Financial Modeling Archives

Rich Lopez, aka the “QuantrixAuthority”, Creates YouTube Channel for Quantrix Users

We are always amazed and gratified by our customers’ passion for Quantrix Modeler, but Rich Lopez has taken it to the next level. By day, he works in the finance department of Litehouse Foods, but by night he is YouTube star The Quantrix Authority. His series of three- to five-minute-long how-to videos helps others get the most out of using Quantrix’s multidimensional modeling software, from learning how to snap two matrices horizontally to a canvas, to the benefits of using Timeline for recursion in a model.

How did you get started with Quantrix?

I was introduced to Quantrix when I worked at clothing retailer Coldwater Creek. I used it to build an allocation tool to manage inventory at our 350+ stores. When I moved to Microsoft’s interactive entertainment division, a co-worker and I built a distribution model to ensure that we were getting the Xboxes and games shipped properly. It was during some of the really big

Microsoft launches, like Halo 4 and Windows 8, so we build scenarios for everything we had to manage during the holiday season. We were able to model it down to the daily levels. Quantrix saved my bacon at that job – I could not have done what we needed without it. Now I use Quantrix for financial modeling and capacity modeling for Litehouse.

What inspired you to start making video tutorials about Quantrix Modeler?

I leaned a lot about using Excel from a guy on YouTube called MrExcel. Bill Jelen has more than a thousand videos, and I used to watch him every day. I am a pretty advanced Excel user, but I love Quantrix more. After seeing what MrExcel has done, and seeing how his expertise helped me, I thought I could do something similar to help others with this fantastic software.

How do you choose the topics?

My first video was about the first feature I learned in Quantrix – “Using As.” My mentor taught me that when I started at Coldwater Creek, and it’s basic functionality in Quantrix. Some people at my company are struggling to use certain features of our Quantrix Models, so I’m starting to create videos on topics that will help them.

Who are you targeting?

I am pretty much reaching out to beginners and intermediate users. I am very open to questions – after my second video, I got an email from a Quantrix user in the Ukraine. Just this week someone asked me about using DataLink with .csv files, so I made that video. Whenever someone asks me a question, I try to answer it.

How many videos do you plan to make?

MrExcel has more than 1,000 videos and a forum that everyone knows. I have eight videos online now, and if I get to 100, I know I will have really accomplished something.

I’m following you on Twitter. How famous are you?

Ha ha! On a scale of one to ten, I am probably a “one” in real life. But in the Quantrix world, I hope to one day be about an eight! I am having fun with the videos, and with my Twitter account (@QuantrixAuthor). I have legitimate Quantrix users following me, and I feel like I am rubbing shoulders with some real legends. Some of these people are such power users, and they are telling me to keep making videos. Their feedback is so positive, and it’s great.

Final question – what was your “aha” moment using Quantrix?

It happened at Microsoft. I remember being called into a room by eight managers and having them tell me they needed some specific information, and they wanted it in three days. It could not be done in Excel, so we just pounded out a model in Quantrix. I stayed up until two in the morning a couple of nights, but I developed a model where if the managers wanted to add another distribution center, product line, or launch scenario they just could select a category and hit “enter”. That was it. And I realized then and there that Quantrix Modeler was the coolest tool that has ever been made. Quantrix Forever!

Quantrix Offers Collaborative Environment for Essla International

Essla International is a Quantrix partner, and recently started using the business modeling solution to help its clients with budgeting and financial forecasting. At the 2014 Seminar by the Sea, Ernesto Seijas took some time to share his experiences using Quantrix.

The company had several criteria in mind when it was looking for a new software solution, including connectivity to databases, the ability to manage a lot of data, and multidimensional views and found Quantrix to be the best solution.

In addition to meeting everything on the company’s wish list, Quantrix offered a more collaborative environment. “We can have 20, 30, 50 users inputting data – that’s a major difference,” says Seijas. Other benefits include the speed of calculation and reporting.

Seijas also likes Quantrix’s graphical canvas, as it enables him to display what-if scenarios in a dynamic presentation. This capability enhances the impact of Essla’s work, particularly when sharing with management or company boards.

“Quantrix has the best of many of the software [packages] in the market,” says Seijas. “You have the multidimensional approach. You have the data gathering and databases. And you have the reporting and the [fast] calculations.”

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Is that Season Pass Worth It? Quantrix for Personal Finance

One thing I love to do with my family is to go Alpine skiing. With Quantrix’s HQ in Maine, we can take advantage of some great ski areas. Each year we make a point to ski Sugarloaf, Mt. Abram, Black Mountain of Maine and Shawnee Peak. I even maintain a personal ski blog about our family skiing adventures. Our favorite mountain and where we have a season pass every year is Saddleback located in Rangeley, Maine.

Quantrix's Mike Salisbury finds some fresh stuff on a bluebird day. — Quantrix’s Mike Salisbury finds some fresh stuff on a bluebird day.

Each year about this time, ski areas offer “Early-Bird” pricing on next year’s season pass. The analysis for buying a season’s pass is very multi-dimensional. There is season pass price, purchase time deadlines, age level of passes, day ticket prices and the question of “How many ski-days does it take to pay off a season pass?” And of course I use Quantrix Modeler and the Quantrix Qloud to do this analysis.

With the first purchase deadline approaching, I put a model together quickly with one formula driving the entire calculation. The model is expandable so when new season pass deadline comes, I can easily expand the dimension, add the new pricing figures and the model will just… work. No formula editing or copying and pasting things around. There is also a nice canvas I built to show the model results that has links to the Saddleback website. I use a picture of my son skiing as the canvas image background.

While we market Quantrix as a tool for business, it certainly has many personal finance applications as well.

– Mike

Mike Salisbury is the Sr. Product Manager for Quantrix. In his free time in the winter you can find him somewhere on a ski slope.

The Value of Multidimensional Modeling with Quantrix – An Interview with Software Executive George Pappas

Many people purchase Quantrix because they are looking for a tool that can delve more deeply into their data than typical spreadsheet solutions. One of the important capabilities that Quantrix delivers is its ability to model complex information relationships in multiple dimensions. At Quantrix’s 2014 Seminar by the Sea, VC-affiliated Software Executive, George Pappas shared how he uses Quantrix to provide in-depth analytical insight to help high-growth companies succeed. Following is a discussion with him about his use of Quantrix.

Why do you use Quantrix?

I work with venture-capital-backed companies to help them get to the next stage of their evolution. As a member of The Edison Venture Partners Director’s Network, I have observed similar patterns of complexity challenges across their portfolio companies. The need to analyze activities and behaviors that drive financial results requires more modeling power than the spreadsheet metaphor. Quantrix is a superior tool for modeling that lets me do things that are too rudimentary in Excel.

You work with software companies that either use or want to migrate to a software-as-a-service model. What challenges does that bring?

Rather than getting licensing revenues up front, companies get a monthly subscription fee. It’s a very challenging business model if you have a complex product. The cost of building and implementing a SaaS customer is complex, so you have the same cost as for a customer purchasing a license, but much less up-front revenue and cash, so you have to be careful.

What are some of the other common concerns of start-up companies?

When you try to grow fast, the risk goes up. And the team has to grow from doing things themselves to managing things, and that brings a lot of complexity. There are so many challenges, really, and people tend to make emotional rather than objective decisions. They also tend to make their models match their expectations. But really, the levers that drive results are too complicated in most cases to model in a program like Excel. People end up simplifying their assumptions and inputs to their model to drive what they expect will be the financial results, such as, it will take us one month to get five new customers. This happens not just because the finance person might not understand the detailed sales process and key drivers, but also because they are not comfortable in using Excel to model the assumptions that drive the results.

So, tools can be a barrier to insight?

The problem is not modeling financials; it’s modeling the activities that drive the financial result in a way that is rich enough to test your assumptions. I spend a lot of time working with the CFOs at companies, and asking them about their financial and operating models. How much expense does it really take to implement a customer? How long does it take? What resources do we need, and how much do they cost? You need a modeling tool that can describe in a rich way the activities that you need to drive the outcomes that you want and validate the model by seeing the results in multiple perspectives simultaneously; that is where Quantrix’s multi-dimensionality is so valuable. Excel offers a flat, two-dimensional perspective with simplified assumptions. But you can get something much richer and more adaptable with Quantrix.

Give us an example.

Ok, one of my companies developed assumptions for new customer growth including the sales cycle, close rate, deployment time, and economics.

The next step was to dig into that, and find out what it meant. Take a look at the next figure – this is a flattened Excel view of the sales booking of these new customers, and the assumptions seem reasonable.

But then you look at the next figure. This is a multidimensional Quantrix model that shows the reality: if you sell this way, and your deployment time is as predicted, then you have to be prepared to handle rolling out 70 locations in one month at peak load and staffing.

That’s the difference between two-dimensional Excel models and multidimensional Quantrix models – you get information you need to do something meaningful, or make a different choice. These are things that most people understand intuitively, but seeing the cascading effects of modeling assumptions is invaluable.

What often happens with planning is that your assumptions seem right, but when you add them up together, you see that something is not working. By modeling more richly, you can see what will really happen after calculating in all of the dependencies. With Quantrix, you can see the problems clearly before they happen. That’s a big-time selling point over Excel.

How did your client react to that information?

We changed the professional services staffing, and we adjusted compensation sales goals. We did some rethinking on our sales strategy and plans. By using Quantrix, we were able to see the impact of certain assumptions, and get a real picture of our risk. It’s all about risk and execution, and being able to model more richly in Quantrix, we were able to adjust.

Where should new Quantrix users start when they begin to model?

Given the things that Quantrix does well – multidimensional analysis, and ripping things apart and calculating on baseline data – people should try to really understand what’s going on with their customers, activities and the revenue they generate. That’s something most companies have a poor understanding of. Every business cares about revenue, so this is a good place to start with Quantrix.

Connect with George at george@pappasonline.net.

Quantrix Survey Outlines Challenges Faced by Business and Finance Professionals

Quantrix periodically surveys customers to discover trends in business and finance, and the most recent edition of our Business Planning Survey uncovered some distinct challenges in the profession.

Challenges with tool sets: Many users who must interpret data from a variety of model sources, including spreadsheets, listed deciphering model formulas as a top challenge. They also noted how difficult it was to find an efficient way to get data into a model.

Challenges with information: Few models are created using information and data from one source, so it is no surprise that users cited the problems of getting timely and comprehensive data as a top information challenge.

Challenges with collaboration: Most models are developed to provide insight to numerous members of the team. Yet business and finance professionals cited access as a top challenge – they need tools that enable simultaneous access to multiple users. Version control was another top challenge, citing difficulties of reconciling models that are passed around for input.

These challenges are legitimate – it’s difficult to make business decisions when you can’t figure out how data within a model is calculated, or when you’re not sure if you have the right version of a model. But none are insurmountable. All of these challenges can be solved with modern toolsets. Quantrix Modeler, for example, uses natural language formulas that are visible simply by clicking within the model. It tracks versions easily, and also “rolls up” multiple models into a concise, easy-to-understand consolidated model. Additionally, you can easily share your models with others in your organization via the interactive web enabled Quantrix Qloud.

The real challenge isn’t the lack of availability of the right tool sets, it’s the fact that too many organizations are reluctant to break away from the tools that they have outgrown. Inertia can be a powerful force, but we’ve seen the results that multiple customers have achieved when they deploy Quantrix. A business professional will use Quantrix for a limited purpose or within a single division, and when he or she shares models with others in the company, they quickly understand the benefits of a better modeling solution. Many Quantrix sales start out small, but quickly become enterprise deployments

If you’re interested in solving your business challenges, check out Quantrix Modeler for a 30-day trial.

What challenges do you face in your day to day modeling needs? Use the comments field in this blog post to let us know.

Adding Value with Quantrix Modeler Skills

I’ve spoken with many finance executives over the years and a question often comes up – how do I motivate the spreadsheet gurus in our company to embrace a different tool for financial modeling?

This kind of question is not unique to Quantrix; it is often the case in any implementation of new software that people express some reluctance to taking the time to learn a new skill.

One of the reasons in our particular domain is that many individuals who have gained mastery in spreadsheets feel that part of the value they provide to their company is being the “go-to” person whenever anyone has a question about how to do something. They have spent many years learning how to make spreadsheets do things they weren’t necessarily designed to do.

However, in my experience, most of these spreadsheet gurus catch on to Quantrix Modeler in very short order. When they begin to use Quantrix, a light often goes off in their heads with the realization that they can do their tasks with much more speed, nimbleness and accuracy than they could have with the spreadsheet. In a real and tangible way, they are able to take their financial modeling skills to a new level and offer even greater value to their organization. That is a great motivating factor!

On an organizational level, this is a major benefit to finance executives who are asked to make their teams more productive with fewer resources and is one of the key reasons they come to Quantrix. On an individual level, proficiency in Quantrix Modeler is a desired skill in the marketplace. Quantrix has over 1000 customers in 50 countries and we are often asked to refer individuals to employers who are looking for talent. So, investing the time to develop Quantrix skills will pay dividends in one’s career.

For those who use LinkedIn, I highly recommend adding Quantrix Modeler to your skills in your profile. Simply log in to LinkedIn, go to Profile|Edit Profile, scroll down to Skills and Expertise, click Edit (blue pen icon), and type “Quantrix Modeler”. Then hit the Add button. You never know where your Quantrix Modeler skills will take you!

David Phillips

dphillips@quantrix.com

www.linkedin.com/in/davidphillips11/

“Best Practices” Approach to Financial Modeling

"Best Practices" Approach to Building Financial Models — “Best Practices” Approach to Building Financial Models

Are you looking for a structured approach that helps you to quickly build high integrity models? I would imagine so! Well, Quantrix has developed the Quantrix Modeling Methodology (QMM). QMM provides a systematic approach to creating models with Quantrix Modeler. Regardless of skill level or experience with Quantrix, business modelers should consider using a quality process as it will save time and effort when designing models and often increase the utility and impact of models. The process begins with a simple question and progresses to the new business understanding or insight. QMM also ensures on-going understanding of the current and forward-looking business environment through the data updating loop (DataLink).

QMM traces its origin to a proven standard process model. In 1996, an initial committee with representatives from DaimlerChrysler of Germany, SPSS Inc of the US, and NCR Systems Engineering of Denmark began to create a structure to facilitate the immature data mining market. The committee received funding from the European Commission to further their research and activities and sought input from data warehouse vendors and management consultancies. The committee created the Cross-Industry Standard Process (CRISP) which was intended to be an industry, tool and application-neutral structure to build low-defect data models. When CRISP 1.0 was released, there were nearly 300 organizations involved in the CRISP special interest group. Quantrix has employed this structure as a starting point for creating a modeling methodology that conforms with the Quantrix Modeler paradigm.

Click the following link to read more about the Quantrix Modeling Methodology.

I would like to hear about how you build your financial models. Please post your feedback in the Comments section below.

Happy Modeling!

Dave