2. What we were really looking for was something that would solve the problems
that we were encountering with QuickBooks. When we have reporting that’s
being consolidated or when we’re dealing with compulsory audits in the United
Kingdom, we needed an accounting infrastructure that would do the blocking
and tackling for us, so we focus our efforts on the more complex issues.”
– Brandon Byrne
Vice President of Finance, Curse, Inc
2
Midsize companies are a vital and
growing segment of the economy
and in many ways, are more dynamic
than the large enterprises with
which you often compete. Like larger
companies, you experience similar
accounting and regulatory issues as
well as more intense competition.
“
You must be nimble to be successful; adapting
your business model to take advantage of new
opportunities, new markets and defend against
competition. If taking on new opportunities and
fending off competitors weren’t enough, as you
expand your business across borders, demands
on your accounting operations also increase.
Doing business internationally can be as
simple as taking orders over the internet or as
complicated as opening a new sales office in a
different country. The impact on your accounting
system is the same; it must be able to support
growing business complexity and transactions in
multiple currencies and tax rules.
It is precisely these factors that require
midsize companies to upgrade their financial
management systems. Most companies start out
using simple accounting applications such as
QuickBooks or Microsoft Great Plains.
However, growth such as adding new divisions
or acquisitions necessitates acquiring more
accounting system licenses for the new
operation or inheriting the systems used by
the acquired company. This results in a mix
of systems that can greatly inhibit accounting
operations such as closing the books or
managing order-to-cash and
procure-to-pay processes.
3. 3
Midsize businesses constantly
reinvent themselves and you
need to make sure that the
constant change doesn’t require
you to re-implement your financial
system again, because that can
be very costly.”
– Drew Scaggs
Principal, Deloitte Consulting LLP
1. Gartner Research Survey Analysis: Adoption of Cloud ERP, 2013 Through 2023
“
Midsize companies are finding that cloud-based
enterprise resource planning (ERP) solutions
are required to resolve many of these complex
challenges. Cloud computing is a method of
accessing computing resources over the internet
and paying for them as a service, as opposed
to buying software and running it on your own
computing hardware. Gartner Inc.1
reports that
nearly 30% of mid size firms surveyed plan to
adopt cloud ERP software (of which Financials
is a major component) within the next 3 years,
and another 20% of mid size companies plan to
adopt cloud ERP within 3 to 5 years.
When it comes to selecting an ERP cloud
vendor, not all offer the robust functionality,
integration, security, and track record of
innovation that a growing midsize business
requires to operate efficiently and cost-
effectively. The key is to choose your ERP
cloud vendor wisely; like the desktop accounting
systems you are replacing. Your business may
find itself outgrowing your cloud provider in a few
years and have to go through the replacement
cycle again.
4. You Are Growing Quickly
For most midsize companies, rapid growth
soon reaches an inflection point. The entry-
level accounting systems you’ve relied on for
years cannot support increasing transaction
volumes or growing business complexity.
Spreadsheets used to consolidate data from
across ledgers forces staff to spend hours
gathering and reconciling data, increasing the
likelihood of errors.
The inability to effectively audit various
accounting systems and processes slows down
report production, which in turn can cause
delays in responding to external stakeholders
and impede the firm’s ability to raise needed
capital. Slow reporting also affects your
company’s leaders who need timely and
accurate insights for decision-making.
These factors directly point to the need for a
more sophisticated financial system that can
support the entire company and its
growing complexity.
Your Systems Can’t Keep Up
Rising complexity slows your company down.
As your business volume grows, managing a
patchwork of systems and spreadsheets makes
accounting more inefficient and prone to errors.
Much of the work is performed manually with
spreadsheets or rekeyed from one standalone
application to another to consolidate balances
across ledgers, reconcile vendor invoices with
paper purchase orders, and track customer
invoices. This leads to slower cycle times,
increased errors, and rising labor costs.
So how do you know when you are
ready for an ERP cloud solution
and what should you look for in the
provider?
Recognizing the following signs will
help you to make the right choice:
4
1
2
Our previous accounting
software provider really did not
keep up with the times; they
went stale on us. They really
didn’t change anything from
their initial software package.
We were looking for a solution
that would keep up with the
times and meet our needs for
future growth.”
– Michael McLaughlin
CFO and Controller, Tower Ventures
“
5. 3
Managing Reporting and Compliance
Is Becoming More Difficult
The periodic financial close can become
very cumbersome and prone to errors as
multiple ledgers and disparate charts of
accounts proliferate. Fragmented systems and
financial data make reporting difficult, which
can affect growth because managers lack
visibility into business performance. Managing
accounts receivable and payable presents a
similar problem in terms of longer processing
times. Often, the only solution is to add more
headcount, which drives up costs.
According to Deloitte’s Scaggs, older accounting
systems weren’t built to handle the needs of
modern midsized companies.
“When companies grow, obviously their needs
change,” he notes. “They get more complex
and their older accounting systems can’t handle
certain financial transactions that involve
different currencies or reporting requirements
that support different business divisions. What’s
more, when volumes increase, companies
typically respond by hiring more people.
However, managing non-strategic activities
such as payables and receivables by growing
headcount is not the best use of the company’s
capital, particularly when it could be invested
in activities that provide a better return on that
capital.“
Finally, there is the issue of auditability. Whether
your company is public, plans to go public, or
relies on commercial banks for funding, external
stakeholders require audited financial statements
that have been prepared using proper
internal controls.
5
6. Your Business Is
Expanding Globally
6
4
A growing midsize company looking to expand
internationally requires sophisticated financial
software designed for the increasing complexity
that comes with global operations. Support for
multiple currencies and ledgers to handle the
distinct accounting needs of different operating
units is a necessity, as is support for multiple
financial reporting standards such as IFRS
and US-GAAP, and reporting tools that handle
statutory and internal performance reporting.
As you think about upgrading your financial
systems, Deloitte advises that you consider the
application vendor’s expertise in developing
global financial management systems. “You
have to think about who built the application–
are they financial specialists?” Scaggs asks.
“Another key factor is the maturity of the cloud
solution and how long the company has been
developing multi-national financial management
applications,” he adds.
This can make a significant difference in how
effective the vendor’s solution handles your
current accounting requirements and keeps
up with your emerging needs. Vendors with a
large installed base of complex, international
companies assures you they understand what it
takes to deliver global financial systems and that
their cloud solution is built using the same rigor.
Right now, we’re in seven
different countries, and dealing
with a host of international issues
– inventory overseas, multi-
currency reporting requirements,
tax and labor laws. For example,
due to the manual processes
we have in place, running an
accounts receivable [aging] for
all of our different entities would
take about 30 to 45 minutes.
Utilizing something like Oracle’s
ERP Cloud solution could
make that report take about 30
seconds.”
– Brandon Byrne,
Vice President of Finance, Curse, Inc.
“
7. 7
Another factor midsize companies need to
consider is how a cloud accounting system
integrates with other systems in your IT
landscape. These systems include procurement,
project accounting, sales order management,
and human resources management, all of which
post entries to your general ledger and impact
financial reporting.
You also require the ability to trace transactions
from these systems across sales orders,
purchase orders, invoices and approvals through
to the general ledger. “If that audit trail is not in
your accounts payable module but in some other
vendor’s system, it could be problematic,” says
Scaggs. “Auditors often focus on sub-ledgers
or other systems in which financial transactions
originate to verify audit trails and determine if
proper internal controls have been followed.”
Inadequate integration capabilities create the
potential for more complexity and problems. “You
may end up having disparate systems – only this
time they run in the cloud,” says Scaggs. “You
also have to think about the cost associated with
You Need More Robust
Systems Integration
Oracle ERP Cloud will provide us with the integration that we’ve been looking
for. Right now all of our systems now are completely separate. There’s no talk
between them. There is no link between the two. So we have to do manual
journal entries to get them into the general ledger. My ERP people have to
enter two systems just to make sure that items have been received before
they pay them.”
– Kristin Klingvall
Controller, California Academy of Sciences
“
5
building and maintaining those integrations.”
Scaggs also cautions companies about the
burden of managing several cloud providers.
“Another thing to remember is in the cloud,
disparate systems come with disparate contracts
and you have to manage the relationship with
each provider separately,” he cautions. “What
happens if you have a problem with one of the
providers? How does that affect your overall
system landscape and your ability to sustain your
financial operations?”
According to a 2013 survey published by
TechTarget2
, 57% of midsize companies
surveyed preferred cloud-based financial
management solutions from a single vendor
versus having to stitch together disparate
applications from “best-of-breed” vendors. This
approach eliminates costly integrations, system
complexity, and having to manage multiple
contracts with as many cloud providers.
2. Tech Target Financial Software Survey 2013
8. Selecting an ERP Cloud Provider
Midsize businesses are increasingly turning to
cloud-based ERP systems to modernize their
back office operations and conserve capital. The
key is to understand the differences between
first-generation, point solution software-as-a-
service providers and established enterprise
software vendors that provide unified cloud
solutions.
According to Deloitte’s Scaggs, “Companies
focus on financials but may lose sight of what
the provider can offer them. You have to have
end-to-end capabilities that are integrated. Think
about procure-to-pay and how it integrates
with the accounts payable module in your core
accounting system”.
I selected Oracle ERP Cloud
because of its flexibility, because
of its integration, and because
of its modern state-of-the-art
look to it. It can grow along with
the Academy. It has potential to
incorporate other modules that
we don’t currently have. And it
certainly puts us in a much better
position to do things better.”
– Kristin Klingvall
Controller, California Academy of Sciences.
“
8
9. An important requirement of cloud financial
management software is the ability to support
process standardization and efficiency through
workflow, social collaboration, analytics and
ease-of-use to help manage increasing volumes
without adding additional non-strategic and
costly staff.
Social collaboration uses conversational
capabilities, similar to social media, embedded
directly into the actual transactions to
provide users with context and allow them to
execute faster. “We’re seeing modern finance
organizations increasingly leverage collaboration
tools to get things done faster,” says Scaggs. “It
could involve mitigating something that doesn’t
balance or verifying a number. Also having the
ability to attach work products so that people
don’t have to dig through emails to make a
decision or approve something is
very important”.
9
Security’s an extremely hot topic
with CFOs today. With the Oracle
ERP Cloud, we as a company feel
extremely confident in Oracle’s
abilities to to secure our data.”
– Michael McLaughlin
CFO and Controller, Tower Ventures
“
Analytics built into financial management
applications and the ability to access them
from mobile devices is critical for real-time
decision-making. “It’s almost expected now,”
says Scaggs. “People are so used to mobile
and social media, so it makes sense to leverage
these tools to improve the productivity of your
finance organization,” he says.
Finally, security and reliability, particularly with
applications that you depend on to run your
business, is critical when selecting your cloud
provider. A cloud application is only as good
as the last time it was down or compromised.
When evaluating a cloud vendor, it is critical
to understand how much they’ve invested in
their IT operations to protect your financial data
and ensure reliable operations. These include
sophisticated network and facility security,
backup and recovery capabilities as well as data
residency in several countries to ensure that
local data protection and privacy laws are
fully supported.
