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by stevesimmons
2965 days ago
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What is the current state of the art in financial modelling in corporate finance departments? I used to be a management consultant. We often built financial models of company operations or parts of their value chain, and then looked at the change from process improvement, restructuring or bolting on new business lines. Everything was done in Excel. For the annual strategic planning and budgeting cycle, large companies used expensive proprietary systems to aggregate divisional financial plans. I now work for a big bank, building out a Jupyter-based data science and machine learning platform. We have hooks in to SDLC with code reviews, commit history, and all the good stuff that software engineers nowadays take for granted. So what if Finance departments dropped Excel and instead used our dev tools and methodologies? I'm genuinely curious if any companies are doing this, or if any startups are building such solutions. |
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Many spreadsheets are used as disposable report tools to support management level business decision making. While there are exceptions, in general perhaps they are more like one off report-generation shell scripts than unit operations in a larger business process. This distinction is significant, because rigor adds more value on automating processes than one-off reports, owing to increased lifecycle complexity.
At the management level, time is gold. These are people who have enough money, lots of responsibilities, and no time. They already have a tool that works. You would be essentially asking them to waste their most valuable resource investing in a new tool that may disappear tomorrow without a strong/clear ROI.
I don't doubt you could get some customers for such a product, but I'm skeptical it's going to change the paradigm. Platform-for-everything businesses (Google, Oracle, Microsoft, etc.) tend to have a large minimum snowball size.
I see things developing differently: an open source financial gateway will become the standard accounting interface to many businesses as trade moves toward greater transparency, predictability, speed and automation, and we see features like arbitrary asset settlement, multi-hop transactions, banking automation and multicurrency accounting becoming standard. Accounting departments will begin to thin out as forms on such a system become input to generate figures and reports previously generated manually. It will probably be hosted. We see a little of this now with cloud accounting systems, but I'd wager it will go a lot further with Germany's Industry 4.0 vision and a similar result in China. Supply chains will be the driver, there's just so much fat to trim.