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CFPAS: When it’s time to consider a world beyond spreadsheets

CFPAS: When it’s time to consider a world beyond spreadsheets

Businesses of all sizes need tailored models to facilitate their financial planning and reporting requirements. These models help to support investment and finance decisions and streamline annual budgeting processes.

For many businesses, spreadsheets are the obvious choice for financial modelling and planning. While spreadsheets have great functionality, it’s not always the most suitable option, especially for larger organisations that consolidate numerous entities and have complex planning processes.

Many businesses are increasingly looking at their financial planning and analysis options outside spreadsheets, especially with the collaboration challenges that have arisen throughout the COVID-19 pandemic. These businesses are predominantly looking for cloud-based solutions that allow several team members to collaborate effectively. For organisations with complex financial planning processes, Cloud Financial Planning and Analysis Solutions (CFPAS) are an effective solution.

A Gartner report, ‘Magic Quadrant for Cloud Financial Planning and Analysis Solutions’, provides a summary of the competitive landscape for CFPAS. It defines CFPAS as solutions that support finance teams to manage financial planning, budgeting, modelling and performance reporting.

Based on Gartner’s Magic Quadrant, Adaptive Planning is a leader in this market. Adaptive Planning is a SaaS company offering cloud-based business planning. Integrating several features into one platform, Adaptive Planning provides organisations with the functionality to manage revenue, workforce, expenses, capital, balance sheets and cash flow in one place.

Identified as a leader due to its “ease of use, spreadsheet-like user interface and visualisations, straightforward administration, APIs, and ability to “lock” versions”, Adaptive Planning is an excellent option for organisations that need cloud-based financial planning and reporting capabilities.

How is Adaptive Planning helping Pitcher Partners’ clients?

Pitcher Partners is currently assisting clients with the implementation of Adaptive Planning. The way that Adaptive Planning has been implemented for a couple of our clients demonstrate great examples of how CFPAS address common issues faced by finance teams. Case studies providing a short overview of how these businesses are addressing these issues are outlined below.

Consolidating annual planning for a cleaning company

One of Pitcher Partners’ clients, a cleaning services company, has a complex annual planning process that involves nearly 200 profit and loss statements and requires input from over 50 managers. This client had outgrown the spreadsheet budgeting process that served them well when they had fewer contracts, regions and managers.

The business’s growth meant the client was starting to experience problems with managing a network of linked spreadsheets. These spreadsheets were built up across different levels and had to be opened in the right order to avoid errors. Managing these models amongst managers and tracking versions also proved to be difficult. The client was aware of an increased risk of error through the planning process and knew that it was becoming a larger burden on the finance team each year. We worked with this client to move their annual planning process to Adaptive Planning to address their challenges, risks and inefficiencies.

Consolidating accounting and finance systems

Another one of Pitcher Partners’ clients, a transport company, recently completed the acquisition of a competitor. As a result of this acquisition, they found themselves with duplicated systems, including their accounting system. Their requirement was simple – the company needed to prepare consolidated financial reporting to meet their obligations to their bank and their internal reporting needs. While consolidation of systems is on the roadmap, it may take 24 months to achieve. In the interim, Adaptive Planning will provide a solution to consolidate both systems to meet their reporting needs readily.

The client is also building their planning process into Adaptive Planning which will include an integrated profit and loss, balance sheet and cash flow model. This will allow them to re-forecast periodically with actuals integrated directly from their accounting systems.

Using Adaptive Planning to supplement current accounting systems

Another common scenario where CFPAS may be warranted is when an organisation is considering an upgrade to their accounting system. Some organisations are opting to keep their existing package and implement a system like Adaptive Planning to facilitate their planning and reporting. This can be an effective, cost-friendly alternative to upgrading to a tier-one accounting system.

Systems like Adaptive Planning can reduce the chance of errors due to manual processes and make planning and reporting more efficient. This makes more time available for the finance team to work on higher-value tasks that are eternally “on the back burner”.

Do your research before you implement a CFPAS

While CFPAS are excellent platforms, these systems are not suitable for every business, especially if it’s not at the size and scale to warrant the significant investment in accessing and implementing these platforms. There is a sweet spot for systems like Adaptive Planning, and it’s typically suitable for organisations with at least $50 million revenue and some of the planning or reporting complexities described above.

For companies that don’t have a complex planning process or issues with consolidated financial reporting, spreadsheets are still a great option. Pitcher Partners typically advises these companies to continue using spreadsheets and manage spreadsheet risk through strong modelling practices.

If you’re interested in discussing whether a CFPAS may be suitable for your business, contact one of our specialists below.

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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