I have been in the finance systems space for over 20 years and have gained exposure to, or worked with, almost all of the leading solutions that are currently on the market. For a prospective purchaser it is a confusing landscape that is not helped by the software vendors understandable desire to position their solution as the one for you. So, where do you start in finding the right solution for your organisation?
The purpose of this article is to give you some outline thoughts and questions to ask that will help you narrow down the right Financial Consolidation solution for you and your organisation.
What problem are you trying to solve?
This is always my starting point when I am helping an organisation with system selection of any kind. This is likely to be part of a Finance Transformation initiative and there are so many aspects to consider. You need clearly defined objectives and a vision for what you are trying to achieve and how you are going to achieve it.
Financial Consolidation is one of the core processes within many organisations that lends itself to transformation. This can be due to legacy systems becoming unsupported or a move away from Excel. In either case, you should be seeking process efficiency improvements.
One of the most important considerations is the interaction between Financial Consolidation and your Budgeting / Planning process. These two processes are intrinsically linked and careful consideration needs to be given to the current and future vision. There are two likely scenarios:
- Scenario A – your Group finance team will only ever be interested in financial planning or budgeting. What I mean by this is that you are only interested in collecting and consolidating top line numbers (e.g. turnover). The divisions / subsidiaries maintain the detail behind them and they will be responsible for investigating and providing explanations for variances.
- Scenario B – you want a bottom up, fully integrated budgeting / forecasting process that is driver based and that Group has full visibility over.
If you have Scenario A, it can be dealt with by most Financial Consolidation solutions as it is just another dataset alongside actuals. However, if you require Scenario B then this changes the landscape completely and most Financial Consolidation solutions will struggle to deal with the driver-based, multi-dimensional and modelling requirements of Budgeting / Planning – they are just not built for this purpose.
To meet the requirements of Scenario B you will need to consider a unified platform approach that can truly deal with Financial Consolidation and Budgeting / Planning (there are only a few of these) or you will need to purchase two solutions and integrate them – this is covered in more detail in my whitepaper “The Argument for a Best of Breed Approach to Finance Transformation”.
Concentrate on the complex requirements
It should be accepted as a given that all of the established solutions can deliver the fundamentals. If they cannot then they would not be in existence and would not be recognised by the analysts (i.e. Garter, Forrester, BARC). You need to concentrate on the more complex requirements, those that will provide differentiation in the products. We suggest there should be no more than a dozen of these at most. Ask the vendor for a detailed explanation of how they will deal with the requirement and whether this is out-of-the-box configuration or bespoke development. Depending upon criticality, you may wish to include some or all of the critical elements in a Proof of Concept although on for the short-listed two or three vendors.
Ability to deliver and support
I talk about this in much more detail in my whitepaper “For many organisations, the most important aspect of software selection is NOT the technology!”. To summarise in a paragraph, who you partner with on this project is as important as the technology itself. This partner will be working with you for a number of years, through the implementation and beyond into future support. You need to know you can work with them and that they can help you realise the full potential of the solution, guide you as to best practice and lead you to success. Make sure that enough consideration is given to this aspect – it can make or break a project!
Understand the vendor landscape
The current vendor landscape is a confusing one. There are a number of newer products on the market that have established themselves over the past 3 or 4 years. Many of these were built primarily as planning solutions that ‘can do consolidation’. What I mean by this is that their strength is in planning and modelling – this is their primary purpose. They do have consolidation capability but this may not be as functionally rich as those products which are built primarily for Financial Consolidation. Whether these products will be suitable for you is dependent upon your particular requirements (e.g. complexity of ownership, FX translation etc.). In this respect it is important to know which questions to ask as the vendor is unlikely to point out their limitations.
What adds more confusion is the whole cloud story and what this means to each of the vendors. Some are delivering Software as a Service (SaaS), some Platform as a Service (PaaS), others Infrastructure as a Service (IaaS). Each of these has different implications and may impact your selection. This needs to be considered at the requirements stage.
The perfect solution does not exist
This is a key point to understand and accept for any solution selection process. There is no solution that will do everything that you want in the way that you think you want it done. It is essential that you identify those differentiating requirements, the ones that are non-negotiable to you, and use this to narrow down vendors. If none of the vendors can deliver the non-negotiables, you need to revisit your requirements as this is a strong indicator that you may be asking for the unnecessary or the unreasonable.
Helping you make the right decision
For a Finance Team to perform at the highest level they need technology solutions that support them and provide the tools to enable transformation i.e. improvement and change. There are so many considerations and complexities and a large number of software providers who will tell you that their solution is the one for you. Choosing the right solution is critical and one that should not be taken lightly.
Selecting a new Financial Consolidation solution is not something that an organisation does every day. The core skills are not ones that necessarily exist; knowledge of the technology market, experience of selection, understanding the ‘art of the possible’. This is not a criticism, this is a fact of life. Why would you carry these skills for a once in a 5 year event?
One option to help you make an informed decision is by engaging with someone who is an expert in this particular subject, and who is technology agnostic. A small investment at the requirements gathering and selection stage can pay handsome dividends given the amount of time and money that you will be investing on such a project.
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