilities to analyse vast amounts of data quickly and accurately.

These AI/ML capabilities can process complex data sets and recognise intricate relationships between multiple variables, leading to more accurate forecasts.

For example, analysing sales data, customer behaviour, economic indicators, and other relevant factors to predict future revenue is more precise when using an AI or ML-based tool than the manual analysis done by the FP&A team.

This is helpful in not just predictions and forecasts but also in scenario planning. Budgeting and forecasting software uses its advanced Forecasting techniques to create multiple what-if scenarios to understand how different variables can impact financial performance.

It can do this by using statistical algorithms and machine learning techniques to predict future outcomes based on historical data.

This capability allows businesses to forecast sales, expenses, cash flow, and other financial metrics with greater accuracy under various scenarios.

In summary, advanced forecasting techniques, which include AI/ML capabilities, scenario planning, and predictive analytics, are key capabilities for budgeting and forecasting software that enable businesses to create accurate forecasts, detect patterns, explore multiple scenarios and predict future trends, improving business responsiveness, risk management, and decision-making.

Robust reporting and visualisation

Robust reporting capabilities are a cornerstone for effective budgeting and forecasting. Comprehensive reporting ensures that all relevant financial data is accessible and understandable to various stakeholders, allowing them to make informed decisions.

A good budgeting and forecasting software has robust reporting and visualisation capabilities. FP&A managers should look for such capabilities to create various reports for different stakeholders.

Different stakeholders within an organisation require different types of reports. For example, executive leaders might need high-level summaries and strategic insights, while department heads might require detailed reports specific to their areas of responsibility.

Therefore, the right budgeting and forecasting software customises reports tailored to each stakeholder's needs so that everyone has the information they need.

Having the capability of creating advanced visualisations is critical for gaining deeper insights and making better decisions. Visualisations such as dashboards in heat maps make comprehending large data sets and complex relationships within the data easier.

Taking this one step ahead, interactive dashboards allow users to explore data dynamically, drill down into specific matrix filter data based on various criteria, and real-time updates. This also helps identify patterns and trends that might not be immediately apparent in raw data.

Budgeting and forecasting software with these capabilities helps create tailored reporting, saves time, improves accuracy, and improves data understanding by identifying real-time trends and anomalies.

Therefore, robust reporting and visualisation are key capabilities that a budgeting and forecasting software must have to enable comprehensive, accurate, and tailored reporting for different stakeholders and ensure data-driven decisions through advanced visualisation tools.

Conclusion: Key capabilities to look for in budgeting and forecasting software

In today's dynamic and complex business environment, upgrading to advanced budgeting and forecasting software is essential for FP&A teams.

Modern software solutions offer key capabilities such as seamless integration with existing systems, real-time data access and analytics, advanced forecasting techniques, user-friendly interfaces, collaboration and accessibility, and robust reporting and visualisation.

These features enhance accuracy, efficiency, and collaboration, empowering organisations to make informed decisions quickly and effectively.

Embracing these technological advancements streamlines financial planning processes and positions businesses to thrive in a competitive landscape.

It's time for FP&A teams to move beyond outdated tools and leverage cutting-edge solutions to drive strategic success.