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Tips for choosing the right financial management system

Alan Joch

Unlike choosing some other enterprise systems, picking the right financial management system software doesn’t begin and end with simply matching a package’s features with the basic outline of the organization’s needs analysis. Because the financial accounting system runs vital business operations

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-- and switching platforms later on can be so disruptive -- enterprises need to find the right match from the start, in terms of both the software and the vendor supplying it.

For these reasons, consultants say one-size-fits-all approaches don’t work when choosing financial management system software and long-term vendor partners. Instead, IT managers, CFOs, and others on the steering committee need to be guided by the unique needs of the organization.

More on choosing a financial management system

Appoint a financial accounting steering committee

Find financial accounting software

Understand financial management system integration

For example, the challenge for a growing company may be to identify and install its first integrated ERP platform while making a choice that won’t break the bank. Others may want to continue their specialized “best of breed” strategy for financial management systems, which makes it important to evaluate how easily  new components can exchange data with existing systems. Or perhaps the organization has already made a significant investment in an ERP system and now needs to negotiate upgrades and new services with the vendor. “Each one of those scenarios has a different challenge,” said Charles Wilson, director of the business analytics practice at the consulting company RJT Compuquest, based in Torrance, Calif.

So organizations looking for a first-time ERP platform, or the chance to expand an existing ERP suite, will be forced to work from a ready-made shortlist of options; market consolidations have led to a relatively small number of competitors. By contrast, if point solutions remain part of the mix, organizations must look closely at application programming interfaces (APIs), which will determine how well financial software applications will integrate with core business systems. “That’s where the bulk of the [implementation] costs come from because many of those interfaces are custom,” said Steve Tennant, managing director at Tennant Consulting, a technology and business advisory company based in Orinda, Calif. “It pays to get down and dirty with the details.”

There’s another concern that crosses all of these implementation profiles: Budget realities are forcing enterprises everywhere to seek out financial accounting systems that minimize management and maintenance overhead for their IT departments. “Look for systems that will be user driven in terms of implementation and user management,” Nigel Rayner, a Gartner research director, pointed out in a recent webinar about maximizing the value of financial management systems. “Also, they want a system that’s scalable, but flexible and adaptable --again without heavy IT support.”

Dig into the details of financial management system software

With these considerations in mind, the steering committee can make many subsequent choices in a classic decision-tree fashion, with if-then conclusions. If the project will require working with a new software vendor, then evaluate candidates to determine if they provide the necessary depth and breadth of functionality and support specific industry requirements of the enterprise, Rayner said. This includes local regulations, U.S. Generally Accepted Accounting Principles (GAAP) reporting rules, and international accounting standards, he added.

“It’s good to ask, when there are changes in reporting requirements or international accounting standards, can the vendor accommodate them in its system without a major change or are you going to be faced with a reimplementation?” Rayner said. “Ideally, you should be looking for a system where major changes for compliance can be adopted with minimum disruption.”

Also, because financial reporting and analytics are so vital to today’s financial management applications, Rayner advises organizations to spend extra time probing this area. Determine whether advanced visualization capabilities will be available in the software and get details about each vendor’s strategy for embedding financial analytics into business process execution, he said.

Deployment options are another focal point. For some organizations, the question isn’t simply Software as a Service (SaaS) versus on-premises applications. As deployment strategies evolve, enterprises may need a vendor that can accommodate a variety of delivery scenarios. “You may want to deploy on premises, on a local or wide area network, or you might need to connect people over the Web, and increasingly organizations are looking to use cloud-based services,” Rayner pointed out. “So, is the vendor supporting these different deployment technologies and do they have a strategy that is keeping abreast of those developments?”

Effective RFPs for financial management systems

Once organizations make initial decisions about vendors and products, it’s time to send out requests for proposals (RFPs). Organizations should keep a number of key points in mind to make the RFP as effective as possible for the steering committee and not simply a promotional tool for vendors, consultants say.

A full RFP requires questions that elicit a high degree of technical details, said Chris Arndt, partner at Red Granite, a Chicago-based consultancy that specializes in financial reporting systems. “Identify the required reporting outputs of the financial solution. Create a list of reports needed. Even better, provide samples of the reports you’re looking to produce from the new system,” Arndt said.

Other portions of the RFP should determine the application’s ability to support the organization’s existing database, the software’s security framework and how flexibly administrators can control user permissions. “Do you have basic needs, [such as] giving Susan full access to accounts payable, or do you require very granular control -- Susan can only enter new bills with a value less than $5,000 and cannot edit or delete existing bills,” Arndt explained.

He also advises enterprises to use RFPs to clarify vendor support policies. “What is their usual software release cycle? If they don’t have a normal cycle, then you should be concerned. This means they are either not improving their software as you’d want, or they release upgrades on a random and unplanned basis, which can be disruptive to your operations.”

See financial management systems in action

Finally, while RFPs and meetings with vendors will uncover valuable information, don’t pass up a chance to see a financial application in action. “If possible, sit ‘shotgun’ for a day with an existing client of the vendor,” Arndt said. “Doing this will allow you to see how the software actually operates on a daily basis. Does the existing client have to utilize a bunch of workarounds to make the software do what they want? If so, proceed with caution.”


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