There are some challenging issues that SMEs face, namely the execution of the quantitative part of financial planning. The quantitative method in financial planning involves the production of forecasted statements (for instance, cashflow, balance sheet and profit-loss statements) where a set of important financial metrics or indicators (for example, working capital, break-even points, etc) are derived from the forecasted statements.

Many financial planners for these SMEs find the quantitative method a time-consuming process, especially in an environment where the financial data is ever-changing. Most of the financial planners still prefer to use the spreadsheet application. However, this particular application is a short-term solution that only works well with small numbers of parameters and is not feasible for use when big numbers of parameters are involved.

There are also financial software applications that are more complex than simple spreadsheet applications. These software applications over-analyse transactions and provide too many details to users. The complexity of these software applications has inadvertently discouraged users from attempting to use them for their business financial planning.

Business simulation software and consulting company Cakerawala Resources Sdn Bhd believes its solution, the Financial Console (FC), addresses the issues above by offering users a simpler navigation system that allows them to control the details and workflow of the financial forecasted statements produced by the FC.

The FC was designed and developed by Cakerawala Resources to allow financial projections and metrics for a business to be produced quickly and accurately.

As a service provider and consultant partner to the Service Advisory Centre (SAC) in SME Bank, Cakerawala Resources has developed an SME version of the FC to cater to the bank’s current and potential customers.

The concept of WYWIWYG (What-You-Want-Is-What-You-Get) is applied to the FC to cater to a wider range of users while simultaneously producing more high-quality and powerful results that help SME owners to make decisions faster and more accurately.

Research and development. The FC was born out of the minds of Cakerawala Resources’ co-founders – Nazhar Musa and Azlan Abdul Aziz. The idea of the FC first came about from Nazhar, who later drafted out the Request for Proposal (RFP) and the Software Requirement Specification (SRS) for the FC. Azlan was in charge of the Java programming language for the FC.

According to Azlan, the actual methodology used in the initial stage of the development of the FC was never formally discussed.

“As the nature of the project was mainly explorative, it is not unusual to use the raw but short iterative request-code-build-test approach to produce results within specified time frames,” he said.

Features were first tested on paper to check their compatibility and usefulness with other existing features before the Java coding task took place. The time taken to complete each feature varied depending on the complexity of the feature. Once features were completed, they were tested for bugs to ensure that the FC will perform without a glitch.

“This simple method has proven its value and encouraged us to believe that simplicity is still the best,” Azlan remarked.

How it works. The FC enables users to generate forecasted financial statements (for instance, cashflow and balance sheet) in a single integrated environment. The FC also provides a library rich with important financial metrics or indicators (for example, working capital, interest rate risk or IRR, net present value or NPV, etc) that can be analysed and compared between the different sets of inputs supplied by the user.

“The FC shares a lot of its intuitive way of working with many other modern Windows-based applications. However, the most important part of its graphical user interface (GUI) is the project explorer window.

“The project explorer window displays a tree-like structure, with child nodes that reflect on aspects of the business that the user is planning to forecast. This particular structure logically represents the assumed parameters used in any financial planning exercise (for example, products, costs, equities and loans),” Azlan explained.

“For example, the ‘Products’ node will represent the forecast revenue model. To create a product, the user is required to fill in the values in specified fields (for instance, price-per-unit) contained in a special dialogue box. Once that is completed, a new child node will be created underneath the ‘Products’ node. The user may create as many child nodes as he/she wishes to mimic multiple products,” he continued.

There are also various fields (for example, the credit terms) available in the form to allow users the flexibility to fit the forecast sales or trend as desired.

“Once all the other assumed parameters or child nodes have been created, the user is required to build the project. At this point, the FC will compute and generate the forecasted statements in the background. Finally, the generated results can be viewed in another sub window by selecting the menu item provided,” he elaborated.

Future plans. “As clichéd as it may sound, we encourage creativity in our development team and we are often on the lookout for new ways to do things. We have to constantly ensure that our product’s quality is high. We have always taken pride in every version of the product that has been released. This is why we always welcome suggestions and feedback from our FC users through our online forum (www.cakerawalaresources.com/software.html) because they help our efforts to enhance and improve the FC application,” Azlan shared.

Cakerawala Resources development team is currently working hard to improve the GUI and add more features into the existing version of the FC. Some core features will be grouped into a single module to enable users to continue using the current features in future versions of the software without having to re-install the application.

“We have also developed a more powerful prototype version with advanced features such as the ability to run in the background mode, and the ability to cater to more complex requirements. This prototype will be released in the near future as the Enterprise version and will work in a Web 2.0 framework.”

Another important milestone in Cakerawala Resources’ development is the Islamic Financing features which the company hopes to release by the end of the third quarter of 2008.

“Despite all these developments, we take great care to not over-flood the FC application with unnecessary features. We always strive to balance simplicity and flexibility in the FC,” said Azlan.

Azlan said Cakerawala Resources envisions to be the leading provider in the business simulation tool and a commendable champion in the global SME sector.

“We are now an advisory provider in Malaysia and are focused in solving the financial planning problem that plagues most SME businesses. After going through a consolidation period where our consultants have ensured that the FC is working consistently while generating profit, we feel that it is time for us to share our product with the rest of the world.

“Through research, we find that majority of the Malaysian business communities still lack sophistication in making business assessments. Hence, our main objective is to arm these business communities (for instance, banks and venture capitalists) with an elegant tool that can be used in their strategic planning exercise and help them make better business decisions. The FC can also be used in government agencies and government-linked companies (GLCs) that provide grants to companies,” Azlan said.

Currently, the Malaysian financial service sector is spending at least 50 per cent out of RM2 billion on software alone on a yearly basis. Cakerawala Resources is targeting to capture at least 0.1 per cent of the capital spent annually and sees this as an opportunity for the company to grow and mature.

“Although the FC is a technical innovation, its value is unquestionable as proven in our track record by clinching the contract to be SME Bank SAC’s official consultant partner,” Azlan concluded.