With fears of a U.S. recession rising, businesses are keeping a close eye on their finances. Forecasting, and “what ifs” have become a part of daily operations. Now that economists are expecting more of the same financial pressures, companies have the economy as a very important variable to consider when making business decisions.
Many of those companies are moving away from spreadsheets towards a web-based business performance management (BPM) application.
“Companies are adopting software as a service. They’re using software to solve business problems,” said Bill Soward, President and CEO of Adaptive Planning. “They have been using tools like customer relationship management (CRM). We’re doing the same thing for performance management.”
These systems reduce complexity and aid in forecasting -- key points for companies that are tightly monitoring their resources.
“Companies have been creating budget reports and forecasts in Excel for a long time. As their businesses grow and become more complex, they are realizing that Excel is not an enterprise-wide solution,” Soward noted.
BPM solutions have been available in the past, but lacked the ease of use that online versions now have; Companies preferred to work with spreadsheets.
“About 75 percent of mid-market companies use Excel for budgets and quarterly reports. It has been that way for 25 years,” Soward said. “These companies are realizing that alternatives are out there, and there has been an increase in the numbers of businesses moving past spreadsheets.”
When it comes to forecasting, BPM allows companies to forecast and reforecast to see the impact of potential changes. Situations can change quickly and problems can pop up in a target market. Using a web-based BPM tool puts companies in a better position to handle the changes.
“They may have a baseline plan of 10 percent growth year-over-year, for example. But if there is a recession in their target market, they can compare different business models based on a flat market and choose the best solution,” Soward said. “They can ask themselves, ‘If XYZ happens, how does it change our growth plan?’”
Moreover, an online BPM tool keeps data better organized than traditional spreadsheets. Instead of several different versions of spreadsheets, companies have one system dedicated to managing their financial information.
“It helps companies manage their business as the environment changes,” Soward added. “They aren’t struggling through version 15 of interlocked status sheets, wondering what to do with new information.”
BPM applications are fully integrated and visible to stakeholders, both overall and by department. Anyone involved in the decision-making process has access to the necessary information.
“Solutions are becoming more collaborative,” Soward commented. “There are several people involved with information going back and forth between stakeholders across the company.”
Increasing transparency and access to information allows companies to view updates faster, so companies have the most up-to-date information possible when making business decisions.
“It’s about speed,” Soward noted. “Using a web-based tool allows companies to change scenarios and update their information quickly and easily.”
But with that increase in speed comes the potential for an increase in the possibility of errors that could derail financial plans.
“To protect against errors, there is a workflow capability companies can utilize, where changes must be approved by the next management level. You can also check underlying formulas and assumptions, as well as save and archive information,” Soward added. “It provides transparency.”
While companies may have opted to stay away from traditional forms of BPM in the past, the option of implementing an online or web-based solution makes the system much less intimidating and can provide benefits to the user.
Information can be made readily available and updated quickly, with safety nets in place to reduce the chance that errors would occur. It can help companies adjust their business plans for whatever variables crop up, and can help them weather an economic storm.
“These systems have rapid time to value and allow companies to gain market share by being more nimble in difficult financial market segments,” Soward added. “As companies budget and plan, they can bring in results from their ledger and have dashboard level control. This reporting back provides a big payoff.”
Adaptive Planning is a leader in on-demand financial planning and reporting solutions. For additional information, visit http://www.adaptiveplanning.com.