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Software & Systems

Good Prep Key to Digital Transformation

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July 03, 2018

Survey: cost-benefits analysis can help with satisfaction and expectations of digital projects

CloudThere are great benefits of automation and moving to cloud solutions, but treasuries should do so with caution because they can be expensive and end up not working out. That was one of the takeaways from results of a broad survey of US and Canadian corporate finance executives by staffing firm Robert Half.

“What is the cost in relation to the potential benefits,” said Kenneth Kirk, CFO of Sepro Mineral Systems, in Langley, British Columbia, who participated in the survey. Mr. Kirk added that the cost can be high because some automation software is pricey. “And a lot of the solutions are overkill. They look nice but aren’t practical. Vendors often make these solutions look a lot easier to operate than they are.”

Similar thoughts were expressed at a NeuGroup meeting of treasury executives in May, in a discussion about Reval’s worsening service and whether implementing full-blown TMSs were worth the time and cost. In meetings across NeuGroup’s universe of treasury groups, the question of upgrading often comes and if the company is upgrading or moving to a new system, selection is becoming increasingly detailed. The idea is the more time spent on thoughtful consideration in the beginning will result in few disappoints (and unmet expectations) at the end of implementation.

One NeuGroup peer group member suggests that following implementation, evaluate how the system performs against how the company expected it to perform based on the RFP response. This information can also be good feedback to the vendor at a minimum, if not useful in future dealings with the that firm. In this member company’s case, its evaluation resulted in a 90% satisfaction rate against expectations.

Cloud Bound
According to the Robert Half survey, “Benchmarking 2018: Accounting and Finance Functions,” 69% of respondents overall use some cloud-based solutions, with 69% of with $5 billion in revenue ore more doing so. Only a quarter of US financial executives have no plans to adopt cloud-based technology, down from 28% in last year’s survey.

Meanwhile, the largest companies are more likely to use an on-premises enterprise resource planning (ERP) system—69% for all respondents whose companies generate more than $5 billion in revenue, and 50% for companies with between $1 billion and $5 billion.

In the largest category of companies, a third said they use SAP’s ERP and a quarter one of Oracle’s ERP products. Another quarter responded “other,” and that percentage increases steadily as companies become smaller in size.

“Many firms selected ‘other’ as their brand or system of choice, which suggests they are using more customized or hybrid ERP solutions, or opting to work with smaller providers,” the survey report said.

Excel still excels
Also reflecting NeuGroup member comments in recent meetings, Excel is the common budgeting and planning tool across companies of all sizes, checked by 43% of companies with between $1 billion and $5 billion in revenue, and 41% of even larger ones. Among the largest companies, 35% pointed to Oracle/Hyperion and 18% to SAP Business Planning and Consolidation software. About 90% of members of NeuGroup’s two groups for FX managers (FXMPG1&2) use spreadsheets for risk analytics among other things.

The Half report also notes that as more finance teams embrace ERP and cloud-based solutions with similar capabilities [to Excel], fewer firms are identifying Excel as their top tool. “Sixty-three of US companies report they rely on Excel, down six points from last year,” the report says adding that Canadian firms saw an even bigger 10% drop.

The survey report also notes that “automation, once in motion, appears to create a positive domino effect in many accounting and financial functions. As the business starts to automate processes, teams are inspired to search for more automation opportunities.”

Indeed, many firms are pursuing “digital transformations,” which Robert Half defines as applying technology, including automation and cloud-based solutions, to create new business models and processes; drive innovation and revenue, and sometimes disrupt entire markets and industries. What are the skills sought by companies pursuing those types of goals? For the largest-company category, experience with ERP systems was most in demand, 31%, followed by experience with data analytics and communication skills, each at 19%.

Interestingly, respondents at companies with between $100 million and $5 billion in revenues each chose communication as the most valuable skill. The report notes that soft skills like communication are highly valued at many organizations, often more so than technical skills such as data analytics.

“One reason: Accounting and finance professionals need a broader range of communication skills to work effectively with others across the organization because digital transformation efforts often require—as well as enable—extensive cross-department collaboration,” the report says.

Pick a winner
Survey respondent Jim Froisland, CFO and CIO at Quincy, IL-based tire manufacturer Titan International, said in the report that his company is still in the early stages of automating processes, as a step toward digital transformation. He noted the importance of picking the right technology but said before that companies must define the business case and get the correct resources. He had worked at a company where the CEO decided to invest in an ERP system based on the recommendation from another CEO. It turned out to be the wrong fit, and the company had to spend oodles of money to fix it.

“You must start digital projects the other way around,” Froisland said. “Define your business needs. Then, get the right skill sets. And then, get the right technology.”

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