0115 966 7955 Today's Opening Times 10:30 - 17:00 (BST)
Banner ad for Viper plagiarism checker

Technology for Financial Planning

Published: Last Edited:

Disclaimer: This essay has been submitted by a student. This is not an example of the work written by our professional essay writers. You can view samples of our professional work here.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

In this assessment, I am going to evaluate critically technology (SAP and EXCEL systems) that supports robust financial planning, budgeting, administration and reporting systems. Also, I am going to analyse financial monitoring, review, evaluation and auditing systems.

SAP

EXCEL

Financial Planning

SAP Cloud for Planning makes easier planning through simulations at various levels of details with a modern interface, with many professionals and at any time. Planning data is entered, edited and stored in one place. It allows getting the planning process in less time once it is not necessary to manage spreadsheets individually. Using cloud-based EPM system keeps the data safety, and spreadsheets are not shared by email.

Financial planning is a common spreadsheet application. Many worksheets are created to gather as much information as possible to allow cross-sheet referencing. Any system has Human entry error but this question has a huge influence on Excel spreadsheets and time-consuming is a disadvantage.

Budgeting

SAP Real Spending permit the access to up to the minute budget and spending information. To manage to spend in real time, allow optimisation of budget utilisation

The information related to budgeting is not updated in real time because the spreadsheets should not be changed by any person avoiding thus misinformation

Administration

SAP Personnel Administration aims to facilitate employee lifecycle management from hire to retire, including transfers and new placements within the organisation, leave of absence, and terminations

Excel usually is used as an auxiliary tool to manage human resource information

Reporting Systems

SAP Crystal Reports can do reports based on any virtual data source and delivery it in various formats, in up 24 languages.

This function is not available in Excel Program

3. System Features

SAP

EXCEL

Financially Monitored

SAP has capabilities to analyse a huge amount of data quickly; forecast and examines what-if scenarios, and to assess actual performance against goals

Excel does not have capabilities to analyse the vast amount of data quickly. What if scenarios and assessment of actual performance against goals are possible, however in a superficial way.

Reviewed

Intelligence tools empower employees to make faster and more informed decisions based on real-time data available 24/7. Dashboards, mobile apps and predictive analytics help users' performance

Moreover, also, dashboards and predictive analytics have to be developed by users

Evaluated

Using Financial Planning and Analysis (FP&A) software from SAP, users can improve financial performance once it can help to increase the profits, align operations with business strategy and track and control costs

A better understanding of data analysis is required to interpret the financial data. Also, users have to develop many reports based on worksheets to decision-making process

Audited

GRC (governance, risk and compliance) tool helps users manage: enterprise and operational risk, access governance, regulatory and compliance, policy, global trade, fraud prevention and detection.

Excel does not have tools to audit any data

4.1 SAP summary

SAP is an enterprise performance management (EPM) system that integrates and examines organisation's data from different sources to improve its performance (Garther, n.d.).

Cloud-based EPM system has many advantages, such as (Bright Point Consulting, 2016):

- data control: the permission to edit or change formulas can be set only for some users. This restricted access reduces the probability of human mistakes and also it facilitates fixing errors by tracking changes and approvals;

- existing Excel spreadsheets can be used by EPM system, reducing time and effort once the company will not have to start from scratch. It is a cost-effective and fast solution;

- it is not necessary a huge initial investment in license fees. In addition, installation, maintenance or update software will not be IT responsibility;

- EPM systems allow to get accurate financial consolidation and close process quickly and in a security way (Host Analytics, 2015);

- the accuracy of the data increases when it is loaded directly from EPM systems. "Spreadsheets, even after careful development, contain errors in 1% or more of all formula cells. In large spreadsheets with thousands of formulas, there will be dozens of undetected errors." (Panko, as cited in Host Analytics, 2015);

- all department has access to the same dataset (consistent and accurate information) to do its reports;

- EPM systems are financially smart because they do not require human interference (to add formulas and customise spreadsheets, for example). They present an understanding of finance, templates and built-in formulas.

SAP recommendations:

SAP is recommended when an integrated platform (strategic, capital plans, operational and workforce in only one system) is required.

4.2 EXCEL Summary

Excel is a spreadsheet program that has the capability to calculate values using mathematical formulas. The data is arranged easily in cells (Computer Hope, 2016).

Excel is a very simple system which needs a huge human interference to keep it working well without mistakes. However, according to MarketWatch (as cited in Bridge Point Consulting, 2016), 88% of spreadsheets have errors because Excel requires human entry data, what does not happen with the new cloud-based financial tools, which are automated and can detect invalid or missing information more easily. Individuals make mistakes, they type over things accidentally or forget things. So it means that companies waste a lot of the time to enter and fix the data.  This manual process does not allow the transparency required by business environment nowadays (O'Rourke, 2015).

According to a recent survey, Excel was chosen by 86% of the participants as the tool to be used for planning and budgeting (Kasabian, 2014).

Although it is one of the cheapest systems, there are many hidden costs once Excel is extremely time-consuming. Staff spends time creating customised planning that will help them to do planning and measure outcomes. To change this approach, it requires spending more time or even start over again. So, Excel appears the cheapest in the first moment, however it becomes expensive as more complex financial applications are required.

Besides that, Excel does not have efficient tools for a company doing its management properly. Some information such as financial and management reports are not available easy for users once each department provides company's information individually and using its own template and approach to developing its spreadsheets. Consequently, accountants and auditors have to decipher this information later. All the data is not centralised and available for everyone up to date at the same time. It is extremely important all sectors in the company be linked each other to make sure that outcomes are in accordance with the business goals. Closing process is not fast in Excel. The overwhelmed majority of finance teams wait until all data had been processed to minimise the probability to make changes and rework. This attitude becomes the process long and hard, and this inefficient procedure is repeated monthly, quarterly and annually in the company. So, Excel does not help too much managers and CEOs to see the "big picture". In modern organisations, they need data in real-time and reporting and analysis in near-real time to support their process of decision making.

Excel spreadsheets can be recovered from computers and servers, even after deleted, or can be accessed if laptops had been stolen (O'Rourke, 2015).

When linked spreadsheets need to be shared and edited by many people, the system gets messy and presents many formula errors easily (Host Analytics, 2015).

Excel recommendations:

Nowadays, the Excel's use should be limited to domestic use because it is considered a great personal tool. In companies, Excel can be used as initial part of budget and planning solution once it is easy to work with.

4.3 System Recommended

After all considerations, SAP is more suitable for submission to a business manager for many reasons. Reliable data, fast report generation, integrated system which allows all staff having access to information.

Nowadays, information on real time is an important requirement and SAP supports a business manager in this case. Besides that, reports can be generated with focus on many aspects of the organisation. These reports allow the understanding of the "big picture" and a better evaluation of organisation situation.

References   

Bright Point Consulting. (2016). Five reasons to switch from EXCEL to a cloud based EPM System. Retired from http://www.brightptc.com/5-reasons-to-switch-from-excel-to-a-cloud-based-epm-system/

Computer Hope. (2016). Spreadsheet. Retrieved from http://www.computerhope.com/jargon/s/spreadsh.htm

Garther. (n.d.). IT Glossary. Retrieved on October 18, 2016 from http://www.gartner.com/it-glossary/epm-enterprise-performance-management/

Host Analytics. (2015). Five reasons to move off Excel for consolidation and close. Retrieved from http://www.brittenford.com/wp-content/uploads/2016/03/Five-Reasons-to-Move-off-Excel-for-Consolidation-and-Close.pdf

Kasabian, D. (2014) For better or worse, Excel is still the number one tool for planning. Retrieved from http://www.tagetik.com/blog/authors/dave-kasabian/excel-planning#.WKk4gTt97IU

O'Rourke, J. (2015). Why leaving Excel behind leads to improved EPM. Host Analytics Blog. Retrieved from http://blog.hostanalytics.com/why-leaving-excel-behind-leads-to-improved-enterprise-performance-management


To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Request Removal

If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please click on the link below to request removal:


More from UK Essays

We can help with your essay
Find out more