Monday, October 14, 2013

Finance Software Integration


When I describe Enterprise Resource Planning (ERP) software with people I often make the analogy that ERP is to the enterprise what office suites are to the desktop.  ERP integrates an organization based on department or functional roles so that one hand knows what the other is doing.  Similar to how a workstation database, spreadsheet, word processor and presentation programs can share information instead of having to rekey it in each application.  It saves time, increases accuracy and improves efficiency.

 


Within an ERP system the financial application particularly General Ledger tends to be the mortar between the bricks, where the bricks are the other applications.  Sometimes the ERP system consists only of financial applications, however, in today’s highly competitive environment the more functional roles that are included the greater the efficiency.  Having the other applications tie into the financial module really enables meaningful dashboards.  Finances give an unbiased view of business operations.  The more highly integrated with application interfaces and automatic posting, the better management opportunities exist.

 

Finance is often referred to as the Back-Office.  It is the behind the scenes company operations that are critical.  Purchasing cannot operate without payables handling the payments.  It does no good to ship orders if the proper credit application and collection resources do not exist.  Inventory valuation, write off and variance accounts for the company’s ability to borrow and fulfill customer orders.  Too much inventory and there is excess overhead, too little and business opportunities may be missed.  Finance gives an unbiased analysis of the company’s efficiency.

 

Functionality is a critical component of any system. 

 

How well does the software match operations versus how much change in operations are necessary to match the software.  This is no simple statement. 

 

The implementation of software can run from one extreme to another.  At one end the software is implemented and the company updates its processing to match the software.  This provides software stability and enables relatively easy upgrades.  On the downside if the software does not match operations the company will have to make some potentially painful adjustments to the way it operates.

 

At the other end of the spectrum is a company that develops their own system.  This system matches exactly the operations and is like hand in glove.  The problem that typically occurs is that the technology can become outdated.  Upgrades, if they even exist, require reapplication of the modifications and can significantly increase the costs to stay current.  If the software is completely custom, then adding new functionality often requires bringing in experts in new technology to learn and understand how the two can be integrated.     

 

Most companies fall between the extremes.  We like to see a 95% or better match between software and company operations.  At this threshold the software is matching the majority of the way the company operates giving stability and upgrade paths to the business.  The modifications tend to be light in nature and more easily managed.

 

There are cases when custom solutions are necessary, but they should be carefully planned and evaluated to ensure the Total Cost of Ownership (TCO) is evaluated.  

 

Another key question to ask is how well does the new software fit the culture of your organization?  How many steps does it take to process a payment?  Are accounts updated in real time or at some defined batch point in time?  Do you need multi currency support?  Are you working in multiple time zones?  Or, are you a single location facility?  How well does the software meet any industry regulations? 

 

There are software solutions to match each. 

 

Regardless of the match, business growth tends to be the common driver for any change.  Changing systems, finance, ERP or other is not a comfortable process.  It takes careful planning to make a successful transition.   Growth is good, keeping up is the challenge. 

 

The process of change can be painful, but staying put is typically more painful.  How hard is it to operate the current software?  Does it meet your needs?  How many manual processing steps are necessary to keep up?  The fit has to be right.  It has to be relatively easy to operate.  Be flexible enough to address the inevitable future changes you business will face.  Support from your software supplier is very important to consider.  How do they provide training and implementation support?  Are they large enough to develop new enhancements, yet small enough to answer the phone with a real person?

 

Is functionality an issue?  Is out dated technology a driver for change?  Is native growth or merger and acquisition a factor?  What costs are associated with your current solution versus anticipated costs of a new system?  What is your competition doing to serve their customers and win over your customers?  How fast can you react to market change?  Are you now operating in multiple locations? 

 

Cost savings from operational efficiency and reduced maintenance should be included in any analysis as well as departmental or personnel consolidation.  How many people does it take now to manage the finance department and why is that?

 

Your customers are demanding a change whether you realize it or not. 

 

Customer service should be at the heart of any change.  Every person and operation has one goal.  That goal is to serve those who pay the bills, your customers.  What good is a more efficient operation, if you cannot increase your customer’s satisfaction? 

 

Bottom line is that you need a trusted advisor that will take a fresh look at your operations and help you document your operations.  A good match for a new solution is made on knowing what you are doing now and what needs to change.

 

Dolvin Consulting works with industry experts to help you find solutions to the challenges you face.  All organizations struggle somewhere.  All different, but consistent when they want to grow.  Contact us to see how we can help you find new solutions.  We are here to help.

 

2 comments:

  1. ya, this place i was working for recently used to have such a hard time in getting the software and the workplace get in tune with each other . Like u said either the company must change its environment to suit the software (atleast feasible!) or .. well, the alternate is just absolute chaos! most softwares need to cover functions that are just beyond their basic functionality for that xtra bit of edginess since there are so many software solutions firms coming up ! you need to go for solutions that understand your enterprise environments and so its always best to go for custom softwares !they always fit in with the needs and are also capable of incorporating the likely changes! our company later went for customised software from custom softwareand it made alot of difference ! These people paid alot of time and attention to understanding the needs and functionality and also offer support services . custom softwares are so much more flexible!

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    1. ERP vendor support is a critical component of any solution. The customer service they provide is a reflection of the customer service level you provide or at least want to provide to your customers.

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