Real World Modeling drives SurvivalWare.NET development

It’s hard to take the time to communicate when in the midst of a huge development effort. My New Year’s resolution is to give updates once a week, so herewith the first:
SurvivalWare.Net* is well under way. In addition to the standard Simple and Fort Knox models, we’ve actually got one customer model running under the new version. I find I hate going back to SurvivalWare 2015. If you’ve been to our website recently (apologies in advance if you have) you’ll notice that you can’t actually buy SurvivalWare off the website. We’re in the enviable position of not taking on new customers at the moment. Our focus is on this major technology conversion and product upgrade. We’re still actively supporting current customers and will provide additional software licenses to them as they need them. But we don’t anticipate taking on new customers until the second quarter of 2016 at the earliest.
There is still a lot to do. Our internal release date is April 2016 – but that could change based on the demands of a certain special client.  Next week, I’ll go into more detail about what has been done, and what needs to be done to SurvivalWare.Net.
In the meantime, I have agreed to serve as interim Finance Director for this special client: a 40 person software company with a substantial customer base, and about to experience a spurt of growth. I’m just about done with their budget for 2016 and a highly customized projection model. Their business is complicated – a mixture of Cloud, Premise, and Lease customers – each with their own cash flow and profit profiles. The business is changing quickly, so we have decided to go with a 90 day rolling budget, and update every quarter.
For a software company, the biggest expense and strategic decisions really concern people. I decided early on to come up with an efficient way to forecast salary expense, and to react quickly to changing plans for new hires, terminations, raises, and departmental assignments.
Originally I decided to use the pay-master table exported from our payroll service provider to get the master list of employees, hire date (to determine date of next raise), annual salary, and departmental assignment. I wanted to use it “as is” with no human intervention to keep things efficient, and reduce the opportunity for error. But after the initial round of projections, and a poor attempt to cover new hires as lines in the model, I decided to use the pay-master file as the starting point and modify it slightly.  I added new hires to the end, and expanded the number of fields to allow multiple raise dates, and tolerate Dollar Amounts, not just percentage increases. I also added a column for a Termination date – for expected terminations, and as a way to re-assign an employee from one department to another as of a certain date.
I also decided to put in a column for FTE count (set to 1.0 for a full-timer, or some fraction of 1 for a part-timer) instead of importing departmental FTEs from a separately maintained spreadsheet.  We have at least one situation where an employee is split between two departments, so for expedience I just copied the employee info to a second line, and cut the salary in half, and set the FTE count to 0.5 for each department.
Going forward, this file will need to be manually maintained, but it shouldn’t be a huge burden – just a handful of changes each month. Also, it is good to force someone (like me) to scrutinize the list each month to make sure the forecast is accurate, and to keep an eye out for salary inequities.
There is an applet that reads this master file, and projects out the salary expense and FTEs by department for the rest of the current year, and for the 12 months of the following year. The applet takes about 30 seconds to run. At this point, 50% to 60% of the expense budget has been done.
It should all be downhill from here, but the devil is in the details. Coming up with a credible revenue forecast is really difficult. It’s going to take a lot of analysis to separate the “predictable” (e.g. monthly subscriptions, maintenance renewals) from the volatile (Premise Licenses, Annual Cloud subscriptions).  There is the further complication of needing to defer revenue for Annual Maintenance Contracts, and Annual Cloud billings – and recognize the revenue over the life of the contract (usually one year).
The last 40% to 50% of expenses take some thought – especially for marketing, and technology upgrades. These are the two most discretionary spending categories.
As you have probably guessed, this is an “opportunity of a lifetime” for a financial modeling software developer like myself – to be thrust into the position of power user of my own software in a real world setting. I get to feel the pressures firsthand, experience the challenge of continuing to provide accurate information while building out a series of analysis and planning models, that seem to constantly change. I shudder at the thought of having to do it in spreadsheets. I just don’t have that kind of patience. It wouldn’t be fun. I’d lose sleep worrying about the accuracy of the data I was providing.
Not that there haven’t been hiccups with SurvivalWare. It’s just that as I experience a pain point – or some clumsiness, or drudgery, or a propensity to make mistakes – it makes we think “what can I do to improve this?” or “what would make it less boring and more fun?”
What is shaping up is not just SurvivalWare.NET, converted to a new technology platform. But rather a quantum leap in usefulness and usability – and “fun.” The CEO of my special client has said more than once – “How can anyone get by without this?!” This while we look at projections for 2016 and dug into the assumptions and trends. He is data-driven and loves to see things graphically (my bias as well). We have lively “GoToMeetings” that often raise more questions, and iteratively improve the model and the forecast. It is the process of model customization and continuous improvement that I am trying to get right with SurvivalWare.Net. I feel like I should be paying this client for the privilege, not the other way around.


 

* SurvivalWare.NET – a conversion of SurvivalWare from Visual Basic 6.0 to the Microsoft .NET platform and VB.Net. The project started in earnest in June, 2015. Models and data files from older versions of SurvivalWare can be used without modification under the new version.  We’re hoping to release SurvivalWare.Net in Q2, 2016.

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Introducing SurvivalWare 2015

The latest and greatest version of SurvivalWare has just been released!

Thanks to all who attended the webinar, we hope you enjoyed it. For those who couldn’t make it, we put it online for you to watch and download. As always, contact us with any questions! 703-780-2044

http://www.survivalware.com/webinars.html

Excel Sucks at Financial Modeling

I don’t see how you all put up with it.  I’d pull my hair out.  I’m talking about using Excel (or any spreadsheet tool) for financial modeling.  To build and maintain financial models, that is.  It’s fine if someone else built it for you , and all you have to do is put in a few numbers in well-marked locations, and view the results.  And as long as you don’t have to trace back a formula so see how something was calculated.  As long as there is no need to make sure the same calculation is used for each column in the model. Yikes, have you seen those formulas?!  If anything is referenced outside your viewing area you are screwed.

Now don’t get me wrong.  I love Excel.  I use it every day.  I import and store lists.  I sort things.  I maintain small databases.  I keep a log of how many miles I ride my bike each day.  I have another spreadsheet I use to keep track of my daily calorie consumption, exercise, and weight.  It helped me lose 40 pounds, and keep it off still 5 years later.  Like I said, I LOVE EXCEL!  Just not as a financial modeling tool.

I’ve been spoiled.  I’ve used an English like financial modeling language of one sort or another since 1977.  (I’ve created two of them myself).  My tool of choice nowadays is ENCORE! for the financial modeling language, and SurvivalWare for the infrastructure – i.e. getting data in, analyzing, reporting, graphing, exporting data to the dashboard tool of your choice for mobile and web access.  Fortunately, you get these as a bundle when you buy SurvivalWare Pro.  But I’d advise you to wait until the release of SurvivalWare Pro 2014.  It is available in Beta test form now, but the formal release is scheduled for July 15, 2014 to accommodate a major refresh of documentation and training videos.  There is a lot of new stuff including a Model Generator to make you incredibly efficient at developing models, without sacrificing the ability to fine tune calculations and report formats.  Transparency is another big thing. Click on the new formula bar to see the English-like logic for any row in the grid.  I could go on and on.

But back to my rant: Excel sucks as a financial modeling tool.  There is just no other way to say it.  I’m sitting here having to update the Simple Model Excel template file.  I made some changes to the simple model based on suggestions from Philip Campbell after he used the model in a real live client engagement.  The new “Disposable Spreadsheet” feature in SurvivalWare depends on a working Excel model that mimics the calculations of the Simple model.  So I’ve been updating the Excel spreadsheet this morning, trying to figure out the cell references, and looking for any excuse to do something else.  SurvivalWare Simple 2014 isn’t scheduled to be released until May 15th – so I have lots of leeway to procrastinate – over 2 weeks to update the formulas in a measly 150 row model.  

Back to the grind: let’s see, here’s my formula for Annualized Sales down at row 49: =(B5+C5+D5)*4.  Let me scroll up to the top to see what Row 5 is.  And what columns B,C, and D represent.  Now is this formula for October the same? =(I5+J5+K5)*4.   Is that an I or a 1?  So far so good.  And here is Cash Flow From Operations for October: =K111+K112+K113+K119+K126.   It doesn’t exactly roll off the tongue.  You get my drift.  This is the simple stuff.  Imagine a complicated model.

I picked a hell of a time to stop drinking!

 

 

Understanding Cash Flow in less than 10 Minutes – Webinar on June 11, 2013

Philip Campbell

Philip Campbell – author, consultant, and all around good guy – has spent the last decade teaching business owners all about cash flow.

He has put together a free webinar to help business owners understand cash flow.  In this webinar, he promises to show you how to understand your cash flow in 10 minutes or less AND how to explain what happened to the cash last month to your spouse or business partner in a 2 minute conversation. He really has come up with a novel approach to figuring out what’s going on with the cash in a business.

When he told me what he was doing – and that the webinar was FREE –  I asked (begged!) him to let me invite my SurvivalWare customers.

He graciously agreed, and you all are invited to join him on June 11, 2013 at 1 p.m. EDT (Noon CDT, 10 a.m. Pacific Time) for an entertaining and insightful webinar.

To register:

https://www1.gotomeeting.com/register/468785608

Philip’s blog:

http://campbellphilip.typepad.com/blog/2013/05/free-webinar-understanding-your-cash-flow-in-less-than-10-minutes.html

 

 

SurvivalWare in 60 seconds

SurvivalWare in 60 seconds

A new minute long video describing the product line and philosophy of SurvivalWare