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Advice and Information for Finance Professionals

Looking for More Return on Your FP&A Investment? Scratch the Surface!

The tabs on my smartphone constantly remind me that I could get more value from it. I use the traffic information on my GPS to tell how late I’ll be for dinner. But I haven’t downloaded Waze to find a faster route home. And while I check movie schedules on my phone, I never use a ticket-buying app to avoid long lines.

Sure, I could be making better use of my smartphone. But all in all, I think it’s proving to be a pretty good investment.

According to an article in CFO.com, many financial professionals don’t feel the same way about their investment in financial planning and analysis (FP&A) solutions. While finance professionals generally agree that FP&A technology enables better analysis and decision support, many wonder if they’re getting the best bang their buck.

Life Without Spreadsheets

For many companies that have invested in robust FP&A solutions, reducing the use of spreadsheets alone generates sufficient ROI. Of more than 3,800 customers already using Oracle Hyperion Planning solutions, 23% of finance teams spend less time gathering data, and 38% accelerate the forecasting process.

But if you put a price on the time FP&A solutions allow for more value-generating tasks, their ROI soars. Our research shows that 35% of the organizations use the time they save to provide more value-generating analysis of the data and other important finance activities.

“Spreadsheets can only get you so far,” one customer told us. By streamlining the collection and analysis of financial data, his team is free “to focus their attention on places they hadn’t spent a lot of time previously.”

Time Much Better Spent

At many companies, much of that free time is being focused on using FP&A solutions to address drivers of cost and profitability in their organizations. As our Enterprise Performance Management: Top Trends for 2015 study revealed, the number of companies planning to calculate the cost of individual customers jumped more than 70%. In addition, 133% more enterprises are planning to cost by invoice, and 136% more plan to cost by transaction.

For organizations that align FP&A systems with solutions such as Oracle Hyperion Profitability and Cost Management, the faster, easier and multi-dimensional analysis and scenario modeling can add up to some serious money. For example, if a company has an annual revenue of $2 billion, and a profit-focused enterprise assessment uncovers a 2.5% improvement, this equates to a $50 million bump-up in profit opportunity.

Another way that finance teams can invest their time to drive more value from FP&A is to help executives make more intelligent use of the information it generates. For example, the CEB noted that business decision makers don’t use the insights rendered by FP&A solutions for 25% of decisions with financial implications.

More alarming is how some executives apply the “lies, damned lies, and statistics” approach to FP&A-generated data to back up decisions they’ve already made. The CEB noted that many decision makers selectively choose FP&A data to validate gut instincts. Rather than using the analysis to suggest a data-informed path forward, these executives use the information to support already-made decisions.

The cost of misusing financial analysis can be significant, the CEB said—up to 1% of revenue if related to a major strategic decision.

On the upside, FP&A solutions provide more value when they are used to provide a deeper understanding of challenges and opportunities. For example, rather than using FP&A solutions to report only the numbers on a deviation in sales performance, the CEB commented that higher ROI is generated when they help to identify the root causes of the variance and assess which can be controlled.

Tell It like It Is

Helping executives provide more insightful explanations of FP&A data is another significant way to realize greater ROI.

For many companies, the current integration of narrative into performance-reporting processes is manual, ad hoc and highly prone to error. When leveraging new cloud-based solutions, such as Oracle Enterprise Performance Reporting Cloud, organizations can streamline internal and external reporting processes, combining data plus narrative in a single, secure, collaborative way.

The ROI can be significant. According to our own research and that of third parties, 90% of finance professionals say  expanding qualitative commentary in management reporting processes is critical to their organization. Eighty percent agree that reporting impacts how management is perceived. And 62% said reporting quality can even impact a company’s cost of capital.

Invest Less, Get A Lot More

Of course, one more way to increase ROI is to spend less to start with. This is where finance teams should take a serious look at moving to the cloud. Cloud-based solutions allow organizations of all sizes to quickly adopt leading planning and budgeting applications with no CAPEX infrastructure investments, flexible deployment options and virtually no learning curve.

Cloud solutions make it more feasible to roll out FP&A solutions more broadly across the organization and allow finance to readily collaborate with the business. And better linkage between finance and operations helps leads to more accurate forecasts—certainly a goal for any FP&A professional.

To get started, read the executive brief, "Faster, Better Planning and Budgeting for Finance Executives."

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