Lotus 1-2-3 and Adding Machines: Remembering Old-School FP&A and Looking to the Future

Don't you yearn for the Finance technology from days of yore? Wasn't it great being limited to just three things in Lotus 1-2-3? Isn't the world just too quiet without the screech of the dot-matrix printers? Wouldn't it be great to be once again hampered by those punch cards with all those letters and numbers? No? Maybe we're not all that nostalgic for old-timey tech. But is your Financial Planning and Analysis (FP&A) function making the best use of the new tech that's available? Or is it still stuck in the 20th century? To celebrate our latest interactive guide, FP&A Upgraded: How to Modernize Your Corporate Financial Planning & Analysis, we asked Finance experts for their tech horror stories, and for advice on how to upgrade your FP&A.

From Manual Ledger to Finance Automation

So, what kind of archaic tools did Finance experts contend with at the beginning of their careers? "At the start of my career, this sort of thing was done on stone tablets. When Johannes Gutenberg invented the printing press, that really accelerated the FP&A process," jokes Jack McCullough, President, CFO Leadership Council. But, on a more serious note: "This will scare you: Manual posting of general ledger with fountain pen. Tech was major mini-computer IBM S/36, punch cards and an electric calculator -- circa 1982!" says Tom Hood, CPA, CITP, CGMA, EVP Business Growth & Engagement, Association of International Certified Professional Accountants. For those unfamiliar with the IBM System/36, this "small" computer system was about the size of a business fax machine. The base model included 128K of RAM and a 30 MB hard drive but was expandable to 7MB of RAM and 1478 MB of disk space. Impressive, huh? Even better? You could get this feat of innovation for the low, low price of $200,000 back in the early 1980s. At the time, the IBM System/36 was impressive because it digitized processes and drastically improved efficiency. It could even run software programs up to 64K in size! Now we look back on the IBM System/36 with a sense of shock and wonder. How is it that an entry-level desktop computer now has one thousand times the processing power at a fraction of the price? Since that initial leap to computers, companies made other notable advances such as smaller personal computers, more advanced software, and networked systems. Still, FP&A technology at many companies has plateaued at spreadsheets and manual data entry -- techniques that bog down the process in inefficiency and can even introduce more human error. It's time to take the next leap forward and modernize FP&A with automated and comprehensive processes that will move Finance into the 21st century.

From Narrow View to Part of the Bigger Picture

It's not just technology but also the function of Finance that's evolving. Historically, financial planning was an exercise tacked on after the company finished the real work of strategic planning. Jack McCullough explains: "I think the biggest change is that 20 years ago, FP&A was often viewed as separate from strategic planning. Yes, financial planning and strategic planning operated in two different silos. Today, you can't have one without the other (with apologies to Frank Sinatra). But it used to be just accounting types running numbers on spreadsheets, whereas today, the technology is amazing, and the acceptance of financial planning as part of the strategic plan is nearly uniform. Also, back then, FP&A in many companies was a seasonal venture (create the financial plan for the following year in November and December). Today, it is a perpetual process, and largely due to technology, more effective than ever before." The modernization of FP&A is fueling Finance's shift in role, from backroom support to key participants in developing the overall business strategy. The rise in the accounting techniques of rolling forecasts, zero-based budgeting, and scenario planning allows Finance to forecast more frequently, accurately, and faster than ever before.

From Spreadsheet Operator to Valued Advisor

There's also the potential to elevate the role of FP&A professionals within the organization. Janet Schijns, CEO, JS Group, shares a story about the shifting role of Finance: "In my first job, in the cosmetic industry, the tools I worked with were largely spreadsheet or database-driven with limited to no intelligence and a set of highly complicated processes to get even the simplest calculation or presentation to come out appropriately. Having a highly experienced financial person by your side at all times was a necessity. Now tools can make data available and analyze it at a click of a button. This allows a wider range of leaders to have not only access but also intelligence around specific data to run the business." You might wonder: What's wrong with needing a Finance person by your side at all times? Shouldn't they be recognized for their skills? The answer is a resounding "yes!" But modernizing FP&A will allow Finance to be known for much more than impressive number-crunching skills. Finance technology can improve collaboration, allowing more people to contribute to the forecasting and reforecasting processes. And with a central repository of information, the entire C-suite can access the information they need when they need it. Instead of being the go-to people for distributing forecasts and running reports, Finance will become the go-to source for deeper analysis and business-driving insight. Why are numbers up? Why are they down? How should we alter our strategy based on changes in the supply chain? With greater access to data, everyone wins.

From Repetitive Tasks to Easy Insights

Repetitive tasks like data entry were central to Finance from days of yore. Gabrielle Luoma, Co-Founder and CEO, MOD Ventures, LLC, shared what it was like for her in the early days of her company: "Every now and then, my husband and I look back to a time when I just started my business. I had a client that had a file box full of receipts, and she wanted every single one entered into her Quicken. This was for the whole year, and so I had to decipher what the receipts said. Many receipts were so faded we could barely read them. My husband spent hours calling out vendor names and amounts while I typed them into the system. All we wanted to do was just be done." Most people don't like mundane tasks. But currently, most Finance pros only spend about 20% of their time on strategy and higher-value tasks, according to a Prophix survey. Modernizing FP&A can automate routine tasks, including rules-based activities, reporting, data consolidation, and reconciliation. With less repetitive work and more reliable data, Finance can spend more time on activities that deliver more value to the organization.

Ready to Graduate to Modern FP&A?

Is FP&A at your company forward-looking or stuck in the past? Moving beyond stone tablets is a start, but there are other ways that companies can modernize the financial planning and analysis process. If you're ready to ditch manual processes -- and that dusty old copy of Lotus 123 -- check out our new interactive asset, which includes insights from Finance experts about how to upgrade your company's FP&A. Check out our new interactive asset, FP&A Upgraded: How to Modernize Your Corporate Financial Planning & Analysis.