What to Look for in Financial Data Analysis Tools
Updated: Aug 30, 2022
Data collection and analysis is a core function for accounting and consulting firms, and financial data analysis tools can greatly increase a firm’s margins and capacity. These tools, ranging from financial due diligence software to forensic accounting software tools, are a vital piece of any firm’s tech stack.
Technology is a necessary part of an accounting firm’s operations and expenses. According to the Rosenberg Survey, regardless of a firm’s size, the technology cost per person ranges from $5,700 to $5,800 per year. For firms with annual revenue over $20 million, IT costs come in at around 3.3% of the firm revenue. Looking at three of the Big 4, $9 billion is being invested into AI and data analysis tools. It’s an investment that shouldn’t be taken lightly at any firm.
The decision to purchase new data analysis tools may seem insignificant at first, but the ripple effects of the software you choose can greatly alter the way your firm operates. It's important to consider several things before investing in new or replacement software for your tech stack. To help you determine which tools will best fit your firm’s needs, let’s examine five important factors to evaluate in your decision:
1. Cost and Value
Most purchases, at some point, come down to cost, and software is no exception. Of course, making sure software costs are within the firm’s budget is a huge piece of that, but the value added can outweigh the need to tighten the belt in other areas. When considering a new piece of technology, be sure that you take into consideration both sides of that coin.
Understand what the actual cost to the firm will be for that new software purchase. Will there be extra setup fees? Will each person who uses the software increase your license cost? Are there extra charges for things like customer support after implementation? A good technology vendor will have very clear, transparent pricing for their solutions. Be wary of any that try to hide or mislead you with complicated fees and pricing structures.
Determining the value can be a less straightforward task, but a good rule of thumb is paying attention to the factors that impact your margins. A tool that enables you to increase the number of clients or projects your firm can take on with the same headcount will be a better value and might justify a higher price point than tools that are only a cost to the firm.
Another factor to consider in value is the longevity the tool will have. Said differently, is the tool filling a short-term need or is it part of a longer-term solution and strategy for your team? If it’s the latter, consider how the tool and its cost can scale as you expand the number of users or add features. Thinking and planning ahead with your team will help you find solutions that fit your immediate goals and set the firm up for success for years to come.
2. Specialization with Financial Data
Many data collection and analysis tools were developed to work with different types of data – both financial and non-financial. It’s a common strategy for software companies grow and attract investors. However, this also leads to tools that may have features and functionality that don’t apply to an accounting and consulting firm. With the increased functionality comes an increased price tag, even if the features don’t apply to your specific needs.
Alternatively, there are many benefits to finding a software vendor that specializes in the financial industry. The tools will be more tailored to the work your firm does at a much better price point – providing functionality that aligns to your needs. That said, these solutions may be harder to find since they lack the resources of a bigger “one-size-fits-all” tech company.
Be sure to check if the tailored solution is reputable – do they have a client list you respect or testimonials from people you know? When you find an industry-specific solution with a good reputation, you also usually find higher-quality customer support from real people who are knowledgeable about the work your team does day-to-day.
3. Ease and Speed of Implementation, Customization, and Integration
It’s an unfortunately common story: a firm purchases a new software solution, only to find themselves months, if not years, later waiting for the implementation to go live. Implementation can be a black hole of time, money, and resources, so it’s important that before committing to a tool, all the relevant teams at your firm are well-aware of what the expectations and needs will be.
Customizations can greatly impact the speed and cost of implementation of a software solution. Adding customizations makes the tool better fit your needs and increases the value it adds to your firm, but you’ll want to investigate how these customizations will realistically affect the project timing and price.
Not all data analysis tools will require this level of commitment, however. Many solutions can be implemented with just a few clicks and may only need an hour of your IT manager’s time for the entire firm to be up and running (even with customizations!). When exploring solutions, be sure to know where on the implementation spectrum the tool resides and make sure it matches the resources you have available for the project.
Another factor to consider with implementation is integration. Many software tools have added features and benefits that can work seamlessly with tools your firm may already be using. (Our tool, Strongbox, for example, integrates with accounting software like Quickbooks and Quickbooks Desktop.) Ask about the available integrations and any costs or limitations associated with them.
4. Adoptability by Your Team
“If you build it, they will come” or so the film line goes. If only it were that simple. On countless occasions, firm leaders purchase a new tool that seems to be the perfect fit. After hours of research, implementation, and training, the software is ready for action. But after all that work, the team doesn’t use the tool.
Avoid this outcome by including members of the team in the software evaluation process. Their early involvement can increase the overall enthusiasm for the project and will help you uncover needs you weren’t aware of. Ask the actual end users on your team to attend demos so they can ask practical questions that speak to the way they’ll ultimately end up using the tool. They’ll be able to quickly identify if a tool will actually save time and add value or just create extra steps that aren’t worth the effort. Having these team members involved in this process early on will help them feel ownership of the tool’s success with the firm.
5. Security and Privacy Standards
Nothing is more costly to an accounting and consulting firm’s reputation than a data breach. Since the data analysis tools you’ll be implementing will most likely be dealing with sensitive information, security and privacy measures should be at the top of every firm’s list. It’s crucial to understand how the software collects, secures, stores, and shares data. Look for security certifications like a SOC-2 and understand what the data retention policies are (and if they can be adjusted to meet the standards of your firm).
Financial Data Analysis Tools: Bottom Line
At the end of the day, the financial data collection and analysis tool that will benefit your firm the most is one that will have positive impact on your margins, be used by the team, and keeps your clients’ data secure. It should be easy to implement, customize, and integrate, and built specifically for accounting firm use cases.
By keeping these factors in mind, you’ll be able to evaluate the available options systematically. Dive deeper into your shortlist of tools with a demo and/or trial that will help you make the right choice for your firm. At Finagraph, we’ve built Strongbox to meet and exceed these expectations, and firms using Strongbox report reduced deal times and hours saved on menial, mundane data manipulation tasks. Contact us today to book a demo and see if our data gathering and analysis tool fits your firm’s particular needs.