FROM TRANSACTION TO TRANSFORMATION: HOW FINANCIAL SOFTWARE KEEPS PACE WITH BUSINESS

Transcription

1 FROM TRANSACTION TO TRANSFORMATION: HOW FINANCIAL SOFTWARE KEEPS PACE WITH BUSINESS Technology Evaluation Centers

2 From Transaction to Transformation: How Financial Software Keeps Pace with Business Business complexity has increased tremendously in recent years, with the advent of total global trade and data-driven strategy. Finance departments are increasingly expected to play a more strategic role in a business s development than they have in the past, with a direct impact on the stewardship of an organization. To keep pace with new demands, financial executives need tools that are just as dynamic and modern as the environments in which they operate. However, too many organizations are hampered by aging technology that is an obstacle to progress, rather than an enabler of growth. That means an increasing number of businesses are considering upgrades to existing software applications or investing in new technology that is better able to support complex requirements. In addition to providing core functionality, a financials suite must now also address new challenges, such as: Increased demands for real-time reporting and analysis of larger volumes of data. Vendors are addressing these needs by making business intelligence (BI) and other analytical applications, including dashboards and data visualization tools, a standard part of their offerings and by using in-memory technology to boost computation speed and process big data in real time. Think of SAP HANA, or Infor using Amazon RedShift cloud data warehouse. Industry-specific analytics are also a growing trend in corporate BI. Complex compliance requirements and escalating compliance costs. Vendors are addressing these needs by enabling organizations to automate controls monitoring processes and streamline reporting. Cloud-based applications can also help by supporting fast, automatic technology upgrades that are required to accommodate new regulations. A rapid pace of change, caused by factors ranging from mergers & acquisitions to global expansion. Vendors are addressing the challenges caused by rapid change through a variety of strategies, such as improved integration technology, which simplifies the process of connecting new systems with other enterprise applications; and cloud hosting, which allows companies to scale server capacity up or down as business needs demand. The good news is that financial executives have a wider range of choices than ever before for meeting their needs. Keeping both old and new factors in mind, let s now take a look at elements that are a must for any modern financial and business management application and how some of the top vendors measure up. 2

3 Finding a Financial Management Solution Dream Functionality, Soft Factors, and the Contenders What Does a Financial Suite Need to Look Like? The ideal financial management package includes not just reporting and transactional features, but also tools for financial consolidation, business intelligence (data visualization and forecasting), corporate performance management (CPM), business process management, and online user communication tools. The CFO s wish list may include even more in-depth functionality, such as cost analytics, revenue modeling, business portfolio management, investment modeling, capital structure and liquidity planning, mergers and acquisitions and business development planning, customer analytics, pricing and contracts, product analysis, manufacturing analysis, risk modeling, and workforce analytics. An optimal financial management software package also allows mobile access and full flexibility in deployment options cloud, hosted, on-premise, or a combination. Although this is by no means an exhaustive list, an up-to-date global financials suite should address most of the following functionality: Finance departments are increasingly expected to play a more strategic role in a business s development than they have in the past, with a direct impact on the stewardship of an organization. New Standard Financials Functionality Embedded and proactive controls monitoring Built-in financial close and reconciliation automation processes Built-in cash and treasury functions Single repository for the main ERP and third-party ERP sub-ledgers Automated intercompany transactions Global chart of accounts and analytics Multi currency support Variable dimensions and calendars Flexible general definitions and reporting Hierarchy of management capabilities Pervasive auditability, traceability, and extensibility with effective dating and attributes Budget Functionality Unlimited budgets and budget versions Flexible budget modeling using shared dimensions and currencies with general ledger (GL) In-context view of budgets 3

4 Features for Industries and Users Industry-specific functionality, such as grants and encumbrance accounting (for government, research, healthcare, etc.) Responsive mobile UI design Shared data across the entire suite Access to in-memory database technology In-context documentation and help features Social collaboration with contextual analytics, alerts, and prescriptive recommendations Choosing One from Among Equals: Soft Factors Matter There s been a big shift in many sectors of the enterprise software industry over the last several years, and financial management software has not been exempt. The shift is that virtually all full-suite solutions support the same core functionality including many of the items listed above right out of the box. A quick look at the Financial Applications Comparison Chart at the end of this report shows that the major-player solutions provide full support for virtually all standard functionality. This applies across the board, from the General Ledger set to Cost Accounting, Cash Management, Budgeting, Accounts Receivable, Project Accounting, and Reporting and Analysis. The differences are few and sporadic: Epicor s budgeting capabilities require some partner add-ons; Oracle, Sage, and SAP are not fully enabled for all delivery modes, necessitating add-ons for cloud or hosted delivery. Infor fully supports 100% of the criteria on this matrix, including complete support for on-premise, hosted and cloudbased delivery. Convergence of functional capabilities and all-around agility has upped the ante on all of the soft factors that surround software selection and adoption. This is a great thing: we re seeing high quality all around. But it s a bit like an Olympic-level competition: one athlete wins out over the others by hundredths of a second on a particular day in a particular stadium. It s not easy to determine which software solution is best suited to one s own company when they re all high performers. On the other hand, this convergence of functional capabilities and all-around agility has upped the ante on all of the soft factors that surround software selection and adoption. These include the availability of a trusted partner, positive user experience, level of product support, access to other vendor s technologies, and the overall cost and speed of implementation. Software vendors are also increasingly verticalizing their financial offerings to meet industry-specific requirements, which can be a persuasive factor in selecting a product. For example, Infor offers grant and encumbrance accounting, which tailors nicely to the public sector, research organizations, software companies, and rental companies. Oracle delivers specific functionality for banking and insurance businesses, and SAP provides financial solutions for dozens of industries via stand-alone applications or as part of its larger ERP packages. 4

5 Lastly, since financial functionality is but one component of a business s software arsenal, integration with additional, disparate systems is essential and can be a key determining factor in picking one solution over others. The Current Crop of Contenders Here s a brief rundown of what s on the market from the mainstay software vendors: Epicor offers a powerful mid-market financial application along with a range of other business packages. Apart from its broad functionality, the solution s strong suits are its adaptability and simple user experience, deployment flexibility, and scalability. The solution performs best as an inherent part of the Epicor ERP suite. Infor delivers industry-specific ERP suites as well as comprehensive administrative ERP solutions that include financial management, enterprise performance management, and human capital management capabilities for large organizations and mid-market companies. In recent years, the company has transformed itself from a conventional vendor into an innovative organization and has extended this dynamism to its software in the form of forward-thinking integration and collaboration platforms (Infor ION and Infor Ming.le). Oracle offers comprehensive financial and business management software packages that help manage a wide variety of business scenarios. The company is also one of the world leaders in enterprise performance management and financial consolidation solutions with its Oracle Hyperion product. Sage offers several financial solutions, primarily for small businesses. Its strongest financial application is a part of its flagship X3 ERP product. It is capable of supporting companies with multilingual and multinational requirements, with multiple legal entities, and with a focus on the manufacturing and distribution industries. SAP may be the world leader for multiple financial applications for customers that range from large and complex multinational organizations to small businesses. The company is currently deeply focused on leading-edge SAP HANA in-memory based technologies and applications. When dealing with large companies, using SAP software is considered a prerequisite in some countries. While large enterprises tend to turn to Oracle and SAP for financial software, typically as part of a much larger enterprise management solution, Epicor and Sage are more suited to smaller businesses. Infor offers ERP suites that support both types of organizations larger multi-national enterprises as well as mid-market organizations. Now is a good time to consider replacing or upgrading financial management software. The major vendors have kept pace with business change and with each other. The result is a mature and competitive buyers market stocked with solid options that now include differentiators like industryspecific capabilities and solutions designed to meet varying levels of organizational complexity. These value-added offerings should be considered alongside the traditional functionality checklist and in addition to soft factors like product support and implementation services. 5

6 Financial Applications Comparison Chart General Ledger (GL) Accounts Payable (AP) Fixed Assets Cost Accounting Cash Management Budgeting Accounts Receivable (AR) Project Accounting Reporting and Analysis Delivery Mode Epicor Accounting and Financial Management Infor EFM Oracle E-Business Suite Sage ERP X3 GL Development and Management S S S S S Chart of Accounts S S S S S Journal Entry and Ledgers Control S S S S S Multicurrency Capabilities S S S S S Multicompany Support S S S S S Multilanguage Support S S S S S Supplier Master Data S S S S S Invoice Processing and Aging S S S S S Control of Payments S S S S S Processing of Payments S S S S S Processing of Checks S S S S S AP Ledger Posting S S S S S Records for Fixed Assets S S S S S Asset Transactions S S S S S Depreciation of Assets S S S S S Depreciation Books S S S S S Tax Reporting S S S P S Cost Data S S S S S Cost Allocations S S S S S Cost Allocation Processing S S S S S Management of Costs S S S S S Cash Projection Capabilities S S S S S Payment Planning and Scheduling S S S S S Electronic Banking S S S S S Budget Control A S S S S Budget Accounting S S S S S Budget Development A S S S S Allocation of Budgets A S S S S AR Processing S S S S S Customer Data Tracking S S S S S AR Interfacing Capabilities S S S S S Credit and Collection Management S S S S S Project and Coding Structure S S S S S Cost Coding Structure S S S S S SAP ERP Project Transaction Processing S S S S S Standard Reports S S S S S Reports Consolidation S S S S S Report-building Capabilities S S S S S Dashboards S S S S S KPIs and Scorecards S S S S S Business Intelligence (BI) S S S S S On Premises S S S S S Hosted S S S A A Cloud-based S S A P A S Supported P Partially supported out of the box A Supported via partner s add-on or solution You can evaluate these solutions and others according to your specific needs and business priorities in TEC s Financial Packages Evaluation Center.

7 About Technology Evaluation Centers Technology Evaluation Centers (TEC) helps private- and public-sector organizations choose the best enterprise software solutions for their unique business needs quickly, impartially, and cost-effectively. TEC s online Evaluation Centers, containing IT research and extensive knowledge bases that catalog vendors support for thousands of enterprise software features and functions, are the leading resource for IT decision makers around the world. By combining that information with a proven methodology, unique Web-based software selection platforms, and years of software selection expertise, TEC delivers an unmatched range of online software evaluation and selection services that bridge the gap between enterprise decision makers and the vendor/value-added reseller (VAR) community. Technology Evaluation Centers Technology Evaluation Centers Inc. 740 St. Maurice, 4th Floor Montreal, Quebec Canada, H3C 1L5 Phone: , ext. 404 Toll-free: Fax: analyst_services@technologyevaluation.com Web site: TEC, TEC Advisor, and ERGO are trademarks of Technology Evaluation Centers Inc. All other company and product names may be trademarks of their respective owners. Technology Evaluation Centers Inc. All rights reserved.