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Do you really need the Financial Planning & Analytics Rolls Royce?

I have seen a lot of change in the Financial Planning & Analytics (FP&A) space over the last 20 year but one thing was constant: it’s not cheap.

I just came back from a conference where I got first hand proof when asking about the required investment for specialized FP&A software. The answers I got from some of the now listed vendors (or backed by heavy VC investments – investors that likely want to see quick returns…) were in the range of $80k+ for software and then typically twice that for the consulting investments.

The organized Rip-Off…

This strategy of “milking the market” (either dedicated FP&A but equally so the ERP behemoths) has worked for many years, as vendors played on the budget power of their target audience: If the CFO -the ultimate money authority in an organisation- says “I need that”, it usually happens.

This situation resulted in a market place that I would dare to call at a minimum overpriced and tending towards “rip off”.

FP&A runs better on proven standard platforms

Yes, FP&A processes are complex, but it’s not rocket science: more than competitive, interactive financial reports with live connections to the source are now available in Office productivity or analytics solutions costing a few ten Dollars a user a month.

Standardized cloud systems -particularly for ERP systems- enable adding financial data warehouses with a click. These are not just for read purposes but provide high performance, concurrent write back for planning and forecasting, even with complex allocation and distributions.

You want AI, predictive analytics and complex forecasting with this? No problem, above mentioned approach will give you all that as open source (r, Python, etc.) or as reasonably priced off the shelf cloud capacity, with massive community support.

The best part of it all: the knowledge to maintain and even extend the solution is typically already in house or available from an extensive pool of community experts. These offer their services at a competitive market rate as they don’t have the bargaining power benefits that proprietary, FP&A specialist vendors enjoy.

Considering this, I would ask a few questions when you are proposed to invest the price of a Rolls Royce alongside 50 days of $4,000 a day consultants by your friendly legacy FP&A software vendor…

(Martin Kratky is the CEO of Acterys and has worked with most major financial Planning & Analytics (FP&A)  solutions over the last 25 years)

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