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Monday, April 22, 2019

Building your Finance Technology Roadmap


Insights for Business Leaders


The Changing Role of Finance Requires a Tech Stack Upgrade

You’re already aware of the changing demands on finance: Be less transactional and more business-focused. It’s a shift from closing the books to identifying financial risks. From focusing on just creating the reports to spending more time interpreting the results.

Research bears out the change, with the Armanino CFO Evolution® 2.0 study finding that finance leaders are looking to double their time spent on business partnering, strategy and navigating a changing business environment while cutting time spent on accounting nearly in half.1

Technology Remains a Barrier to Change

Few business leaders believe they have the technology needed for this shift. When asked about the current state of their finance landscape, nearly two-thirds of CFOs stated that their current systems were a barrier to transformation: inefficient, silo-constrained and unable to provide data for decision-making.2

This means that accounting and financial planning and analysis (FP&A) teams are often buried by the rekeying of data, manual reconciliations, uneven workloads, and copying and pasting data and formulas for reporting — a direct obstacle both to getting the time to deliver on more strategic value to the business, and to retraining and retaining top talent.

A Technology Plan Is Essential

The transformation of your finance organization will remain little more than a pipe dream if you don’t evolve your finance tech stack to cut manual accounting, reporting and planning processes. And any technology upgrade requires a plan, from the issues to address and the applications to address them, to where to start and where you’re headed. This is especially essential now that cloud technology has lowered the bar to deploying and maintaining applications, enabling finance teams to do it themselves. Without a plan, you risk creating chaos with lack of integration and more silos, building the next generation of your technology hairball.

Creating a coordinated plan around on-premise delivery across all of the apps needed by a business used to be almost impossible. Long deployments, painful upgrades, and virtually no connectivity between apps made piecemeal deployment de rigueur.

No longer. Thanks to the speed with which cloud apps are now deployed, the wide availability of packaged integration, and the ease of use that enables business owners to make changes, finance leaders are now equipped to architect and evolve to an integrated finance tech stack. This shift in turn provides the analytics and automation that are essential for modern finance organizations.


Common Challenges Facing Legacy Finance Tech Stacks

Today’s typical finance technology landscape has evolved organically, rather than by design. In many organizations, the rapid change in technology over the past few years has led to a diverse array of legacy apps, ad hoc cloud deployments, and a significant number of stubborn spreadsheet processes.

Transactional Transformation Varies

Whether you’re using older, on-premise accounting apps or newer cloud accounting apps like Sage Intacct or NetSuite, many manual integration points remain. Employee-facing financial processes such as purchasing or travel and expense management vary from spreadsheets to hard copies to HR-centric proprietary web apps and cloud apps like Concur.

Integration Is Limited

Apps usually don’t connect with each other, and rely on proprietary integrations or spreadsheet-based “solutions” that are either error-prone or have limited usefulness. Whether processing incoming sales orders from Salesforce, reconciling transactions between the accounting system and bank/credit card systems, or performing three-way matches across POs, invoices and receipts, systems integration is often lacking.

Stubborn Spreadsheet Processes Abound

Budgeting and planning often consists of sending spreadsheets to line-of-business managers, and frequently requires the FP&A team to perform most of the manual entry themselves. This usually means budgets and forecasts quickly become stale and outdated.

In many cases, monthly management and financial reports, or performing analysis, still requires repetitive data extracts from the accounting system into spreadsheets, adjusting formulas and formatting each time, and refreshing pivot tables.

And in accounting, managing the financial close and controls often still means performing thousands of reconciliations, manually entering journals, hunting for account balance variances in spreadsheets, and relying on close and controls checklists based on Excel files, Word documents, and gut instinct.


Five Benefits of Modernizing Your Finance Tech Stack

A well-planned technology stack that takes advantage of the current wave of cloud-delivered, finance-focused solutions can deliver significant near- and medium-term benefits:

  1. Efficiency and resource allocation – Taking an intentional approach based on each software component working together helps eliminate the need for manual, spreadsheet-driven workarounds that plague business processes and the efforts to get data from one system to another.
  2. Better, more contextual access to data and analytics – Most modern solutions come with some element of improved analytics and provide real-time visibility into financial results and other KPIs. These systems focus on the information relevant to the teams using the platform and sometimes eliminate the need for additional business intelligence tools.
  3. Scaling for growth – Adding business units can break manual, spreadsheet-based processes. Deploying a modern finance tech stack can provide the infrastructure needed to handle planned future growth.
  4. More standardization,governance and control – By using workflows designed within modern software platforms, accounting teams can increase controls through segregation of duties, stronger audit trails, repositories for documentation, and task lists to ensure vital processes don’t fall through the cracks.
  5. Reduced risk and dependency &ndash With aging systems, spreadsheet-centric planning and close processes, or undocumented integration steps, it’s often risky when individual employees leave — because they take their knowledge with them. By formalizing integrations and reducing spreadsheet use, there’s less dependency on tribal knowledge.

The Modern Finance Tech Stack

The technology stack that each department relies on to run their operations is not only changing, but also coalescing. You’ve no doubt seen it happen in other departments in your company. In sales and marketing, for example, the new best-of-breed stack is often a blend of a CRM solution like Salesforce or Microsoft Dynamics 365 for Customer Engagement, demand generation apps like Eloqua or Marketo, and LinkedIn. In service, tools like Zendesk are often firmly in the mix.

The cloud not only empowers departments to deploy apps quickly, it also enables them to implement the solutions they want, trust, and can confidently configure to meet their needs. Business leaders can now choose best-of-breed apps ― those that are most popular and mature ― rather than being forced to use one-size-fits- all applications. Packaged integrations between best- of-breed apps provide solutions for standard business processes, with cloud apps playing well with existing on-premise and legacy investments.

These are the four critical ingredients for a robust departmental tech stack:

  1. Best-of-breed
    A good tech stack means you haven’t compromised on any software component. Each application within the stack is best-of-breed ― recognized by analysts and industry peers.
  2. Scalable
    It’s not uncommon to outgrow solutions, but each app should sustainably support growth in your head count, transactional volumes and complexity for the foreseeable future.
  3. Agile
    Each new application should be designed for the cloud and must be flexible enough for business users to implement, adjust and maintain without requiring expensive technology consultants.
  4. Connected
    No app is an island. To handle all the needs of your department, you’ll need multiple solutions. Each must provide packaged integrations to deliver connected business processes to other cloud apps or existing on-premise investments without requiring code.

While there is no one-size-fits-all tech stack, the key is to make sure that each of your technology investments is best- of-breed, and that your vendors are continually innovating and improving integration with one another.


Key Steps to Building Your Technology Plan

Assemble a Team to Lead

Laissez-faire is never a strategy. Whether designing blueprints for a house or establishing a vision for finance technology, it’s always better to have a defined team to build a strategy and execute on it.

The team should be responsible for establishing a vision, determining business requirements, penciling in best-of-breed providers, and evaluating essential integrations between apps.

Create an Integrated Technology Roadmap

It’s impossible to build a coordinated technology plan without a roadmap. To create your roadmap, you need to document all of your business requirements for each area, measure your potential solutions against those requirements, and determine which are better to handle your needs. Once you’ve arrived at your short list of solutions for each area, map together business processes between them to understand what data is going to be flowing from which system to which.

Want to break down silos and avoid fortifying internal fiefdoms? Keep in mind any technology decisions that departments like sales and services are making that may intersect with finance business processes. Build a partnership and plan together.

You also need to consider the sequence in which you’ll implement your solutions. Your roadmap should ensure that each step of the plan builds on the one before, and that prior investments aren’t wasted with subsequent upgrades.

Sequence Change for Less Risk and More Resources

Companies’ requirements differ, so the optimal sequence of your solutions will depend on your specific situation. While some organizations decide to start with the financial close in order to free up resources, for example, others may need to fix their ERP foundation before moving on to other components of the stack. The right implementation partner can help you assess your situation and map your sequence based on the impact in your environment, the impact to your team, etc.

In general, the financial close and FP&A processes both can be addressed regardless of the ERP, and they are mutually complementary. They are the least disruptive upgrades, typically replacing spreadsheets, and both deliver relatively fast time to value. Usually, there’s no need to rip and replace old technology. Modern best-of- breed apps provide connectors that integrate with legacy and newer ERPs, AP apps and CRMs.

Plan for the Unexpected

As you evolve your technology stack, there will likely be unforeseen hiccups due to data migration, unanticipated requirements or an unexpected integration gap. Choosing best-of-breed providers helps reduce the risk because they typically have well-rounded capabilities and have seen most types of integration.


Summary

Today’s finance teams must be more efficient and agile, and become strategic leaders for their businesses. This requires the right technology and a coordinated technology plan.

Modern cloud applications can address your needs for virtually every accounting and finance business process, including core ERP, FP&A, and account reconciliations and close management. By implementing best-of-breed applications, and by integrating and sequencing the upgrades to ensure all the parts fit together and add value to each other, you can build a modern technology stack that provides the analytics and automation that are essential for the success of your finance organization.




CFO Evolution 2.0: Innovation and Influence Fuel the Transformational CFO, 2018, Armanino
The Road to Finance Transformation Survey of 157 Finance Executives, August 2017, CFO Research

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