Top 10 Criteria to Evaluate an FP&A Solution
By now, you’re familiar with Gartner’s “Magic Quadrant for Cloud Financial Planning and Analysis Solutions” and how it applies to your business. Once you’ve had time to take a deep dive into the vendors, it’s time to evaluate which financial planning and analysis solution is right for you. Whether you’re the head of a small- to medium-sized enterprise or on a team of a larger organization, here are some criteria to take into consideration in relation to your customer size and process complexity.
Ease of maintenance and use
A solution shouldn’t just have a user-friendly interface, but it should also be easy to manage in terms of performance reporting. Implementation should fall in line with its ability to provide analytics, as well as solution flexibility and functional capabilities. This applies over the course of its life, too, not just in the initial setup phase, including any maintenance and compatibility with other systems already in place, which all fall back on customer service.
Analytics go so much deeper than surface level. Analytics should be embedded within a business process to guide and optimize performance and have an FP&A solution to match. Decision support lies in enterprisewide analytics efforts in order to dive into predictive analytics and maturity to focus on improvements to support simulation, optimization, statistical modeling and forecasting, and machine learning. An advanced FP&A solution should develop a framework that offers strong customization capabilities with visualization and reporting capabilities as it pertains to comparative analytics.
Integration with source and target systems
A good FP&A solution will integrate with other products beyond its own solutions. A fast-evolving native integration of the solution can go deeper between planning and analytics, for example, while improving response time with larger datasets. Fully actualized integration is source system specific while being secure. FP&A solutions are trending toward “expanding their integration capabilities,” and “ERP vendors are expanding their platform or integration capabilities (or both),” according to the report.
Finding a solution that meets your organization’s needs shouldn’t just work for your current size and structure, but rather vendors should be asking where the company is headed, as well. This is most important in organizations seeking cloud solutions since they likely need to be accessed by multiple members on a team. Organizations that have a broader definition of financial planning and performance reporting require more solution flexibility “as it enables users to be more effective and allows them to customize the solution to support a more diverse set of business needs,” Gartner reports, “[requiring] requires each business domain to have a degree of control over its own model while not sacrificing the application governance of all connected models.”
Availability of integrated planning modules for other business domains
A successful FP&A solution should extend to user groups and service-level agreements, as well as financial or modeling budgeting and planning, including profit-and-loss balance sheet and cash-flow forecasting. The data should then be accessible across a large number of users, in addition to different business domains across the organization, when expanding beyond traditional finance-focused budgeting for analytical and performance management purposes. “More-granular, driver-based modeling efforts,” the report states, “help the organization anticipate outcomes given existing assumptions.”
Application life cycle management
Financial planning and performance reporting that include specialized modules or models for specific domains requires greater solution flexibility and application life cycle management. This includes application governance, as well as “the capability to allow end users to modify certain aspects of the controlling model, such as adding custom attributes, maintaining process-specific workflows and managing source-system-specific integrations,” according to the report.
Industry-specific capability and experience
The user experience varies among industry, from the capability to allow end users to modify certain aspects of the controlling model to maintaining process-specific workflows and managing source-system-specific integrations. Different needs require “each business domain to have a degree of control over its own model while not sacrificing the application governance of all connected models,” Gartner states. Platform capabilities can bring new features to vendors faster while providing a competitive advantage thanks to a more efficient scale and focus of developmental process efforts, including vertical markets.
When subscriptions are up for renewal, users often get what Gartner calls the “three-year itch,” a time when all options are assembled and considered. Gartner notes that some cloud service licensing and technology are “metered on a pay-for-use basis,” while others follow a subscription model, such as on-premise vendors that use third-party platforms. With so many options available, cost shouldn’t just be evaluated on a price point but rather what the solution offers for its money.
Implementation cost and effort
An understanding of the Magic Quadrant helps to understand that Niche Players “may have reasonably broad functionality, but limited implementation and support capabilities and relatively limited customer bases,” Gartner states, while others require minimal effort to get off the ground. The results vary depending on your current application capabilities and enterprisewide business intelligence initiatives. What’s more, the amount of effort required to pull data from multiple applications into a single report should be considered.
It might not be necessary for your FP&A solution to be available outside North America or your area of standard operation, but it’s important for you to consider that before evaluating your options. This could include sales and product strategy, as well as service support. “The vendor’s strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the ‘home’ or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market,” the report states.
Above all, the provider of your FP&A solution should fit within your organization’s mission and vision. The solution should meet your expectations both in terms of its capabilities but also its ability to react and adapt in a way that makes sense to your organization. As with all other business decisions, it’s important to work with other organizations that go above and beyond to meet your organization’s needs.