Ventana Research defines financial performance management (FPM) as the process of addressing the often overlapping people, process, information and technology issues that affect how well finance departments operate and support the activities of the rest of their organization. FPM deals with the full cycle of finance department activities, which include planning and budgeting, analysis, assessment and review, closing and consolidation, internal financial reporting and external financial reporting, as well as the underlying information technology systems that support them.
At the recent Host Analytics World, the company announced the Spring 2017 release of its FPM product suite, which features a range of productivity and user experience enhancements and improvements to its reporting. The release also includes general availability of Host Analytics’ native NetSuite connector, which was first announced with the Winter 2017 release. NetSuite is now owned by Oracle, which has said that it aims for larger enterprises to use its Hyperion software for planning, budgeting, consolidation and reporting, although Oracle is likely to offer its cloud-based Hyperion offerings at a considerable discount when bundled with a NetSuite subscription. In this situation, I recommend that existing and future NetSuite customers consider alternative vendors, including Host Analytics, when planning to acquire this type of software.
At its conference Host Analytics announced a partnership with Workiva. I’ve reviewed Workiva’s Wdesk, which enables companies to create composite documents for the U.S. Securities and Exchange Commission as well as documents or presentations for external or internal purposes that corporations routinely produce, including board presentations, management reports, audit management, disclosure documents and other regulatory or compliance filings.
Host Analytics offers a mature, cloud-based suite that handles the full range of FPM processes. It has action-oriented software that can address a major issue in planning: an inability to drill down into the underlying details while a review meeting is under way. Our Office of Finance benchmark research finds that only one-fourth of companies can do that immediately while 42 percent take a day or more. Being able to drill into details allows companies to resolve issues and make decisions on the spot, which leads to faster actions. Our integrated business planning research finds that companies that use dedicated applications from third-party vendors are better able to drill down into details during a review meeting. Nearly half (47%) said they are able to do so, compared to 21 percent that use spreadsheets alone and 16 percent that plan with spreadsheets and other applications. In other words, using capable software means an end to “I’ll get back to you with that.”
Host Analytics’ planning software connects finance, sales and HR departments – the three functional areas that most companies must integrate in their planning and budgeting processes for mutually beneficial outcomes. For example, having the human resources function manage the projected costs of the components of head-count expense (including salaries, bonus and benefits) by employee type and geography enables line-of-business managers to more accurately estimate future expenses and do so consistently across a company. Having a centralized and up-to-date repository of business unit head-count forecasts provides HR departments with an easy way to understand and plan hiring requirements at a granular level. Having current forecasts from sales departments enables the financial planning and analysis (FP&A) group to have more accurate and timely budgets and financial forecasts. Host Analytics FPM includes territory and quota management functionality, which provides an organic environment for sales operations to handle the sales forecasting process. Our next-generation business planning research reveals that two-thirds of companies that have direct links between departmental plans said their planning process works well or very well, compared to just 25 percent that have little or no connection.
Host Analytics software is designed to facilitate integrated business modeling that brings together planning for financial, operational, sales, human resources and professional services. Compared to using spreadsheets, this product makes it much easier to create and update rolling quarters- and driver-based models. When companies create models that integrate finance, HR, sales and operations, they can quickly understand the impact of changes in the outlook and assumptions of a given part of the business on the company’s finances. The process of reforecasting or updating the budget takes much less time than with desktop spreadsheets, enabling more frequent and farther-reaching planning. Faster planning cycles enable more agility. And because it’s possible to model using multiple dimensions (such as currency, product families, customer hierarchies, sales territories and business units), it’s faster and easier than with spreadsheets to change a global assumption (such as the price of commodities or currency rates) and instantly see the impact across the entire company. Consequently, it’s possible to quickly generate multiple what-if scenarios and see their impacts. It’s also easy to save selected scenarios and then create reports with side-by-side comparisons.
Host Analytics also offers a rich set of reporting functionality as part of its offering. Using its automated reporting capabilities and self-service reporting functionality can save a considerable amount of time and provide those in operational, sales, HR or finance roles with exactly the information they need. It’s relatively easy for business users to modify their reports. The company’s software enables users to perform multidimensional slicing and dicing of data using an Excel, mobile device or Web interface. Its reporting capabilities include automated creation of board books as well as the assembly of composite reports (those incorporating text, data, tables and charts) for periodic filings required by regulators or creditors.
Statutory consolidation is an essential part of the accounting cycle. Software that manages the consolidation process and automates repetitive tasks related to the close process can ensure accuracy and enables a company to close its books sooner. Our Office of Finance research finds that the degree to which companies automate their close is correlated with closing their books sooner.
Our research consistently shows that spreadsheets are everywhere; in particular our business planning research finds that spreadsheets dominate planning processes in corporations. Two-thirds (65%) of companies continue to use them for budgeting despite their acknowledged shortcomings. And our fast, clean close research finds that about the same proportion (67%) use them to a substantial degree in their close, even though they retard the process. Dedicated software for planning, budgeting, consolidating, analysis and reporting can improve the quality of these processes and increase the effectiveness of the finance and accounting departments. I recommend that companies that use spreadsheets to support these functions look into replacing them with dedicated software. I also recommend they include Host Analytics among the alternatives they evaluate.
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