IT Business Drivers for selection of IT system

Where is the business benefit is a question too few IT suppliers can answer for their customers. Vendors of some new technologies have done extremely well by selling the IT rather than the business message.

The result has been that too many companies have derived too little added value from their IT investment.

There’s no doubt that there has been wholesale improvements in recent years in the way that accounting software has leveraged off other technologies to good effect, not just in improved accounting functionality but in delivering improved working practices.

The prospective purchaser all too often misses these business opportunities.

The imperative for the FD seeking a new financial management system is the need to obtain additional functionality to meet current and perceived business needs.

Information As A Resource

The vision of business data as a huge, untapped strategic resource is a liberating one for many organisations.

Once they acknowledge the benefit that flows from having near or actual real-time access to it for every aspect of day-to-day business, they will become enthusiastic about systems that will help them achieve this.

In productivity terms, only about 20% of staff time in the finance function is spent on activities that contribute directly to the management of the organisation, such as financial modeling and performance analysis. Instead, most of the resources are being spent on day-to-day bookkeeping activities and processing of transactions. Speeding these up or doing them more efficiently should be a prime consideration.

Providing An Information Service

How much time does a company spend providing more detailed information to management?

These requests for information may be driven from queries arising out of the Monthly Management Accounts, or ad-hoc queries.

If there are few queries, it could be assumed the information provided is sufficient for managers’ needs. In fact, few managers read more than a fraction of the reports they receive and fewer still make use of them.

If this is so why provide the information at all?

Productivity

Every organisation recognises the basic requirement of maximising productivity. Meeting objectives with scarce resources is an on-going battle.

Improving staff productivity has been given a massive boost by the phenomenal increase in use of e-mail. The growth is a reflection of two issues:

1. E-mail can be generated at any time, read at any time, answered at any time and communicated to many people in a moment.
2. More organisations expect to be able to communicate electronically. The ability to do this with consumers and suppliers in seconds, including the transmission of data where appropriate, has changed the entire process of doing business.

E-mail is an electronic backbone for the office that offers the potential for a total re-think of the way financial information is presented.

Globalisation

Globalisation is another issue that has come to the fore. To meet customer demands, organisations have to provide a seamless service. A company cannot hope to succeed in overseas markets unless it has adequate representation there. The pressure to become a world player has driven a massive number of mergers, acquisitions, joint ventures and strategic tie-ups.

While this gives businesses the multinational presence they require to service customers’ requirements, it creates pressures that have to be resolved before it can succeed.

International Consolidation Of Information

The software industry has come around to providing modular systems with a single core design flexible enough to meet different national requirements.

Software has to be small-scale enough to cope with today’s requirements of a smaller subsidiary, and robust enough to manage not just the head office requirements but also the potential for radical growth of all the companies in the ensuing years.

Many products are neither upwardly nor downwardly scalable, leading to multiple accounting products around the organisation and make for problems trying to consolidate information between them.

The ideal solution for a prospective purchaser, is to find a developer with local market expertise – a software house that has established relationships with partners around the world and has a product that caters for local financial and tax issues, but which will easily interface with the system in use at head office.

On-line Technologies

In the UK, many organisations have yet to realise the benefit of the Internet (includes Intranets and Extranets) and the World Wide Web, indeed some actually see them as a security threat.

The lack of tangible benefit reflects the youth of the technologies.

Financial transaction security remains a thorny issue. The developing technologies will deliver a means of effecting financial transactions in a manner that is infinitely more secure. Once fully released, the issue of security will vanish and the real tangible benefits will become available.

Online technologies will change the way organisations trade, both internally and externally. It is inevitable, as the process has already started. The option for the FD is to either investigate the opportunities, or hope that it all goes away. Either way the impact will be felt within the life cycle of the next accounting system he buys.

BPR (Business Process Re-engineering) and workflow

Another significant issue of technology developers has to be the emphasis placed on business process re-engineering. As organisations have changed to operate on process rather than functional lines, so they have needed software that reflects their new agenda. Workflow technologies offer a new way of working by eliminating unnecessary parts of a process and bottlenecks by ensuring that work is carried out in the most efficient manner.

A system, which incorporates workflow successfully, will give users the ability to work in a way that closely matches the ideal. Speeding up the transaction of basic ordering, invoicing and payment processes and minimising the bureaucratic influences of the paper-based approach.

Accounting applications are beginning to include useful workflow functionality in a number of areas of the software design; some of these areas include:

Through the use of e-mail or self-service Internet applications, defining the rules, routes and user roles associated with a specific approval process using workflow software makes invoice, payment or credit approvals entirely electronically.

Electronic approvals have even more benefit when business operations are distributed across physically remote sites.

Key consideration in choosing financial management system

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