Historically the Office of Finance has sought all-in-one solutions that met the majority of their needs – GL, ERP, financial planning & analysis, budgeting, payroll management, accounting and more. That attitude is evolving – the Office of Finance now prefers selecting best-of-breed solutions and incorporating them into a single CFO tech stack. This tech stack includes software for:
- Spend management
- AP/AR reconciliation
- Bookkeeping/Financial close
Why Move from All-in-One Systems?
There are a number of reasons why the Office of Finance is moving away from all-in-one, behemoth solutions. First, with a single solution, there is bound to be aspects of the system that perform better than others. Perhaps the software is a great accounting and spend management solution, but is weaker on FP&A. Maybe the financial close “solution” is bolted on and not really integrated with the full solution. It’s possible the “all-in-one” software is the amalgamation of a series of acquisitions by the primary technology company. The “bundled” product might not receive the right amount of attention it needs to be great.
On the other hand, standalone systems can be much better. The software vendor is focused on a single product. The majority of their time and R&D dollars go into making the product as good as possible. It is updated often with the latest and greatest functionality. It is often easier to buy and easier to implement and maintain. When the software vendor has one purpose-built product, it is easier for the vendor to provide its clients with great support. The support team only needs to learn one product – and can dedicate the time to understanding the ins and outs of the product. Lastly, in today’s environment, almost all standalone systems include integration capabilities to “talk” to other software within the CFO tech stack.
Selecting the Right Accounting Software
Once you’ve decided to go for a CFO tech stack versus an all-in-one solution, you need to determine how to choose the right standalone products and build out your tech stack. Let’s take a look at how to approach the accounting function of the stack.
Before selecting accounting software, your accounting team should document and create flow charts of your existing processes. This gives the accounting team a clear picture of what’s currently going on (you may think they do, but in reality, sometimes they don’t). You can use that documentation to evaluate the various accounting software applications on the market. Turn it into a checklist to ensure the software you are evaluating can handle all your departments’ specific processes and scenarios.
You can also provide this information to the software vendors you are considering. They can incorporate these details into a demo specific to your company’s needs. You will learn more from a specific demo than from a standard canned demo that might not focus on the areas of most importance to you. Documenting your processes will also give you a jump-start on your implementation – you’ll need to create it anyway once the implementation team gets started. This approach also enables you to identify which people and systems are impacted by your accounting processes.
Think about your company’s growth plans while you are assessing accounting software vendors. You want to make certain you select a vendor that can handle your company’s future growth.
It can be exciting to select and work with the latest, hottest startup. Especially now in fintech. You need to balance FOMO with your tolerance for risk. We recommend selecting software that is a fully mature product, used by many customers. This approach ensures most of the software bugs and issues have been ironed out.
This might sound contrary, but while you want a mature product, you also want to select a company that is dedicated to innovating in their area of the CFO tech stack. You want to be assured that you have access to new and evolving functionality.
Lastly, the all-in-one systems of the past often required heavy IT resources. New SaaS-based solutions removes most of the IT overhead of previous systems. That said, as you plan your build out, you want to identify “power users” in each function to handle the majority of administrative tasks associated with the particular software solution.
It’s a new world in the Office of Finance. Now is the time to bring your finance systems into that new world.