The balance of risk-reward related to the implementation of this product is beneficial to us

Description

Balancing risk and reward refers to the process of determining the potential risks and benefits related to the implementation of Corporate Performance Management (CPM) software in an organization. For organizations surviving with Excel, it is important that the “reward” for deploying a CPM platform is high.

Example Use Case

Scenario: A mid-sized hospitality company runs their budget in Microsoft Excel. The process is working, although it is slow and errors have occurred. They're worried that the financial analyst who owns the Excel file could leave at any moment.

Solution: The management team analyzes the potential negative impact if the analyst leaves. They determine that, due to the critical nature of their continual forecasting process, the risk of leaving financial projections in the hands of one person is too high. The risk to business continuity is too great. As such, they see the high reward ROI with a dedicated tool that everyone understands and purchase a CPM platform.

Considerations

Many organizations have been plodding along with Excel or Google sheets for years without incident. It can be difficult for organizations to make a big change when what they have “works”. However, we find that the person most in love with an Excel process is the person who made the Excel file in the first place. Nobody else in the organization has the same level of admiration for the file.

In other cases, the CFO has moved from role to role and brought along the same spreadsheet to each, confident that it is the single best spreadsheet ever produced. Usually that CFO produced it when he or she was an analyst or FP&A Director. Those CFOs almost never buy non-spreadsheet CPM solutions despite pressure from their staff.

There comes an inflection point in every business where it is time to move to a platform. That point is difficult to apply firm rules to, as it involves to many factors:

• Maturity of the business's financial model
• Importance of continual finance activities throughout the year, like rolling forecasts and reporting
• Prior experience of the finance team using non-spreadsheet solutions
• Increased pressure from investors, the board or other parties to see results quickly
• More scrutiny on the financial plan including what-if scenario modeling

As an FP&A professional, if you find yourself working 80 hours a week to simply be effective in your role, it is probably time to look at a more purpose-built approach to planning.

Questions to Ask a Vendor

• Benefits of Moving: Here is our spreadsheet and everything it outputs. These are the demands we get on a regular basis. How is what you're showing us going to make our old process look like an abacus?
• Still In Excel: Looking at our spreadsheet, what will we have to keep doing in Excel, if anything?
• ROI Indication: Can you quantify for us the ROI benefits of using our software if we provided metrics?