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Financial Software Selection Best Practices in Selecting Financial Software

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I. Financials Software: Supporting Growth in a Resource-Constrained Environment

In today’s post-recession business environment – hallmarked by the opposing economic indicators of a rising stock market and stubbornly high unemployment – IT organizations at mid-market companies are similarly caught between a rock and a hard place. They are budget- and resource-constrained, yet their companies require the same real-time, enterprise-wide information flow that large enterprises do. When considering the purchase of Financials software, this duality manifests itself in:

  • A requirement for a high-performance business application that can easily and extensively integrate with other enterprise applications, and scale to support global growth
  • The need for a Financials application that can accommodates tight budgets for IT staff, software purchase, implementation and ongoing total cost of ownership (TCO).

In short, mid-market companies need Financials software that can be deployed quickly and cost-effectively, deliver fast time-to-benefit and provide sustained value. As such, a discussion about best practices in choosing Financials software should focus on three essential domains, all of which have a strong cost component:

  • Rapid deployment, including integration
  • The ability to customize a packaged financial application quickly
  • Easy adaptation of the financial software to existing business processes.

This article examines these key issues and their implications for mid-market companies, and provides suggestions and guidance on associated decision-making criteria.

II. Establishing Best Practices: What Mid-Market Companies Need to Know

At a time when many mid-size companies are exercising caution on expenditures of all kinds, they are nonetheless replacing essential business systems like Financials, for three reasons:

  • At a strategic level, high-performance financial software is a necessity in guiding companies through challenging economic times, to handle business volatility and enable growth opportunities. Capabilities such as business process automation and real-time information are more than just good ideas, they're mandates to run a competitive business.

  • Pragmatically speaking, many companies have reached a breaking point with their legacy financial applications; they are often unable to support business agility and software upgrades to these systems are too complex and costly.

  • A choice in software delivery models — traditional on-premise deployment or subscription-based software as a service (SaaS) cloud delivery — have dramatically altered the financial software landscape for mid-size companies. In particular, cloud financial systems are being increasingly considered as they entail less up-front CapEx, IT support and lower ongoing TCO.

Making the right choice: Key considerations

Similarly, as mid-size companies embark upon the financial software selection process, they can apply both strategic and practical criteria when evaluating Financials software. At a strategic level, two of the most important capabilities that Financials software can enable are:

  • Business process automation, to reduce manual processes and decrease cycle times, and thereby enable fundamental and significant improvements in efficiency.
  • Information accessibility, to enable real-time analysis of enterprise-wide, data that can be flexibly manipulated, and thus deliver actionable insight. When business volatility requires fast decision-making, Financials systems that require re-keying or other manual methods of transfer dramatically slow down the process.

To fulfill these goals, a best-practice approach to choosing Financials software should thoroughly investigate three key areas:

  • Application and data integration: Ease of integration with other enterprise applications (such as customer relationship management [CRM] or the myriad of legacy systems) translates into dramatically faster software implementation, a more robust production environment, and easier maintenance and upgrades. Conversely, poor integration capabilities make it nearly impossible for users to extract data in real-time, forcing decisions to be made using inaccurate and/or incomplete information.

  • Easy adaptability: “Out of the box,” packaged software applications such as Financials deliver the vast majority of functionality that mid-market companies require. However, each company’s unique needs typically require customization of approximately 10-15 percent of the final application environment. This should be readily accomplished in-house or through external professional services organizations. Straightforward customization is essential to both tailor the software during initial installation, and to adapt the Financials package on an ongoing basis, to meet changing business requirements. Choosing inflexible accounting software will either result in expensive work-arounds in the Financials system, or will force the company to change its business processes to fit the software.

  • Financial software delivery options: Mid-market companies vary widely in IT cultures, and their requirements of Financial systems. Some companies prefer to deploy the business software themselves, on-premise, as well as manage ongoing customization, upgrades and maintenance. Other mid-market companies are adopting subscription-based SaaS and cloud financial software applications as a way to reduce initial investment, speed deployment and streamline ongoing use of the application. Both approaches have their advantages and limitations; these are discussed in the next section.

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Strong financial software is a necessity in guiding companies through challenging economic times, to handle business volatility and enable growth opportunities.

 

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