FinancialDriver to re-define mid-market budgeting, forecasting, planning and consolidation

15th February 2011

The mid-market has always been a difficult ‘nut to crack’ when it comes to budgeting, planning, forecasting and consolidation applications – collectively known as corporate performance management systems (CPM). Multinationals and large public sector organisations are well served by sophisticated suites of software but these complex products sit uneasily with mid-sized businesses that are short on IT skills and cannot afford a solution costing hundreds of thousands of pounds. So is there an alternative? Up until quite recently the answer has been “No” but in this feature article, Gary Simon, FSN’s managing editor, takes the first look at a newly launched CPM suite, “FinancialDriver” which runs in the Cloud and is aimed squarely at meeting the needs of the smaller business.

Development of FinancialDriver started in 2009. Its founders were two experienced accountants working in commerce and experiencing the frustrations of running modestly sized organisations using nothing but spreadsheets for core management tasks such as budgeting and monthly management accounts.

They found that spreadsheet-bound processes collapse like a pack of cards when, for example,  reporting entities unilaterally decided to change an account line, statutory or management information requirements change or complex macros need to be written or modified to generate new reports.

It’s not too surprising. After all spreadsheets were designed for personal productivity and as such provide limited scope for multi-dimensional queries and reporting, providing different management views of a business or covering even the basics such as security and audit trail.

But what if one could harness the power and flexibility of the spreadsheet with the robustness and integrity of a multidimensional database whilst making the system, secure, accessible and affordable?

This was the challenge that FinancialDriver as an organisation set itself culminating in the release of a refreshingly simple performance management system, based on regular Microsoft technologies (Microsoft SQL Server database and Analysis Server) running in the Cloud.

Developed from the ground up as a unified suite it has an identical user interface and administration system whether you are in the budgeting application, forecasting application or performing a financial consolidation. So it suffers none of the integration drawbacks or inconsistencies evident in some larger competitors that have grown CPM suites through serial acquisitions. Take, for example the organisational hierarchy which is defined once in FinancialDriver and is immediately available to all of the applications in the suite.

System set up

True to its roots of maintaining simplicity the entity structure allows organisations to build classical divisional/statutory structures but you won’t find the ‘bells and whistles’ of partial shareholdings, different consolidation methodologies or automatic posting of minority interests found in the big CPM suites.  This product does what it ‘says on the tin’ and provides the simple arithmetic consolidation that most mid-sized groups need together with foreign currency translation and automatic posting of exchange differences. For the time being inter-company eliminations and other group adjustments are made manually through journal entries, reflecting the norms of the mid-market.

‘Dimensionality’ distinguishes the true CPM systems from the spreadsheet based system. FinancialDriver provides the normal dimensions such as time period, account, currency, version (budget, actual, forecast 1, re-forecast etc) straight out of the box, but users can establish a virtually unlimited number of user-defined dimensions such as project, product group and so on.  Ted Baker, the fashion retailer and a flagship user of FinancialDriver uses “sales categories” and a “stores” dimension to track performance at each of its retail outlets and reports weekly in the time dimension – a common requirement in the retail industry. Currencies are attached to the entity level and allow reporting and consolidation in local and base currency as desired.

Data capture

Data entry is governed by a spreadsheet-like grid called a ‘sheet’. These are defined by selecting the required combination of dimensions (accounts, version, time period, and so on) to yield a grid ready for inputting data. 

Sheets are defined by selecting the required combination of dimensions (accounts, version, time period, and so on) to yield a grid ready for inputting data.

1 Sheet set-up.jpg

 Cell values can be derived by calculation and FinancialDriver has an extremely simple formula writer that anybody with even rudimentary Spreadsheet skills will pick up in minutes. These can be used for, say, payroll calculations, performance indicators or budget drivers. Furthermore, the system provides a number of ways to help users quickly populate grids through the usual functionality of automatically spreading annual totals across months, say, evenly or in percentage increments ensuring that roundings are taken into account.

Workflow Sheets effectively define the contents to be captured in an application and there are no practical limits on the number of grids or their relative complexity though care needs to be taken over the size of a sheet that needs to be filled in over the web – perhaps from a Net Book in an airport lounge.  Better to use multiple sheets than one huge one.

Workflow Sheets effectively define the contents to be captured in an application

2 Sheet entry.jpg

But the sheets also drive the applications, for example, some business units can be compelled to fill in certain sheets but not others. Some can be used for quarterly reporting and others for the half year where the information needs are different.

Sheets are also central to status reporting and workflow. Each sheet has a deadline associated with it and workflow defined within the system can report on whether sheets have been submitted on time, approved or rejected – functionality that is essential in say a financial reporting or budgeting application.

Sheets are central to status reporting and workflow

3 Workflow.jpg

User permissions in the system define the roles of individual users.  Most will be ‘contributors’ of information but the system also has the role of ‘consolidators’ – power users (usually finance professionals) who can run consolidations and generate their own sheets to query the underlying relational store.  Consolidator status , (usually reserved for a limited number of users) can change numbers directly on the underlying database without going through journal entries.

Getting information in/out

Migrating to FinancialDriver is a matter of generating a csv. file in the prescribed format that can be read into FinancialDriver. This technique can be used for balances as well as structural information (metadata) such as account codes.

Reporting can be as simple as producing a grid to screen or exporting data to Microsoft Excel.  More advanced users could use Analysis Services to generate more complex reports if needed.

Furthermore, comments, for example, management commentary can be attached to sheets at the entity level that can travel through the application to consolidation at the centre.

Pricing and the cloud

Pricing is easy to understand and starts at £30 per user per month. This is a price that is virtually unmatched in the CPM industry, even by other cloud vendors that have entered the space. Take into account that users have 24/7 access to the system over the internet from anywhere in the world, that they do not have to maintain any IT infrastructure or upgrades and the proposition looks financially compelling.

So what have we got?

FinancialDriver is ideally suited to mid-sized companies with straightforward needs that urgently need to break out of spreadsheet-bound budgeting, planning, forecasting and consolidation systems but can neither afford nor need the complex functionality associated with the traditional software suites that have dominated the CPM space.

For these companies, probably UK based and with around 10 to 50 reporting entities, FinancialDriver provides a unified, affordable solution which because it focuses only on essential functionality, can be implemented rapidly and used easily.

It’s early days for CPM in the Cloud but this new product tackles an obvious gap in the market and will be welcomed by businesses struggling to overcome the limitations of spreadsheets.