Many organizations implement financial management systems to reduce the burden that manual processes — general accounting, reconciliation and financial reporting — place on their finance teams, preventing them from engaging in higher-value activities like business planning or financial analysis.
Others explore new solutions because they are facing a major upgrade of their current system, or their existing technology is too inflexible or hard to maintain.
Whatever the reason you need to evaluate the merits of various financial management systems, you likely already suspect that the process will be a major undertaking. You are right. However, answering these four questions can help the process.
1. Should we move to the cloud?
The advantages of cloud-based financial management systems are significant: large cost savings and the ability to quickly upgrade. But for finance functions concerned about compliance and security, the decision to embrace the cloud is not so easy.
According to the 2015 Benchmarking the Accounting & Finance Function report from Robert Half and Financial Executives Research Foundation (FERF), about half (49 percent) of U.S. companies don’t currently use cloud-based solutions in their accounting and finance departments — and don’t plan to do so in the future.
However, the report also found that the percentage of companies using an enterprise resource planning (ERP) system as their primary financial system is on the decline.
So, the trend seems to be that more finance functions are moving to the cloud — albeit slowly.
If security is a key reason for not moving to the cloud, keep in mind that cloud-based financial management system vendors must adhere to strict International Organization for Standardization (ISO) security standards. They are also subject to regular security audits.
2. What will be the impact on compliance?
Any new hardware or software implementation has the potential of making previously vetted processes noncompliant by introducing new risks.
Therefore, be sure to engage compliance managers early in both the solution review and decision-making processes so they can raise any potential red flags.
3. What kind of reporting and management information do we need?
Financial management systems can offer dynamic, granular data — the kind that can be used to generate business intelligence for decision-making. However, too much data can lead to information overload.
Look for systems that can help you make the most effective use of your company’s big data. And talk to any business analyst in your organization who will be using the system so you can better understand what type of data they need to access. Ask them what they’re looking for in a solution in terms of features, usability and reporting.
4. What type of support is available?
Whenever your business purchases enterprise software, it will need to negotiate with the vendor to secure the best possible support. But what if you need something that’s outside your service agreement? What if the vendor goes bust?
Before committing to a solution, take time to confirm that third-party support is available, well-trained and reliable.
Prepare for change
Once you decide on a financial management system, take time to manage the implementation process effectively. Moving to the new system will be a big (and initially disruptive) change for many or perhaps all of your employees.
Provide appropriate training and consider bringing in a consultant to help guide the transition. You may also need to add full-time staff to assist with ongoing support and optimization of the system, depending on its complexity and how the organization will be using it as part of everyday operations.