Finance analytics software is the topic of this article.
Once in a while, I spot interesting discussions on Advanced Analytics and FP&A online and among my colleagues. And each time, I keep wondering: “How can I apply it? Which tools are the most effective? And what would I personally gain from it?”
I want to discuss these issues, create a clear perspective, and hopefully help you enhance your professional authority by applying this information.
Why are you interested in Advanced Analytics?
As a top professional, you probably want to know how advanced your company's FP&A function is compared to peers. Gartner and FP&A Club provide you with different maturity models. One of the main criteria is evaluating the kind of analytics used: descriptive or advanced (diagnostic, predictive, or prescriptive)?
Why do you need it for my work?
You need to take different planning drivers into account, such as Sales, Revenues, Expenses, etc. Then you apply them to different planning methodologies, such as Strategic Planning, Budgeting, Forecasting, Rolling-forecasting, etc. You have to involve your organization in the process using either the "Top-down’" or "Bottom-up" approach. You need to foresee different future scenarios and then compare your predictions with actuals using a Variance analysis set.
Which Analytic techniques should you use?
Descriptive Analytics techniques are probably nothing new for you. But what about Advanced analytics? Gartner has defined that Advanced analytics includes the following types: Diagnostic, Predictive, and Prescriptive. The full list of their components is found in the figure below (for definitions, see the glossary developed by Gartner).
What about software?
On request of FP&A Trends, I made a brief overview of the existing finance analytics software. How did I make the analysis? By simply visiting the websites of each application and making a brief analysis based on the available information. I did not include MS Excel 2016 Pro in the analysis, but I know that there are many functionalities there that maintain FPA& requirements. The focus lies on Planning and Forecasting functionality based on publicly available information.
| Countries | United States, United Kingdom, Australia, Japan, New Zealand |
| Business processes | Budgeting, Forecasting, Rolling forecast |
| Set of planning drivers | Sales, Revenue, Cost, Profitability, Workforce, Capital |
| Descriptive analytics | Available |
| Additional capabilities | Top-down and Bottom-up planning |
| Demo and Free trial | Demo, Free trial |
| Countries | United States, Europe, Asia Pacific (used in 40 countries) |
| Business processes | Strategic planning, Budgeting, Long-term financial planning, Forecasting, Driver-based modeling, Assumption-based modeling |
| Set of planning drivers | Sales, Expenses, Revenue, Workforce, Capital |
| Descriptive analytics | Available |
| Additional capabilities | Top-down and Bottom-up planning |
| Advanced analytics | Prescriptive (What-if scenarios) |
| Demo and Free trial | Demo |
| Countries | Europe, US, Asia, Middle East, Oceania |
| Business processes | Strategic planning, Budgeting, Long-term financial planning, Forecasting, Driver-based modeling |
| Set of planning drivers | Sales, Expenses, Revenue, Workforce, Capital, Cash Flow |
| Descriptive analytics | Available |
| Advanced analytics | Diagnostic (Drill-down), Prescriptive (Simulation, What-if scenario, Complex event processing, Machine learning) |
| Demo and Free trial | Demo, Free trial |
| Countries | Americas, EMEA, APAC |
| Business processes | Strategic planning, Budgeting, Forecasting, Activity-based costing |
| Set of planning drivers | Sales, Expenses, Revenues, Profitability, Workforce, Capital, Cash Flow, Capacity |
| Descriptive analytics | Available |
| Advanced analytics | Diagnostic (data mining and correlation), Prescriptive (What-if scenario) |
| Demo and Free trial | Demo |
| Countries | United States |
| Business processes | Strategic planning, Long-term financial planning, Forecasting, Driver-based modeling |
| Set of planning drivers | Sales, Expenses, Revenue, Cash Flow |
| Descriptive analytics | Available |
| Advanced analytics | Prescriptive (What-if scenario) |
| Additional capabilities | Bottom-up, Top-down, Middle-out planning |
| Demo and Free trial | Live demo |
| Countries | Canada and US, UK and Europe, |
| Business processes | Strategic Planning, Forecasting, Value-driver based planning |
| Set of planning drivers | Sales, Expenses, Revenue, Capital |
| Additional capabilities | Variance analysis, scenario planning |
| Descriptive analytics | Available |
| Countries | UK, Germany, Austria, Switzerland, Asia-Pacific, Australia, Benelux, France, Italy, USA |
| Business processes | Planning, Budgeting, Forecasting, Rolling Forecast |
| Set of planning drivers | Sales, Expenses, Revenue, Workforce, Cash Flow, Capacity, Materials |
| Descriptive analytics | Available |
| Demo and Free trial | Demo |
Some final remarks:
- ‘Techfin’ instead of ‘Fintech’ companies. It looks like the providers forgot that the main users of their software were still people with managerial and financial backgrounds. These people are more interested to know what they get instead of how. The main selling point has been moved from functionality to the technical explanations of platforms.
- Complex navigations and diffused information on planning and budgeting functionally.
- FP&A terms differ from vendor to vendor. If you even compare different vendors' functionality, you are not sure you don’t compare ‘pears’ with ‘apples.’
Data Crossroads and FP&A Trends would love to get your feedback on whether the information about finance analytics software was useful for you, so don’t hesitate to leave a reply below.
For more insights, visit the Data Crossroads Academy site: //academy.datacrossroads.nl
