Building model through a Template vs Modano

Hi Anurag,

I agree that using templates is a better approach than building models from scratch, my comments regarding templates 'not working' primary relate to comparing the use of static Excel templates with dynamic, scalable, modular spreadsheet development.

A template model is by nature a static spreadsheet designed to achieve a specific purpose, which in some cases may suffice, but in many cases requires a lot of ongoing manual maintenance, which is both time consuming and risky relative to automation and modular development. Here's a few common examples:

1. Categories: Using templates requires that a template either includes many spare (i.e. redundant) categories, or that categories are manually added when required. Manually adding categories is a painful, high-risk procedure, such that even adding a single additional revenue category requires many manual edits and creates a risk of the financial statements being made erroneous if not done properly. This also creates key person risk in that categories cannot be added by any user of the model. Compare this with Modano, which allows categories to be added/deleted automatically by any model user, saving time while reducing risk and removing key person dependencies.
2. Time series extension/rolling: I'm yet to see a template which simply allows any model user to easily roll forward and/or extend time series sheets, meaning that as with categories, templates need to be built for a specific time series construct, include a large amount of redundancy, or manually edited by an experienced model developer. Compare this with Modano, which allows all time series sheets to be rolled forward and/or extended automatically by anyone.
3. Functionalities: Without manual editing/customization, templates are limited to the functionalities included within them. For example, a template will or will not include a DCF, and may or may not allow for driver-based revenue forecasts. If the template does not include a DCF or driver-based revenue forecasts, these can only be added by an advanced model developer, once again at a high time, cost and risk investment. Compare this with Modano, in which any part of the spreadsheet (i.e. the modules within it) can be replaced, and an infinite number of other modules can be inserted into the workbook in seconds. So, when using Modano, functionality is limited only by the modules available in compatible module libraries.

I could list many more examples, but in essence comparing static Excel templates with dynamic, scalable, modular financial models built using Modano demonstrates such a large difference in flexibility, efficiency and risk, that in my view templates really 'don't work' in comparison. Obviously I'm biased but I speak with our users every day and few of them will ever 'go back' to a static templated-based world.

I should caveat this by saying that there are many very specific pieces of analysis, such as a basic P&L forecast or generic EBITDA-based valuation, which can be undertaken using templates. VBA can also be used to make templates dynamic like Modano. But in every case templates are very limited in their scope and applicability relative to dynamic, scalable, modular financial models, and they require most changes to be made by experienced model developers who thereby become a key person risk to their organization.

Always happy to discuss these things, but that's my explanation for my Chandoo comments.

M.

hey anurag sir can you share with me the add-ins if possible in your user for sometime till i understand the things well through it?/ if you can..

Michael, I'm confused.

You say: "Modano...allows all time series sheets to be rolled forward and/or extended automatically by anyone."

But when I sent my Modano-built workbooks to those who do not have Modano, they cannot extend or reduce the number of time periods.  

Should they be able to do so?

Regards,

Win