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  • Writer's pictureVjeko Skarica

FP&A Software: A Buyer's Guide [Free Download - Vendor Comparison Checklist]

Updated: May 8

Financial planning and analysis (FP&A) software is an invaluable tool to help you understand and analyze your company’s financial situation. This buyer’s guide will help you understand what to look for when selecting an FP&A software solution, and how to know if the software is right for you.

1. What is FP&A Software

2. Essential Considerations Before Purchasing FP&A Software

2.1. Do you even need FP&A Software?

2.2. What is the problem worth to you, and what is your company budget?

2.3. User Adoption

2.4. Implementation Complexity

2.5. Scalability

2.6. Autonomy

2.7. Security

2.8. Support

3. What to Look for in FP&A Software

3.1. Budgeting and Forecasting

3.2. Reporting and Analytics

3.3. Collaboration and Workflow

3.4. Integrations

3.5. Design/UI

4. Free FP&A Software Comparison Checklist Download

5. Conclusion

1. What is FP&A Software

Financial Planning and Analysis (FP&A) software is a specialized tool that helps finance professionals streamline their budgeting, forecasting, and financial reporting processes. These tools provide a comprehensive platform for managing, monitoring, and analyzing an organization's financial health by integrating data from various sources and providing advanced analytics capabilities.

While both FP&A and Enterprise Resource Planning (ERP) software serve a business's financial needs, there are key differences. ERP systems focus on managing an organization's day-to-day operations and transactions, such as purchasing, inventory management, and accounting. On the other hand, FP&A software is specifically designed for strategic financial management, including budgeting, forecasting, and scenario analysis.

With the rapid evolution of technology and increasing globalization, businesses face more complex challenges than ever before. Traditional financial management methods, like spreadsheets and manual data entry, have become inadequate for handling large volumes of data and complex financial models. By adopting FP&A software, finance departments can simplify their operations, improve decision-making, and enhance collaboration between departments.

2. Essential Considerations Before Purchasing FP&A Software

The history of FP&A software can be traced back to the early 1980s when the first spreadsheet applications were introduced. As the technology evolved, the 1990s saw the advent of specialized financial planning software, which focused on budgeting and forecasting. In the early 2000s, these tools started to integrate with other business applications, paving the way for modern FP&A software. Today, FP&A solutions have evolved into sophisticated platforms, offering advanced analytics, real-time data integration, and cloud-based access to cater to the ever-changing needs of modern finance departments.

FP&A Software of each generation

The so-called third generation of FP&A software offers advanced analytics, real-time data integration, cloud-based access, and user-friendly interfaces, making it well-suited to meet the evolving needs of modern finance departments.

Here are the key differences of 3rd gen FP&A software compared to its older counterparts:

  1. Better Design: Modern FP&A tools have simple and user-friendly interfaces, while older software is often confusing and hard to navigate.

  2. Teamwork: They let users work together on financial plans and models in real-time, while older tools had limited teamwork options.

  3. Smarter Analysis: They use advanced techniques like machine learning to give better insights, while older software has basic analysis features.

  4. Easier Integrations: They can connect with many data sources and business applications easily, while older tools have limited options.

  5. Cloud Access: These tools are usually cloud-based, making them easy to access from anywhere, while older ones are installed on-premise.

  6. Better Visuals: 3rd gen FP&A tools have advanced ways to display data, like interactive charts, while older software has simpler visuals.

  7. Real-time Data: Modern FP&A software shows real-time data, helping users make decisions based on the latest information, while older tools might have had outdated data.

2.1 Do you even need FP&A Software?

Unfortunately, it’s not always clear for businesses when is the right time to start using dedicated FP&A software. Finance teams get stuck in their day-to-day operations in spreadsheets, and sometimes lose perspective of the broad picture. But, we can help you here. If you and your team check more than three boxes, you might want to take a better look at your FP&A software situation:

  • Yearly planning lasts > 1 month

  • Lots of people participate

  • Lots of spreadsheets used

  • Lots of versions

  • Data-heavy model(s)

  • Manual template management

  • Manual reports

  • The plan is not viable (departments not co-ordinated)

  • Boss wants rolling forecast

  • Boss wants what-if simulations

  • Boss wants driver-based planning

  • Boss wants to plan profitability on the product/person/atom level

To learn more, check out our blog: 6 Things CFOs Are Risking by Not Implementing an FP&A Solution.

2.2 What is the problem worth to you, and what is your company budget?

The fact is that FP&A software can be on the expensive side of the business tools spectrum. Before starting to research vendors and do a deep dive into software features and various use cases, it is smart to start looking at the problem from a budget perspective. The most important question you must ask yourself is: how much does this problem cost the company? In other words, you need to perform an ROI analysis and determine if FP&A software is the answer to your problem, and more importantly, does the solution cost more than the problem itself. If that is the case, you are better off sitting down with your team, optimizing your planning processes and operations, and maybe considering other types of solutions first. In our blog “Is Implementing a New Financial Planning Software Worth it?” we talk about this, and there’s also an ROI calculator you can use to explore your FP&A software needs in more detail.

2.3 User Adoption

Another critical factor you will want to be careful about when considering acquiring FP&A software is the ease of use of the software. The reason for this is simple - the tool's ease of use will dictate the adoption rate throughout your company, and lower the TCO (Total Cost of Ownership). In other words, the more simple, intuitive, and flexible the tool is, the more resources your company will save in the onboarding phase.

In enterprise companies, managers often purchase expensive planning software for their teams without consulting with the team members to determine their actual needs. Consequently, team members tend to avoid using the software because it creates more problems than it solves. Although they use the tool for some business aspects, such as obtaining high-level P&L reports, planners mostly rely on their dependable spreadsheets because they are flexible and better suited for their daily planning needs.

In his blog post on the most common problems he faced in his career, a long-time FP&A analyst who worked for several pharma companies calls these tools it-was-expensive-so-we’re-keeping-it-tools. The planners do not have enough reasons to use these overpriced and clunky tools, except for the manager's sunk-cost fallacy.

When talking to companies with complex planning processes, we at Farseer learned that this happens more often than anyone likes to admit.

Historically, 1st and 2nd generation of FP&A tools has had lower adoption rates because they were too rigid and did not address the users' problems.

2.4 Implementation Complexity

As an FP&A software buyer, you should be very careful about the implementation process. Many pitfalls hide here. A lack of clear communication between you and the vendor can lead to:

  • inadequate planning and testing,