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Shaping Finance ERP and other F&A systems in the new digital world order

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Factors impacting the design of future Finance & Accounting (F&A) systems


Despite the advancement of numerous information systems, technology products, the Finance community still grapples with challenges related to the speed and quality of financial information. Ever changing regulations, uncertain economic conditions and technology disruptions are significantly driving the need for much more nimble, effective and cost efficient F&A systems.
 
Let's look at some of the elements affecting the design of F&A systems.
 
The great ERP myth  - Quick view of the evolution of ERP

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In the aftermath of the global credit crisis in 2007-08, CFOs & IT chieftains are questioning multi-year ERP implementations, expensive upgrades. The ask from business line leaders is to have simple & effective systems that are easy to adopt and not much of hit on the P&L. For example: small & medium enterprises in the US are managing day to day activities related to cash flow management, reconciliations on the move by leveraging solutions such as Intuit & Xero.

There is a clear shift happening -  a fine border is emerging for large on-premise Finance ERPs. The speed of ERPs extending to "all" the finance & accounting functions has reduced. Despite enterprises consolidating systems, the next few years will witness  smart cloud & mobile finance applications being adopted and interestingly these applications will be aggressively pushed by large ERP software vendors. More importantly, these applications will be outside of so called "core" ERP.
 
The Digital disruption - Wearables, cloud, mobility & social will significantly impact the way business transactions are recorded and consumed. "Ubiquitous" will be the theme and all finance systems have to operate as per this theme. The finance ERPs & systems in current form are quite far from being truly ubiquitous. Probably it may get more nimble, fast to deploy, fast to adopt. However till such time, gaps will be filled with multiple smart applications each managing specific business process. One might argue that there are point solutions today as well to manage business processes such as collections, payables, cash application, reconciliations etc, The key difference in regard to new digital applications will be:

  • Extremely fast to deploy - it may take from hours to a couple of days to deploy a multi-country, multi- business collections application. 
  • Simple to use, no specific training required, as simple as using LinkedIn.
  • Cost effective - zero cost to either start or end application
  • No e-waste -  no redundant infra, complex database maintenance after decommission

The Millennial influence - Global trends indicate that a high number of millennial(s) will enter the workforce over the next few years. The only way to make them productive quickly, make them effective is to provide tools that are simple & smart. Higher focus & time need to be spent on understanding business, market dynamics and regulatory implications rather than lengthy ERP trainings.  There is a high probability that finance ERP related trainings for a new employee will fade away, ERPs will operate in the background with smart transaction applications in the front end. The design will be such that, there will be no requirement for finance staff to login to ERP. For example:  A famous breakfast chain in US increased sales by 3-5% just by redesigning the menu. Nobody requires training to sign-in to Linkedin / Facebook and setup a profile. Similarly, new finance systems will have a simple design and be similar in common functionalities. Significant productivity can be unlocked just by ensuring all finance applications' interface is similar to personal applications used by millennial(s) outside work. 
 
The Analytics connection - This will be a significant competitive advantage. For this to be true, every finance system has to provide adequate insights and not just data. ERP modules and finance systems will be decommissioned quickly if it does not support "analytics". More finance systems will be de-commissioned for this compared to others. The ability to seamlessly to talk to other transaction systems, highlight relationships, scenarios and publish a predictive outcome will be the core to future F&A systems.
 
It would be beneficial for enterprises in the long term if CFOs can evaluate based on above parameters & factors before signing off on F&A system proposals presented before them.

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