Xenakis on Technology

Budget Planning Software Moves to the Web

Written by John J. Xenakis for CFO.com, Apr 04, 2001.

A software package uses the Web to help CFOs make accurate forecasts.

Has there ever been a time when CFOs weren't under pressure to provide accurate financial forecasts? Whether the audience is the CEO, the board of directors, shareholders, or Wall Street analysts, the numbers in the forecast had better be in tune with the real-world business conditions.

Switch the economy from the irrational exuberance of 1999 to the broadening crisis of 2001, and the pressure only gets more intense.

Even without a nasty economic slowdown, users of budgeting packages were bound to demand more from these applications.

This is forcing some vendors of budgeting software broaden their software beyond core budgeting. In particular, the Web is seen as the key to making budgeting a more collaborative process, since geographically scattered managers can work together over the Internet.

"People are buying budgeting software differently," says Lee Geishecker, an analyst with the Stamford, Conn., based market research firm Gartner Inc. "After they got through Y2K, by mid 2000 they realized that their budgeting was still broken. They're looking beyond basic budgeting to financial reporting, information delivery, analysis, performance management, and planning, and they want something that combines them all together."

Until recently, a handful of companies -- Hyperion Solutions Corp. (http://www.hyperion.com), Adaytum Software Inc. (http://www.adaytum.com), Cognos Corp. (http://www.cognos.com), and Comshare Inc. (http://www.comshare.com) -- dominated the market for budgeting packages.

But recently, a package called Financial Planning and Analysis (FPA), formerly called Everest, from OutlookSoft Corp. (http://www.outlooksoft.com), has stolen a march on its well-known competitors. The application marries budgeting with the Web, an OLAP (on line analytical processing) database for analysis and decision support, and a user interface based on the Microsoft Excel spreadsheet.

The Excel user interface has been a powerful selling point. "A lot of our early deals were based almost entirely on the Excel interface," brags OutlookSoft's CEO Craig Schiff.

For example, David Bancroft, corporate finance process leader for Esco Corp., a Portland, Oregon, manufacturer of steel castings for the mining and construction industries, says, "We wanted for a number of years to push the budget and planning process down to the cost center manager desktop level. We tried some off-the-shelf products, and we tried building our own with limited success, but we weren't where we wanted to be."

Esco had been using Hyperion Financials for several years to handle consolidations, and "we really liked the Excel add-in," says Bancroft. The Excel add-in makes it easy to transfer data between Hyperion Financials and Excel spreadsheets, but Esco was looking for a system that relied upon Excel as its sole user interface.

Bancroft says users of FPA don't have to learn a new user interface, since FPA functions can be accessed from Excel using toolbars and menu items that OutlookSoft developed with Microsoft.

Bancroft is making FPA available to 50 cost-center managers, and eventually may roll it out to 100 more users, almost all of whom are familiar with Excel. "With the Excel basis, training and ease of use issues are minimized," he says. "And it has the ease of formatting and presentation you have with Excel. You're not locked into that rectangular format that traditional reporting products give you."

Gartner analyst Geishecker points to the product's analytics, which tie in with the Internet functionality. "They've developed a Web portal approach which gives each user a personalized approach to information delivery and analysis. This isn't just for budgeting. It ties into financial reporting and things like key indicators."

The analytics were important to Midwest Wireless Holdings LLC. "OutlookSoft is more of an analytical tool than the other budgeting products we looked at," says Dennis Findley, VP finance for the Mankato, Minn., wireless service provider.

What Findley likes is the product's capability to load other data, even non-financial data, from other databases, and use it in budgeting.

"For example, we're a wireless carrier, and minutes of use by our customers is very important to us, and is a very complicated input to our budget," he says. "Now we're able to download that data and use it."

The reason that this analytics capability is available in OutlookSoft's product is that it combines a budgeting product with Microsoft SQL Server's OLAP (online analytical processing), an integrated multi- dimensional decision support database.

A user of another budgeting product could get the same functionality by using it with another OLAP. For example, Hyperion's Pillar could be used with Hyperion's Essbase OLAP. However, that makes users learn yet another user interface.

OutlookSoft, for its part, has integrated budgeting software with an OLAP, and made the functions of both products available over the Internet within an Excel-based user interface.

The top enterprise budgeting packages typically cost $100,000 to $300,000 for license fees, but OutlookSoft is pricing FPA as a subscription service, similar to software leasing. The subscription service for 100 seats is $84,000 per year, a price which includes maintenance and upgrades.

Competing vendors, which have more mature, more functionally complete budgeting products, have to play catch-up in integrating with Web and OLAP technologies.

In August, 2000, Hyperion announced upgraded versions of Financials and Pillar, its major consolidation and planning software packages. The products, Financial Management and Planning, integrate Internet access and OLAP.

"We're in an in-between period with Hyperion," says Gartner's Geishecker. "The new products are much more advanced in using technology, but they don't have the depth of functionality of the old products."

(This is a modified version of an article that originally appeared on Apr 04, 2001 on CFO.com at this location. )