How Traditional Financial Planning Software Falls Short

In this article we discuss:

• The Limitations of Traditional Planning Tools
• What You Need to Plan at Enterprise Scale
• Prepare for the Uncertainty and Disruption of Today and Tomorrow

For finance and planning organizations, tools and technologies historically have both enabled strategic planning while also limiting it.

The first spreadsheet program, Visicalc, was a game changer for finance organizations when it arrived in 1979. For one thing, it enabled faster and more efficient budgeting and forecast modeling. And now, 45 years later, the spreadsheet remains a fixture of planning environments.

Yet despite decades of gradual improvements, spreadsheets are simply not well suited for today’s competitive environment, where access to real-time data and collaboration among stakeholders has become a hallmark of business agility. Other financial planning tools, including legacy corporate performance management (CPM) or enterprise performance management (EPM) systems, were similarly never built to empower modern planning. They too have failed to evolve fast enough and thus can’t keep pace at a time when change is happening faster than ever.

The Limitations of Traditional Planning Tools

Organizations accustomed to relying on this antiquated planning technology tend to accept their shortcomings as a consequence of planning at enterprise scale—a painful status quo marked by:

• Slow, manual processes and reconciliations
• Rampant system and data silos
• Poor collaboration and rising frustration
• Missed competitive opportunities
• Pervasive inefficiencies and ineffective workarounds
• Strategic misalignment

The distance between what traditional tools provide and what today’s organizations need—strategic, modern finance planning software that’s continuous, comprehensive, and collaborative—represents a technology vacuum. And that vacuum only worsens an acceleration gap that too many organizations have fallen into.

The planning technology vacuum hits enterprises right where it counts. As the pace of change accelerates, the need for strategic planning becomes more imperative, which in turn requires more stakeholders to take an active, meaningful part in planning. But traditional financial planning tools aren’t designed for broad participation. And as planning scales beyond finance, which it must do now more than ever, the fault lines of traditional planning become even more apparent.

What You Need to Plan at Enterprise Scale

For planning to be continuous and company-wide, it must be designed to take place at enterprise scale. What does that mean for the tools and technologies planners rely on to budget, forecast, and model scenarios so they can understand the potential implications of their actions? It means those tools need to be capable of the following essential capabilities:

Support any number of users. Planning has long been the sole domain of finance with a handful of highly trained planners manually gathering, consolidating, and reconciling data. That won’t work for planning at scale, with the need to support hundreds, even thousands of concurrent users, all planning in near real time using the same underlying data and interconnected models. Any modern planning platform must accommodate this volume without loss of performance. But this isn’t just about technical scalability. For stakeholders in HR, operations, sales, and other areas to participate in planning, you need a platform that’s more intuitive and accessible than the finance-specific tools of old. If users are forced to rely on technical experts to perform sophisticated planning activities, adoption will stall.

Enable unlimited scenario modeling. Model limitations are common among traditional planning platforms. You’re typically hemmed in by technical guardrails on the number of dimensions, for instance, or by the excessive time it takes just to model a scenario which then limits your ability to explore as many scenarios as you like. Modern tools empower planners across the organization to run what-if scenarios whenever they need to, based on cohesive underlying planning data. Potentially, you could see hundreds of planners across finance and various operational functions modeling scenarios on a weekly basis.The right modern platform can accommodate that level of sophistication at scale—not just, for example, data entry at scale. By enabling unlimited scenario planning, modern planning technology democratizes data-driven decision-making rather than limiting insights to a select few technical thinkers.

Simplify and streamline data integrations. Traditional planning usually relies on finance to manually import and reconcile data from disparate plans—those created by dispersed planners using different systems and data. It’s a persistent barrier to progress. But modern planning happens continuously, across the company, on a unified platform. To create true visibility across the business, modern planning demands a platform that can automatically incorporate transactional and operational data from any system—such as your CRM, ERP, industry-specific applications, or even more esoteric function-specific software. Modern planning platforms must be profoundly adaptable, and able to integrate at scale with the systems your business relies on to ensure no source of planning intelligence is excluded.

Provide diverse metrics. With its focus on finance, traditional planning typically limits modeling capability to GL accounts. Company-wide planning demands a platform that can model a much broader set of metrics. For planning to be valuable to dispersed decision-makers, you need a platform that can incorporate and run models from the underlying operational metrics that form the pulse of your business. For example, sales planners might want to model the impact of winning a major customer account on next quarter’s territory allocation, while workforce planners might model the impact of a planned restructuring on organizational performance. Modern planning must accommodate and connect these and many other diverse situations.

Deliver versatile dimensions. Traditional planning demanded mastery of finance data, but little else. Modern planning demands you refract much more data in many more ways to monitor, measure, and report on performance in whatever combination of factors support your immediate use case of the thousands of possible use cases across the business.That’s both a complexity and a flexibility problem, demanding a platform that can segment and analyze your data the way you manage your business. With modern finance planning software needing to deliver on so many dimensions, the planning platform of choice must be cloud-first to be viable. That’s different from traditional on-premise planning solutions that have been modified for some cloud support, saddling enterprises with complex legacy data.

Prepare for the Uncertainty and Disruption of Today and Tomorrow

Clinging to tools and technologies built for the way businesses used to run is no way to deal with the uncertainty and disruption of today and tomorrow. The best financial planning software helps companies overcome the planning technology vacuum by delivering a purpose-built, cloud-first platform where everything is designed to optimize planning. That’s light years from where many organizations are today. But it’s imperative they get there as soon as possible.

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