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Few professionals have a closer view of the evolution of financial planning technology than Michael Lengenfelder. Having spent over two decades in various roles at Unit4, he’s now Global Solution Architect FP&A, where he works closely with finance teams as they navigate ever-growing complexity and ever-growing demand for real-time insights.
Over the past few years, Michael has had a front row seat as the finance function has become more strategic, driven largely by increasingly volatile markets. That instability, for Michael, has placed “greater emphasis on financial planning, forecasting and scenario modelling,” something that integrated ERP systems are tailored to fix. Yet, despite this shift, Michael has been surprised how “finance teams are still so reliant on Excel spreadsheets and manual processes”.
For Michael, the issue here isn’t a lack of solutions: it’s more about the risk. Organisations are simply more comfortable with familiar tools, even when those tools aren’t necessarily still fit for purpose. He believes the barrier is often a “mindset and leadership issue,” where teams are simply “used to doing things a certain way with Excel” and are reluctant to change. But when competitors are willing to evolve with the times, the cost is beyond discomfort with a new system, it could be seen as a missed opportunity.
Ultimately, Michael sees the finance function evolving beyond reporting, and instead into applying critical thinking skills to interrogate the numbers. In this fast-moving world, finance professionals will have to act with what he describes as a “journalist’s determination to keep searching for the truth in the numbers,” turning data into something that can grant direction and insight.
With Michael’s concerns for the future of the industry laid out, we wanted to know what problems organisations may be facing today. That’s why we started by asking exactly what companies might still be underestimating in today’s market.
The finance function has definitely become more strategic, because of the volatility in global markets. This has placed greater emphasis on financial planning, forecasting and scenario modelling, as well as integrated planning so that organisations can respond with greater agility to changing economic conditions.
It is surprising that finance teams are still so reliant on Excel spreadsheets and manual processes, as it can be so time consuming. However, as the role of finance evolves, we are seeing more recognition of the importance of using modern financial planning and analysis (FP&A) systems integrated with ERP systems.
This really depends on the industry and the size of the organisation, but it is amazing how many still rely on Excel either exclusively or heavily. I looked at a BARC report on financial planning which said that around 76% of respondents were still using Excel in 2024. It has come down compared to previous reports, but this figure is still very high.
The concern is that using Excel exposes you to errors in financial reporting. Think about a simple planning process where you want to gather and analyse data from 100 users. You might prepare the master file, then split it into 100 individual files to share with each of the participants. They input their data, which they return to you, and you start collating the files. There is so much potential for human or machine error operating this way.
It’s hard to believe that finance teams would still do things this way today. Similarly, if you are compiling an executive report, it must include the actuals, as well as the plan and forecast data from the ERP system. It must also bring together month-to-date and year-to-date information for proper reporting. If you do this manually, it is a big challenge and prone to errors.
What’s stopping teams from changing their approach? There are issues around the fragmentation and silos of finance data, but it is a mindset and leadership issue as well. Organisations are used to doing something in a certain way with Excel and are reluctant to change. The danger is (as outlined above) manual inputting increases the likelihood of something going wrong; or your competitors could work out faster than you that they could save significant time and do something more meaningful with their financial data by using more modern reporting tools. Either way, continuing with manual processes is risky.
At Unit4 we have a strong integration between FP&A and ERP, which supports financial reporting in areas like Profit and Loss (P&L), balance sheet and cashflow, but we are also focused on industry specific reporting. We have industry specific reports dashboards for each of our core industries – professional services, public sector, nonprofit and higher education.
So, for example in professional services we can provide analysis of utilisation by a variety of dimensions including region, role, project or work order. This enables finance teams to look at visualisations of data in multiple dimensions allowing them to zoom in on operational details fed from the ERP system.
We also see a case for data and analytics for ultimate decision-making. You create a plan and budget in the FP&A system at the start of the year, then as the year unfolds you compare performance in actuals from the ERP system.
This allows you to review what was planned and current results to understand the latest forecast over a certain time period. This enables the finance team to start a discussion with senior leaders about what can still be achieved giving the organisation the agility to adjust its performance targets in real-time.
Using the analysis, you might be able to identity the reasons why you overspent in certain areas and therefore where costs need to be managed. Or if revenues are growing rapidly in one sector or market, you can understand whether that success can be replicated in another market.
To achieve this level of insight to support decision making, though, requires a reporting tool that can compare plan and budget data against actuals and forecast.
If you want to accurately steer the organisation, the finance team must be able to access actuals, budget and forecast data. Given that the actuals data comes from the ERP system, while the budget and forecast data is stored in the FP&A system, this is the biggest priority for integration.
In this scenario the FP&A system holds the whole planning process together, because it contains the most up-to-date information across all time horizons. That makes it the single source of truth for reporting, but this is only possible if the integration between the ERP and FP&A systems is enabling the effective exchange of data between them.
Using modern software and architectures, automation should enhance controls not create an imbalance with audit and regulatory compliance if it is done properly. For example, you can use FP&A to automate data load and check processes, as well as notifications and reporting on exceptions. You can do the same with your ERP system, creating rules to stipulate that you are only notified if something exceptional happens.
The world has become more complex and is moving fast, which makes the ability to explain the story behind financial reporting even more important. It is also important to have the critical thinking skills to interpret the analysis. I imagine it almost requiring a journalist’s determination to keep searching for the truth in the numbers.
These skills were needed a decade ago, but their importance has been amplified, alongside a need to understand the industry you operate in. For individual finance professionals, being curious and having strong communications skills are important to explain and justify what you find in the data.
If an organisation is still using Excel there’s a higher probability it is operating in silos with each business unit building reporting on financial performance in isolation from the rest of the business. That can lead to age-old problems around planning and forecasting.
However, if you are operating off a single cloud-based platform with the ERP and FP&A systems sharing data, the finance team will be able to break down barriers between silos of information and more importantly, create greater transparency with everyone working off the same assumptions around business performance.
The automation of reporting can be surprising, particularly if an organisation has come from a fragmented, siloed approach to financial reporting where everything is done manually; it can be a dramatic improvement to be able to see actuals versus budget and forecast in real-time.
The consolidation and integration of reporting can also significantly enhance transparency across your organisation, as it is possible to see how it is performing at a team, regional and country level. This also allows you to model what happens if you do not deliver planned results or if you overachieve, as this can lead to constructive strategy discussions that improve outcomes.
Start small and look at where the biggest pain is in your financial reporting processes. If you’re using manual processes, it is very likely you will be struggling in some areas. It is important narrow down where the pain is the biggest – that could be where there’s the most complexity in the financial process, or the most people involved and the most time spent on sending, collecting and consolidating spreadsheets. If you pick one item of forecasting, investment planning or cost centre planning where you are feeling the most pain, start there and take it step by step.
A bold prediction for a new a KPI will be speed of insight, i.e. how finance has supported or started the process of adjustment of business performance. Finance will be able to initiate this change because it has seen things first in the financial data. This is beyond the traditional tasks of building the budget on time and ensuring the organisation is compliant. The goal should be to identify trends and anomalies in the numbers that help better steer an organisation and turn this output into a KPI.
I would also add that I don’t think that machines are going to take over this strategy-focused side of financial reporting and planning any time soon. The start point for any strategy will always require humans. Ultimately, humans will decide what the organisation wants to achieve, which will then be operationalised in the plan and budget numbers. Software will support many of these steps, but humans will be heavily involved in steering the direction of the organisation.
