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As I’ve noted before, it’s common for CFOs of companies that are transitioning from being a small to a midsize business (that is, when they grow past about 100 employees) to find that the entry-level accounting package that they have been using no longer fits their needs. This software may be inexpensive to purchase and easy to use but it lacks many of the customization and business process management capabilities that become increasingly important as organizations grow. The transition from such an application is especially difficult when it involves an on-premises system, because the up-front and ongoing costs of implementing and using these can be daunting. Usually, the shortcomings start off as minor annoyances for companies that have between 100 and 500 employees and grow over time, and usually the pain increases with the number of employees and the volume and complexity of the underlying business. Yet because of the cost, finance executives usually don’t want to migrate to a new system until their old software threatens the orderly management of the business or becomes an overwhelming burden on finance operations. For that reason, increasingly we are finding companies choosing to migrate to a cloud-based ERP system sooner in their evolution because it is usually a more affordable and easier transition than using on-premises software.

The Blue Shield of California Foundation, which won the 2012 Ventana Research Business Leadership Awards in the Chief Financial Officer category, found itself in this position. The foundation VR_2012_LeadershipAward_Winner_Logois one of California’s largest health philanthropies, supporting organizations that deliver health care and address the needs of the underserved and victims of domestic violence. Its finance department had been using QuickBooks, but the software was becoming increasingly difficult to use in a distributed operation, and there was no easy way to integrate it with other systems the foundation used to run the business. CFO Scott Travasos and his team decided they needed a more sophisticated system that could deliver up-to-date information to executives.

The BSCF team wanted to move to the cloud so they could have an affordable yet sophisticated system that allowed executives the ability to easily see financial dashboards and reports, and that supported remote and mobile users. Earlier, the foundation had elected to adopt the cloud platform that won the 2012 Ventana Research Technology Innovation Award for Cloud Computing category, so that it could work in a single applications and data infrastructure. Since its IT organization had already evaluated the security of the Salesforce cloud (and therefore did not have to take another set of rigorous assessments) and because it offered a common look and feel with other, already deployed applications and reports, the Foundation chose FinancialForce Accounting, a Salesforce-based package.

FinancialForce Accounting changed the way the foundation’s finance department works. After migrating to the more sophisticated package, the organization was able to streamline the close process, remove bottlenecks from processes through better and more automated management of work flows, and enhance financial performance visibility. It enjoys better access to data anywhere, anytime, which supports more fact-based decision-making. For instance, the application presents key business metrics to individual executives using alerts and conditional formatting so they can quickly spot issues that need their attention. Finance department employees can now work remotely if necessary. Training is easier in the current environment since the larger number of people using the system can train new employees.

BSCF also elected to utilize Salesforce Chatter to foster better collaboration and more effective execution of core finance department processes. Since Chatter can be tied to specific projects and invoices, when questions arise, employees can more easily determine the history of a particular issue because they don’t have to dig through email or paper files. And because it’s especially easy to use, employees are more likely to make notes as situations arise, so there is more background “chatter” stored for people to refer to later on. This is especially useful and engaging for people under 40 who increasingly expect this sort of capability because it’s natural to the way they interact with electronic systems.

In any business that is transitioning from being a small to a midsize one, one of the biggest mistakes that a finance executive can make is sticking with an entry-level accounting package. Until there were cloud-based solutions, it was easy to justify waiting because of the cost and the need to manage a more formal IT infrastructure associated with such packages. Today, that’s no longer an issue. Finance executives have been wary of cloud-based systems because of potential security and reliability problems. These are legitimate concerns, of course, but they ought to be considered in context. On-premises systems have vulnerabilities too and are not inherently safer. Large, inexpensive thumb drives make it possible for an employee to walk out with a company’s on-premises financial and customer data in a matter of minutes, and on-premises systems are vulnerable to fire, flood and other catastrophes. I believe every company that is using entry-level accounting software and beginning to run up against its limitations should look into a cloud-based alternative, especially if buying, deploying and maintaining an on-premises system is a daunting prospect.


Robert Kugel – SVP Research

When they were first introduced three decades ago, electronic VR_2012_LeadershipAward_Winner_Logospreadsheets provided a major advance in corporate planning compared to the paper spreadsheet-and-adding-machine systems they replaced. However, time passes and, as our research shows, desktop spreadsheets often hamper productivity because they were designed for personal productivity, not for managing repetitive, collaborative, enterprise-wide processes such as financial planning. The finance organization at the University of Central Florida’s College of Medicine was grappling with this reality.

Like most government and higher education organization, UCF uses a funds accounting system. This adds a layer of complexity in managing spending, since outlays must be allocated to specific accounts, not to general expense categories, and the amounts of those outlays cannot exceed the value of the accounts. The university had difficulty constructing a unified view of its funding sources, which include allocations from the Florida state budget, research grants, clinical services and foundation gifts. And, as is typical of all desktop spreadsheet budgeting systems, the university had difficulty managing budget versions. Moreover, the way the budgeting process had been set up, the line items did not match the general ledger (GL) codes, and there was no automated mapping between the GL and the spreadsheet. This meant it was necessary to spend considerable time manually reconciling the two. Since there was a lack of uniformity in the process, it was difficult to measure the performance of individual departments. As well, the university encountered the usual sets of problems inherent with desktop spreadsheets in budgeting, such as difficulty in validating formulas and detecting errors. It could take days to create reports showing headcount, salaries and benefits because doing so involved repetitive manual processes to extract and conform data.

UCF knew it needed a dedicated planning application, but it did not want to spend lavishly and it wanted a system that required little or no time from its IT department to maintain. It needed a system that would make it faster and easier to assemble a budget, report results and reforecast.

The university formed a steering committee to evaluate solutions. Cross-functional input from across an organization ensures that all needs are considered and usually helps achieve broad-based buy-in for such a project. Unless there are people in an organization with extensive experience designing models and implementing budgeting systems, it’s important to have a professional services organization with specific industry experience to guide the process, especially because higher education has very specific requirements. When an organization moves beyond a desktop spreadsheet, budget contributors and administrators must know what’s possible as well as best and worst practices; for instance, models must balance the desire for detail against the benefits of system performance.

UCF elected to use a cloud computing platform and selected Adaptive Planning as its vendor. Since implementing Adaptive Planning, the university is finding it easier to have visibility into its multiple funding streams. Its budgeting process is more comprehensive and complete, and in constructing reports for periodic reviews individuals find it much easier to consolidate and report the information they need. Those with budget responsibility also have easier access to their own up-to-date numbers. Because the system is cloud-base, they can log in at any time to review the current state of their spending versus budgeted amounts.

Since its implementation of the dedicated application, the university’s budget contributors have gained easier access to essential financial information. The data collected are more accurate. Key assumptions are controlled and therefore consistent across all departments. The software can generate up-to-date headcount and actual-to-budget reports in minutes.

It’s all too common for companies to underestimate the performance penalty they are paying by relying on desktop spreadsheets to manage their business planning. Spreadsheets are seductive because they make it relatively easy for individuals to construct a basic budget model. However, the issues that UCF encountered are typical and illustrate how not using the right software becomes a barrier to good management. Today, companies have more options than ever to automate planning and budgeting processes that are tailored to their specific business needs. The University of Central Florida illustrates how better systems can achieve significantly better results and is why they were a recipient of the 2012 Ventana Research Leadership Awards.


Robert Kugel – SVP Research

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