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Finance Systems For The 21st Century

Finance Systems For The 21st Century

When you attend conferences about the development of the Finance Function you often see that half of the breakaway sessions are hosted by various companies selling finance systems whether it’s large scale ERP systems or small niche planning and analysis systems we’ll bet you that they will be there. For most people, this is just an annoying part of the agenda they must go through as they know that without these sessions the conference would have been a lot more expensive. However, there’s also another way to look at this. With the rapid development of the finance function moving away from heavy transactional processes to a low cost – highly efficient – decision supporting function your old finance systems just aren’t cutting it anymore. In fact, to do 21st Century Finance, you’ll probably need to change your systems every few years to stay up to date and on par with your competitors.

Are you crazy?!? No company can afford that!

That may be true if you look at your systems landscape in a traditional way where you need a big team to maintain the systems and a lot of IT resources in terms of both manpower and servers to host the systems. It doesn’t have to be like that, though. Enter the cloud and SaaS (or Software as a Service). Per a survey by Panorama Consulting adaptation of SaaS has greatly increased from 4% of companies have chosen a SaaS solution in 2014 to already 33% in 2015. That’s a massive increase and a telling sign that the concept has more than hit the tipping point. Anders has tried this himself when back in 2013 he implemented Concur for travel expense management to replace Excel and paper receipts. It was a massive success but when wanting more from the same vendor issues started to occur and the vendor was unable to deliver. Their limited capacity made them unable to deliver on their promises and we never managed to go live with a purchase order workflow tool. Now, this is becoming big business though and Concur as an example has since then been acquired by SAP and you see how big a company like has become. You still must buy licenses and there will be start-up costs but in the long run, it will give you more flexibility and should be cheaper than your fixed server setup and permanent IT team to keep the whole thing running.

Stay off the customization path

For many companies, a plain vanilla version of any system is rarely enough hence they start to customize the system to make it fit their business model. Then the problems start because despite what the consultants (yes, we know you used consultants!) who implemented the system told you it was never designed to handle the level of customization you want. The implementation takes longer; the users experience a slow and unreliable system and many functionalities never work the way they were intended to. That’s when you see that 60% of companies implementing an ERP system see less than 50% of the expected benefits realized per the same survey from Panorama Consulting. Instead, you need to challenge yourself and ask if it’s your business model that’s too complex and could do with some simplification. If you start your ERP or any system implementation with this mindset we expect you will see a significantly different result. It might even lead to higher customer satisfaction as your customers will experience that you become easier to do business with. While it’s probably next to impossible to do without any customization then you really need to see a system implementation from a new perspective and use the opportunity to simplify your business model.

Use Excel instead of customizing

OK!?! This sounds very counterintuitive. You ask me to upgrade my systems to do 21st Century Finance yet still ask me to use Excel as one of the main building blocks? I don’t get it! We understand where you’re coming from but the fact is that Excel can do most of the customization that you’re looking for, for you. Essentially, Excel is a sandbox where you can pull out all your data, from different systems even, and combine them in whichever way you want, do custom ad-hoc analysis, create graphics etc. Probably there are quite a few SaaS vendors who could create something similar for you within their own system but first, you should think about integration with other systems and second, we always get the feeling it just looks, feels and operates like a slimmed down version of Excel. I should say that programs like Qlikview and Tableau certainly have come a long way and per some, they have even surpassed Excel. Of course, if you need to show real-time data and you have predefined views for what you want to show it should certainly be a part of your system so you can get the latest numbers simply by pressing F5. It’s important to keep those two purposes apart, though. Everything that’s considered standard or at least deemed not to change within a longer time frame (such as one financial year) could be built into your system whereas expecting that all ad hoc analysis should come from it as well doesn’t make sense.

Summing up the recommendations for doing 21st Century Finance we believe you should consider the following.

  • Dump physical – move to the cloud – and partner with SaaS vendors
  • Ditch customization as systems were never designed to fit your business model
  • In fact, use a systems implementation to simplify or even redesign your business model
  • Hang on to Excel for custom ad-hoc analysis and easy system to system data integration

Now here was a talk about Finance systems without too many mentions of vendors and certainly no sales pitches. Do you agree with the recommendations and have you also been hurt by customization? Finally, how are you feeling about good old Excel?

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