The digital world we live in today brings new opportunities, along with new challenges for companies of all sizes. The Internet has leveled the playing field. Even small to midsize enterprises can establish a worldwide presence and compete on a global scale. But even as technological advances create unprecedented opportunities, they also increase the potential for business disruption, bringing new sources of competition as well as entirely new business models. Chief Financial Officers (CFOs) in particular are getting hit from many different angles. Along with the digital economy has come the subscription economy, requiring new invoicing, accounting and reporting processes, not to mention upcoming new regulatory requirements surrounding recurring revenue.
The tech-savvy CFO understands clearly the need for agility today and many turn to the cloud to fight fire with fire. If the Internet can provide entry into global opportunities, shouldn’t the cloud also be part of the solution? The answer is a resounding, “Yes!” Yet while any cloud based solution can provide access anytime from anywhere for better communication and collaboration, Software as a Service (SaaS) based deployments provide even more benefits. But not just any solution will provide the agility needed to survive and thrive today. You need the right solution as well.
Cloud and SaaS
Many use the terms “cloud” and “SaaS” interchangeably, but there are some important differences. Putting solutions in the cloud can provide easier and better access anytime, from anywhere. This supports better communication and collaboration. It also gives you the agility to move into new territories more easily. This is especially significant in our current global economy where new territories often mean new countries. Managing a centrally maintained cloud solution means no capital expenditure required; no need to build out a data center, or even put hardware or a huge information technology (IT) staff in country.
But, beyond the cloud, for years now Mint Jutras research has shown that solutions delivered as software as a service (SaaS) deliver more benefits, including reaching their first go-live milestone faster than in traditional, on-premise or hosted deployments. Ease of remote access and ease of bringing up new locations are both important factors in providing agility. With any growth comes a risk factor. The ability to get in and, if necessary, get out fast helps you fail (or succeed) faster in order to move on to the next opportunity.
A true SaaS solution will also offer other benefits, including better security and business continuity, as well as reduced cost and effort of upgrades, with less disruption. The SaaS solution provider relieves you of the burden of installing the upgrade, and if delivered in a smart way, allows you to decide when to turn on new features and functions. If the solution is a multi-tenant SaaS solution, there is also the potential for more innovation. With only a single line of code to maintain, the SaaS provider can devote all its development resources to providing new features and functions, rather than maintaining multiple versions of the software.
So… Will Just any SaaS Solution DO?
The answer to this question is, “No.” Putting an incomplete solution in the cloud doesn’t make it any more complete or you any more agile. The annual 2016 Mint Jutras Enterprise Solution Study found 49% of our survey respondents this year were not (yet) multi-national. We would expect that percentage to decline significantly over the next few years. This means CFOs will need to deal with the complexities and dynamics of multiple legal entities, complete with multiple reporting, compliance and tax requirements, financial consolidations and eliminations. You will be faced with fiscal and operational challenges and your accounting solution needs to be able handle it all.
If your current solution can’t handle a multi-national, multi-currency, multi-organizational structure, you might want to replace it before it becomes a necessity. Implementing a new solution across the board as you are dealing with the complexities of global expansion or merger and acquisition (M&A), only adds to the complexity.
And as you grow globally, either through organic growth or M&A, you most likely will face some organizational restructuring. If your organizational structure is embedded in your chart of accounts (as was typical in the past), making changes will be next to impossible. Next generation solutions remove this constraint, adding a higher degree of flexibility and agility.
Think too about current regulatory requirements and those anticipated in the future. Does your current solution handle the revenue recognition requirements that will come into play in 2018? While that may seem like a long way off, in reality, you need to be planning for those changes now. At that point public entities must report under the new guidance and old ways of forecasting revenue literally get tossed out the window. So any public entity better be ready to flip the switch, so to speak. But flipping the switch doesn’t only mean recognizing revenue in a new way. For any contract with outstanding, unfulfilled obligations, you also have to go back and restate the revenue for prior periods under the new rules. And for a period of time, you will need to do dual reporting: old and new. If you are managing billing, accounting and/or revenue forecasting with spreadsheets today, now is the time to be looking for a new solution.
While we have made some progress in arming CFOs with the right tools, unfortunately we see evidence that spreadsheets still figure heavily in their arsenals. When our annual Enterprise Solution Study survey asked what tools are used to monitor, plan and predict corporate performance, spreadsheets used in conjunction with other tools was sandwiched between financial reporting and operational reporting. More modern—and more appropriate analytical tools lagged far behind.
Fortunately very few rely solely on spreadsheets, but the dependence is still there. All too often CFOs and their staffs ignore the obvious drawbacks to relying so heavily on spreadsheets, most frightening of which is the high occurrence of errors. Mistakes are just so easy to make – the wrong placement of parentheses, clicking on a neighboring cell instead of the one we really need. We’ve all done it. While easy to correct, they are also difficult to spot.
This is not the kind of agility we all need today. Look instead for analytics embedded right in financial, planning and performance management applications.
Summary and Key Takeaways
Don’t let you current accounting solutions prevent you from participating in this whole new world of unprecedented opportunity. Cloud solutions can give you the added accessibility and visibility to your enterprise data much more readily. But a SaaS solution will bring you far more benefits ranging from lower costs, to added innovation, better scalability, with lower risk. But don’t be satisfied with just any SaaS solution. Does it support all your multi-everything needs? How does it handle new organizational structures? Has it anticipated regulatory compliance requirements well in advance? Does it give you the agility you need to meet your current and future needs, wherever your growth aspirations take you? If not, it may be time for a change. And remember…business agility starts in the cloud.