By Toby Hatch, Senior Product Marketing Director for Enterprise Performance Management, Oracle
If you’re like most SMBs, then growth is your goal. Most small to medium businesses don’t want to stay small (or even medium) for very long. You’re always looking for that next opportunity that will push you over that magic billion-dollar number—or whatever goal you’ve set for yourself.
Opportunities are all around you, but chief financial officers need to evaluate each one carefully. Is now the right time to break into a new market or country? What if your R&D team has five great products in development, but you can only afford to launch two of them? Or what if your fiercest competitor goes up for sale? Could you afford to acquire them?
What if you could look into the future to figure out the best way forward for your SMB?
Sadly, there is no crystal ball for CFOs—but there is something pretty close. It’s called strategic modeling, and it helps you evaluate different opportunities quickly, looking at both the short- and long-term impacts on your business.
If you’re like most SMBs, you probably do most of your financial planning and analysis using spreadsheets. This is a very bad idea.
Spreadsheets are notoriously unreliable. In one of the biggest studies of its kind, an analysis of thousands of spreadsheets from failed energy giant Enron found that almost one-quarter of them contained errors.
And Enron was hardly alone: a 2015 study of 1,200 UK decision makers by FIF9 revealed that one-third of companies have made poor decisions based on unreliable spreadsheet information. My colleagues can name 7 reasons why finance managers hate spreadsheets. Yet SMBs cling to them—because of the flexibility they offer, because they think they can’t afford better software, or simply because they aren’t aware of the options available to them.
Let me assure you: strategic modeling is a better option—and in the cloud, it’s affordable enough even for SMBs.
With strategic modeling capabilities, you can look at long-range financial models to reveal the impact of strategic decisions—on your bottom line, balance sheet, cash flow, and shareholder value. You can model for impact on capital, debt, and investment options, ensuring that the new opportunity—whatever it is—is in line with your strategic plan.
Some of the capabilities available in the cloud include:
In addition to opportunities, the world of business can throw potential threats into the ring too. BREXIT, emerging competitors, regulatory changes, stock market variations, and even weather and environment-related issues can be modeled to show the potential impact on your plans.
In our rapidly changing world, it makes sense to model various “what-if” scenarios before you start your forecast cycles. When you’re ready, you can create professional-quality reports and graphs in a user-friendly reporting environment—helping you compare across scenarios and make the best decisions.
With strategic modeling, you can replace the multi-spreadsheet system that gets so many SMBs into trouble. When trying to model many variables with sophisticated financial logic, it’s easy to corrupt a spreadsheet formula or break a link. But moving to a cloud-based solution doesn’t mean that you have to give up the flexibility of spreadsheets, or their familiar user interface.
Strategic modeling is built into Oracle Enterprise Performance Management Cloud so users can work within the familiar “Smart View.” It looks and behaves like a spreadsheet, but is much safer and has built-in logic and “what-if” capabilities.
So when it’s time for your SMB to look at its next acquisition or business opportunity, you can model the potential outcomes with more confidence.