Next Generation Strategic Finance Platforms: An Emerging Market

A new generation of strategic finance platforms is emerging, built by people who have seen the problems finance teams struggle with and who are aware of the limitations of previous software solutions. 

There are now about a dozen startups in this space. These platforms are designed to manage all of the finance functions of the business, creating revenue and cash forecasts. They use automation to produce continually adjusted rolling plans instead of static, annual ones. These help the board to focus on the future and to predict the result of different scenarios. They are used for corporate performance management, budgeting, forecasting, company planning, and so on. 

Compared to previous generations of software, such as the ERP suite, these next-generation finance platforms tend to be easier to install and use, typically yielding benefits in a few weeks rather than months. They are sector or industry-specific and are low/ no-code and they offer innovative insights drawn from the data. 

Of course, there are differences - for instance, Place Technology is unique in being built natively on Salesforce. That allows us to place our emphasis on democratizing the data, getting it out of the silo, and making appropriate information available to people throughout the business at the touch of a button. That helps to create transparency, engagement, and consistency throughout the business.

The View from Industry Analysts 

Angel Investor, former GM of Salesforce Service Cloud, and Blogger David Kellog made the growth of this space one of his predictions for this year: “Planning is literally being reborn before our eyes, in most cases using modern infrastructure, product-led growth strategies, stronger end-user focus and design-orientation, and often with a functional, vertical, or departmental twist. 2021 will be a great year for this space as these companies grow and put down roots.”

This is what he had to say about PlaceCPM: “Founded in 2018 in Austin, this company takes a focused approach, offering forecasting and planning for SaaS and professional services businesses, built on the Salesforce platform, and with pricing suggestive of an SMB/MM focus. The company has raised $4M in pre-seed and seed financing. The product gets 4.9 stars on G2 across 13 reviews.”

Another VC firm Two Sigma in an article “Opportunities for the Next Generation of Financial Software” defines the central characteristic of the next generation of financial forecasting software as supporting collaboration: “A finance team’s primary function – reporting and forecasting – requires data contributions from every part of the organization to understand plans and budget requests, and create underlying model assumptions. Today, this process is largely manual and happens over emails, ad hoc forms, spreadsheets, and unnecessary meetings. The next generation of financial forecasting software will host collaboration natively, just as Figma and Jira do for designers and engineers. 

“Finance teams are tired of being heavily reliant on other people...The next generation of financial products will not require consultants to configure and edit models like existing legacy products do. New tools will also need to make it simple for other teams (ie. sales, HR) to send data that is used to generate models to finance teams.”

McKinsey Report Sees Opportunity for CFOs to Take a Leading Role in Decision-Making

Looking forward to the requirements for CFOs and finance teams in 2030, a McKinsey report argues: “Achieving the next frontier in finance efficiency and effectiveness will likely require finance executives to shift their thinking from the priorities of the past.” They will need to move beyond transactional activities to provide clearer and richer insights faster. “Finance organizations that can simulate multiple scenarios are better equipped for black-swan events such as the COVID-19 pandemic.”

The report recommends investing in “an agile, tech-enabled data backbone..that is flexible enough to accommodate changing business needs while preserving a single source of truth.” The report sees that as essential to deliver the kind of finance practice that will be required in the future. “At the frontiers of effectiveness, finance leaders deliver far more than core financial skills: their work guides the functioning of the entire organization every day”

By harnessing automation tools and adopting a more strategic approach, the report concludes: “the next-generation finance function can build the insights, performance, and planning capabilities leaders will need to support dynamic decision-making through the next decade.”