The term Business Intelligence (BI, for its acronym in English) refers to the use of strategies and tools aimed at transforming information into knowledge. Its end? Provide value to make better decisions in the company.
Widely used towards the end of the 20th century, BI is a methodology that has not lost its validity. According to IDC, it will continue to grow and will reach 260,000 million dollars in the year 2022, and anticipates that until then spending in this area will expand at an average annual rate of 11.9%.
However, nowadays, advances in development and software have allowed the entry of more specialized solutions in gray points that a BI, or a CRM leave uncovered, one of them we know as Financial Planning & Analysis (FP&A).
An FP&A software is a data analysis system, but with a financial and economic focus, which provides and organizes the data required by directors and managers in real time. Thus, it allows more accurate and efficient decision-making, not only providing analytics, but also automating certain tasks in Budget, Controlling, Forecast and Reporting processes.
So… Do you need one or both? Which one should you start with? In this article, we will look at how BI and FP&A are related and how they differ.
Differences between FP&A and BI
BI strategies seek to analyze internal and external information from different sources and systems in a combined way. It is above all a methodology or work technique, which implies much more than the implementation of software.
The objective that it pursues is a greater depth of analysis in the reports. In addition, BI is concerned with making data accessible through the use of, for example, charts, graphs, and KPIs.
A BI solution helps to visualize the strategic objectives of the company, the operations of each area and how it is working to meet them.
For their part, Financial Planning & Analysis (FP&A) solutions arise in order to solve problems mainly related to the finance department or business directors, who usually make decisions with economic, financial and asset data of a company.
Does this mean that FP&A is not useful for a commercial or human resources area, for example?
On the contrary, these solutions are evolving to the term XP&A, where each business area is provided with a collaborative environment to work on the year’s projections, its deviation control and the forecasting stages in a simple way, even in addition to tools BI.
An FP&A platform seeks to optimize processes around planning, budgeting and data analysis in relation to the context. Such tasks, if done manually, more specifically in Excel, can involve the unproductive work of multiple people.
According to commercial data from our Smarketing team at Plika, +500 video calls confirmed that on average, our leads say they spend +50% of their time on manual tasks that “do not add value” to the business, which are based on making Excels, fixing errors of them, and send mails or manage changes on them.
Then, an FP&A application collects the data in an automated way, which implies a smaller margin of error and greater updating. In other words, an FP&A solution saves time by better organizing the company’s production processes and integrating information from multiple sources.
Likewise, if you work based on the data analysis and integration criteria promoted by a BI, an FP&A development also allows you to understand the operation of the organization around profitability and profits, for example.
Where does the future of financial data point?
The context in which companies develop changes all the time. Today we are in an increasingly complex, interconnected and changing world, at an increasingly fast and dizzying pace.
These changes affect all sectors of a company. Thus, the financial sector requires accurate and timely information to make decisions in an environment of great uncertainty.
In the future, financial data systems must not only be able to bring together information from multiple systems in real time; also, they must give meaning to that information, so that value is created for the organization.
How to expand the visibility of financial performance?
Many BI tools are limited by being analytical only and are nothing more than a snapshot of the past, unless a user loads certain projections in Excel, or makes them in other software.
On the contrary, FP&A developments are different, since they see companies as living, breathing entities that develop functions designed to automate these processes.
In this sense, those who use FP&A seek to optimize performance by identifying opportunities and challenges as soon as they arise. So, they generate financial reports about the past and the present, with a view to better understanding the future, even more so in Latin America.
So much so that the projections of the FINANCE 2020 report: DEATH BY DIGITAL, Accenture, Axson David, are being fulfilled. In it, it is commented that more small companies (from 42% in 2020 to 51% in 2021) are considering their total IT investment greater than $20,000. Whereas, the majority of midsize companies (from 81% in 2020 to 86% in 2021) consider investing in a range above $50,000 in 2021.
Succeeding in the financial paradigm
In the new financial paradigm, real-time reporting tools are at the heart of the business. These systems allow you to see the performance of the organization, with control panels (BSC) and summary data.
Financial reports are what put such information in context. In this way, they allow fundamental decisions to be made for the company because they consider the past, the present and the future, with the possibility of making forecasts based on accurate data.
In this sense, a FP&A system can be seen as a strategic tool for the future of the organization and the business.
In the new financial paradigm, real-time reporting tools are at the heart of the business, because they allow you to see the organization’s past and present performance and make future decisions.
FP&A is recognized as a workhorse
FP&A software is a workhorse because, in addition to generating reports in real time, it adapts to the needs of any business, depending on the degree of complexity or other specific requirements.
In addition, an FP&A solution brings productivity and organization to workflows between different sectors of the company. It allows a quick and exact analysis of the economic or financial information of the business, based on the study of indicators and metrics.
Likewise, software of this nature allows the generation of reports through the planning of changing scenarios in order to assess future impacts. And it does so immediately, with up-to-date data available just a click away.
In this way, results can be simulated according to changes in one or several business variables. Undoubtedly, it is very important information in times of uncertainty and dizzying changes.
With FP&A software, forecast reports can be generated according to the change of certain variables. In this way, different results and scenarios can be simulated in order to make decisions with greater foresight.
Learn more about Plika’s FP&A software
Unlike a BI, an FP&A tool like Plika’s expands the collaborative proposal between all sectors of the company by incorporating contextual data sources to enrich the view and, therefore, the forecasts. This allows your company to work dynamically and accurately.
Each work team loads into Plika the data on which the software will make reports and projections with an economic and financial approach. With just one click, your organization has updated reports in real time.
In an easy way and from a cloud, Plika is an FP&A solution at your fingertips: it helps in the productivity of the company, improves decision-making based on real and reliable data and frees the team from routine and manual tasks.
Business intelligence (BI) systems combine business analysis, data visualization, data tools and infrastructure to help organizations make decisions based on up-to-date data.
While an FP&A solution will allow planning, analyzing and reporting considering the company’s data in relation to changing contexts, under economic, financial and equity approaches.
So, it is time to make the qualitative leap towards modern financial analysis. An agile and simplified software such as Plika’s makes available to the finance team, in particular, and to the business, in general, relevant information, in real time, to make accurate decisions and anticipate negative situations.
Don’t be left behind! Try our free demo and learn the benefits of working with modern finance software. From the cloud you will be able to access the reports and follow the data 24/7 with just a device with an internet connection.
We are Plika: agility and simplicity for your financial analysis.