The pace of change in the macro business environment is unrelenting and accelerating as we move toward a global, digital economy. There’s a pressing need for finance teams to step up to this strategic role in today’s world. The International Federation of Accountants issued this wake-up call:
Accountants need to continue their influential role as advisors to senior management; but accountants need to focus more energy and expertise creating information supporting the decisions of managers and employees throughout the organization.
Yes, the essential nature of the tactical role will endure — ensuring the integrity of the business’s transactional reporting. However, the CFO and controller can deliver far more value when they can rise above debits and credits, achieve greater visibility into what the underlying numbers mean, uncover important insights, and answer important strategic questions. This underscores the need for faster, collaborative decision-making driven by data, not hunches.
Unfortunately, in many finance departments, outdated legacy accounting systems are hamstringing those efforts. Systems that were once state of the art simply can’t keep up, leading many companies, perhaps reluctantly, to consider replacing their financial applications. It’s now time to bite this bullet. In important ways, the risk doesn’t lie in moving to the cloud — it lies in not moving to the cloud.
Today’s cloud-based accounting and finance solutions are far more flexible than older generations of technology. They are easier to install, use, and upgrade. They create meaningful cost advantages by sidestepping capital investments, reducing IT expenses, and cutting preventive and remedial maintenance costs. And they offer features and functions that finally bring automation, productivity, and efficiency to finance.
True SaaS solutions
Instead of rigid back-office systems that are disconnected and isolated, today’s true Software-as-a-Service (SaaS) applications are built from the ground up in a fundamentally different way, providing features and functions that foster transparency and collaboration.
Easy, secure access
When your financials are in the cloud, you’re never out of touch or out of reach. With SaaS, “secure access” means you can keep tabs on your finances while your vendor protects your data with data security surpassing anything you could afford to implement and maintain. That’s because a SaaS vendor’s entire business rests on its reputation for security.
Cloud solutions restrict user access to defined users and roles. Non-accounting users can enter expenses or create purchase requisitions – but they can’t see financials or tamper with other functions.
SaaS vendors like Sage Intacct invest in multiple redundant data centers across different seismic zones and locations to ensure business continuity and maximum availability and uptime. What’s more, we invest in an array of servers that provide triple the capacity of current workloads, so that there’s always resources available if usage spikes unexpectedly. We’re talking thousands of CPUs and 100 TB or RAM to handle 100 million application requests each day and 1 billion web services API calls each month. That provides the underpinning for functional agility and scalability to support a growing business.
The real payoff is integrated data
As I mentioned, on-premise systems typically suffer from isolation. The accounting system is often trapped in its own silo of debits and credits, cut off from the metrics that show the true nature of corporate performance. However, a cloud-based financial system can tie into all of your other applications such as CRM, payroll, inventory control systems, and more. Thanks to robust APIs, you can connect not only the data, but also the functionality of those business systems.
This means not only greater data visibility but also expanded automation of processes. For instance, by integrating CRM to finance, orders can be entered once in the CRM system, pushed to finance, and then synced back after processing and payment, giving salespeople greater visibility into the total relationship with the customer.
By tapping operational data you can also build key performance indicators (KPIs) that paint a truer picture of the health of business — more clearly than basic financial statements. You’ll see KPIs such as customer acquisition cost, cost per operational hours, or profitability by terabyte of data. Subscription-based businesses can track key metrics such as net dollar retention rate. The complexity and application of these types of metrics is endless.
One customer's story
In diginomica’s Profitability matters in cloud ERP, Tandem HR shares the journey of how the business evolved based on new metrics. Tandem HR CFO Tanya Yakhnis has this advice for companies on how to get started:
What I'd recommend is just think of everything that could possibly affect your business. Everything that could drive it forward, or slow it down. Measure it for a period of time, and then decide where you're seeing differences or trends and when you're not. Sometimes you don't even know what those things are until you start measuring them.
From there, your team will spot an area where a new KPI will bear fruit. Yakhnis:
For us, it was the type of service we provide. So we sorted clients into these different service categories, and we measured how much time was spent on each. What the profitability was, what the net revenue versus the profitability was.
Be prepared from some surprising insights — and a few tough decisions.
That's when we were able to decide, well, some of these services are not really providing a lot of value to our clients. They're making us busier, taking away from our ability to provide excellent service to customers
Yakhnis warns that the biggest enemy is inaction:
Don't be afraid to start. Because the minute you start, the minute you are able to make more educated decisions around how to make your business more profitable
Stories like these illustrate how visibility provided by the cloud has allowed forward-thinking finance teams to move from the historical scorekeepers of the company, always looking backward, to becoming strategic drivers in the company. Transforming your finance team is not an overnight project, but the tools and customer use cases are there, as sign posts on your mission.