Review of Alight Planning - a Remarkable Planning Software

by Anthony Nassar

Last month I attended a 2-day training bootcamp for a new planning software called Alight Planning. This product offers a methodology, features and analytics that set it apart from traditional spreadsheet-based planning. Most of all, its architecture and tools allow a user to develop and compare multiple scenarios, monitor key measures, and analyze which variables most significantly impact the results of a plan. In this article, I’ll briefly discuss what makes Alight a compelling financial planning solution for entrepreneurs and investors alike.

1. Building Financial Models Using Stages

Alight is fundamentally based on this powerful methodology, which enables you to think about each stage of your company and build a model for a typical period in that stage. For a start-up, these stages could be product development, product launch, breakeven, growth and maturity.

This approach is important because it drives you to focus on the input assumptions and metrics of each stage, and what you’d want them to look like in abstraction of other stages. In other words, the results of each stage are intentionally generated, rather than influenced by a “fill-right” operation in a spreadsheet. For each stage that you define and build, Alight will generate a standalone snapshot that includes all financial and non-financial data, as well as a P&L and Balance Sheet.

You can view an illustration of revenues and marketing expenses displayed by stage using an Alight demo of a software company.

2. Time Periods and Scenarios

You’re probably wondering at this point: so what do I do with all these disconnected stages? Obviously the purpose is to create a continuous model over the planning horizon. Alight allows you to assign each time period to a stage with literally a click of a mouse. For instance, you can assign periods 1 to 12 to the development stage, periods 13 to 22 to the launch stage, etc., and smooth the data points between time periods in many different ways using spread functions. You have now created a plan Scenario. A “slow start” scenario may consist in delaying product launch by, say, 5 months, while a “fast start” scenario could result from shortening product development by, say, 2 months. You can produce as many as 100 scenarios and use Alight to analyze the impact of each scenario on your financial statements, cash flow and funding requirements.

This functionality provides you with a definite advantage in gaining an in-depth understanding of your model and the impact of changes to your assumptions on the plan. And it can be achieved with great speed and ease for multiple scenarios.

3. Key Measures

Alight lets you see, in one place, important metrics called key measures from the P&L (such as sales, gross margin, EBITDA, etc…), Balance Sheet (cash, accounts receivable, working capital, ratios, etc…), and other financial and non-financial variables such as customer acquisition cost, revenue per employee, consulting hours, conversion rates, etc. Key measures can be viewed in stages or time periods. And you can add or remove variables from the report as needed. You also have the ability to modify variables that are input assumptions to the model on the fly directly in the report. It’s like having an integrated dashboard for your financial plan that you can operate and customize.

Key Measures illustration

4. Sensitivity Analysis

You can pick any line item in the P&L or Balance Sheet, and Alight will instantaneously show you a list of all the variables that have the greatest dollar impact on this line item for a percent change and a dollar threshold that you set. For example, you’ll see the variables that impact Profit After Tax in month 25 by $1,000 or more, with Unit Software Licenses having the greatest impact of $28,862 for a 10% increase in units. The ability to perform an in-depth analysis of the sensitivity of the model so quickly is a very powerful feature of the software.

The analysis module also includes a goal seek function which computes the value of an impact variable achieving a certain goal, such as breakeven.

Impact Analysis illustration

5. Objects Defined with Units, Rates and Amounts

An important characteristic of the Alight framework is that each variable is defined using units, rates and amounts (URA). For example, Consulting Revenues (amount) = Consulting Hours (unit) x Consulting Hourly Rate (rate). And units or rates for one variable can be chain-linked by formulas to other variables. While this architecture requires some discipline, it allows for more robust modeling through systematic linking of variables.

As variables are defined, they automatically become standalone objects that are referred to throughout the model by their names instead of cell formulas. Complex formula structures in Alight, such as cross time period relationships and accumulations, are especially useful when modeling deferred revenues, bonuses or sales commission accruals.

Illustration of line item structure with URA

6. Built-in Financial Statements Structures

As you start entering revenue and expense data in a blank file, the balance sheet is updated automatically because the financial statements structures are built-in the software. You can certainly develop complex relationships for balance sheet items (prepaid expenses, accrued expenses, deferred revenues, etc….), but the integrity of the structure between the P&L and the Balance Sheet is already there. If you’ve ever had to wrestle with broken structures in the financial statements, I’m sure you’ll appreciate the usefulness of this feature.

7. Integration of Actuals

Whether you’re developing a long range plan, an operating plan or a rolling forecast, the integration of plan data with actuals is critical. Alight is currently in Beta for version 3.0, which provides integration of actuals and accounting architectures from general ledger systems. In addition, units, rates and amounts are being extended to actual data, providing the means to perform insightful analyses of operating results.

8. Profiles

Starting a plan in a blank file is intimidating, regardless of the tool used. Alight offers profiles for a number of industries (software, life sciences, retail, consulting, advertising, financial, legal, etc.) to help you get started with the proper format, which you can then adjust or fine-tune to suit your needs.

Illustration of profiles

9. Training & Help

The product is delivered with 2 hours of professionally produced video training. What I like most about Alight’s help module is its contextual feature which allows you, by clicking on a question mark or a film icon, to launch a help screen or a video sequence covering the functions you’re working on.

10. Reader

A free reader version will be available soon to enable sharing of a file with individuals who do not have a paid license of the software. The reader is fully functional except that changes made to a file cannot be saved. The reader facilitates collaboration between various parties involved in developing, analyzing and evaluating a plan.

In summary, Alight offers a compelling approach to planning, with a solid framework and powerful analysis tools. Alight comes in 3 flavors including single and multi-user, and is offered as a perpetual license or on a subscription basis. If you’re interested in a demonstration, please let me know and I’ll be happy to arrange one for you. For more details about the product, please visit www.alightplanning.com.

This article was first published in the January 2006 issue of our e-zine, Propel Your Venture.

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