In some of our other articles, we have already covered the ins and outs of vendor selection and product selection. But there are a few other factors you should consider that are a little more nuanced because they are often left out of deciding on the perfect vendor and product for your business. Overlooking these topics can lead to major issues down the line if they aren’t factored into your decision.
Following your competitors down a garden path
You may be tempted to use the same technology solution that your competitors are using because that means that it has been adopted and vetted by a business with similar needs to your own. There are certainly benefits to this approach, such as the larger pool of already trained experts who you may be able to recruit from your competitor. And it does also make the decision much easier to base it on social proof. However, there is a blindspot that you will have a hard time mitigating. While it’s possible that the solution is working well for your competitor, it’s equally likely that it’s a decision they regret making. A more accurate way to assess a fit with the needs of your business is to consider the growth rate of your business and users over the next 3–4 years and to find the solution that is the most “expandable” to meet those needs.
Pricing surprises
The pricing tiers of solutions can be a bit complicated. Most plans will be tiered based on the number of users (and super users). You will certainly have enough user seats in your plan, but make sure you also have enough super user seats. These are the users who are key to successful implementation and maintenance. Pencil out any price increases that are above the range you’re considering. How much will pricing increase if you add more users, and is that price increase factored into your 3–4 year plan? Also remember to look for price increases based on the amount of data in the cloud and for the integration packages you select based on the source and reporting data needs you have. This can often increase the overall price tag by quite a bit.
Mismatched artificial intelligence (AI) and machine learning (ML)
Most FP&A product vendors are adding AI and ML functionality. And to get the most out of these features, it’s important to understand how these powerful technologies can be applied to your specific business. Ask your vendor the different time series and driver-based capabilities they offer and how they can handle your use case. And what additional pricing is there for that statistical model? You may also want to develop your own models. If so, how much flexibility does the product have to allow you to do so?
Also keep in mind that 36 periods of data are needed to train and test statistical models. This should give you good guidance on when you can effectively start using AI capabilities that come with FP&A tools. Other questions you may want to ask yourself are: will I need AI/ML for sales/volume/revenue planning and does my finance team collaborate with the operations team and have access to all macro factors? We will cover AI in more detail in a later article.
This article is contributed by Finance Transformation Specialist Ramya Krishnaganth, UVID Consulting.
