Agility, scale rate highly in cloud erp financial management systems

Agility, scale rate
highly in cloud
ERP ﬁnancial
management
systems
MAY 2017
ENTERPRISE APPLICATIONS
HANDBOOK
FOTOLIA

2 AGILITY, SCALE RATE HIGHLY IN CLOUD ERP FINANCIAL MANAGEMENT SYSTEMS
In this handbook:
Editor’s Letter
ERP functionality now often
attained piecemeal in cloud
applications
How specialized SaaS
financial software can
replace on-premises ERP
AP automation software
saves time and paper at
Wildman Business Group
HANDBOOK
Companies are increasingly opting for cloud
ﬁnancial management tools
DAN RING
ERP products are undergoing some key changes and giving companies
new ways of handling the volumes of daily transactions tracked inside their
systems. The overarching trend is that ERP and other financial management
tools are more often being offered with a subscription over the cloud.
As alternatives to legacy on-premises ERP, companies are increasingly opting
for ERP features provided via software as a service and realizing significant
benefits from the move, including easier use and scale and more agility,
according to a January report by Forrester Research.
Before SaaS, when ERP software ran on computers on site, customizations
were costly, repetitive and time-consuming, and it was sometimes difficult
to access data. Financial management tools delivered as SaaS offer strong
security with encryption and automatic and regular updates managed by the
vendor, though a user has less say on upgrades and pricing.

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However, the era of cloud-based software may still be in its infancy. Oracle
co-CEO Mark Hurd has said he expects all customers to eventually move
to lower-cost cloud applications at their own pace, but he pledged the
vendor would continue to support E-Business Suite, PeopleSoft and other
on-premises software that provide the lion’s share of sales.
Meanwhile, many companies are obtaining ERP-like functions with SaaS or
even on-premises add-on financial management tools. Wildman Business
Group, for example, uses on-premises ABBYY FlexiCapture to automate
accounts payable and integrates the tool with its on-premises Sage ERP for
managing transactions and with Microsoft SharePoint for electronic filing.
ABBYY is also planning to release FlexiCapture as a multi-tenant cloud-based
SaaS product.
This handbook examines how users are obtaining ERP functions without
buying a full-blown system and the reasons for the rise in subscribing to
internet-based systems.

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ERP functionality now often attained piecemeal
in cloud applications
Tony Kontzer
There was a time, not that long ago, when the mere mention of having to
deploy an ERP system sent shudders down the spines of IT executives. ERP
functionality was never easily attained.
ERP was instinctively associated with multimillion-dollar deployments that
often took years, rarely delivered the value to justify the investment, and
frequently resulted in a system characterized by inflexible customizations,
overdependence on underlying code, overly complicated business processes,
and users grumbling about how they couldn’t get at the data they needed
anyway.
Well, to borrow a tired cliché, it’s not your grandmother’s ERP market anymore.
ERP has evolved with the times, and companies today have the option of
injecting their organizations with ERP-like capabilities, but without the pain of

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an expensive and trying ERP deployment.
“The difference between ERP today and ERP 10 to 15 years ago is massive,”
said Jim McGeever, executive vice president of Oracle NetSuite’s global
business unit. “The challenge with ERP still is that what you’re doing for
companies is very complex and difficult. What we focus very heavily on is
making it easy for customers to consume.”
ERP FUNCTIONALITY WITH LESS PAIN
It’s that theme of easy consumption that’s driving not only the design of ERP
features and capabilities, but also the decision-making of the companies
buying those features and capabilities.
Gone are the days of adding complex modules to boost the ERP functionality
of a siloed system, an approach that led to many an integration nightmare.
Today, companies are looking for ERP-like solutions that can be added as
services embedded in business processes or as features that live where the
associated data resides.
The result, when done right, delivers nimbleness and real-time insight

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instead of isolated processes that can only be completed through complex
integrations and accessed through clunky and antiquated interfaces.
For example, Oracle NetSuite’s well-established cloud-based approach
emphasizes flexibility, choice and ease-of-use.
“You don’t have to install the whole thing, and then this module and that
module,” McGeever said. “We have features you can turn on and off. There is
no code base. If you do the order-to-cash piece, you get financials for free.”
That said, just because a new generation of component-oriented ERP options
is available doesn’t mean it’s the right answer for every company. But Paul
Hamerman, vice president and principal analyst at Forrester Research, said
finding an all-encompassing ERP system that will address all of a company’s
needs is an uphill struggle.
“There’s still a lot of value in having a complete ERP suite if you can get one,
where all the applications natively work together,” Hamerman said. “But
the reality is that most companies can’t find an ERP system that will cover
everything they need.”

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The less-than-promising prospects of finding a system that’s a good fit has
spurred many companies to look for ERP functionality that’s designed to
integrate with some critical existing piece of their IT architecture. That’s why
companies like Kenandy Inc. and FinancialForce -- two Salesforce partners
that take different approaches to bringing ERP to Salesforce environments
-- have been able to carve out successful niches in a market that used to be
dominated by monolithic systems from legacy companies like SAP, Oracle
and JD Edwards (which was acquired in 2003 by PeopleSoft, which itself was
acquired by Oracle two years later).
“The world of ERP, as it’s been traditionally defined, is in many respects
different from what we’re trying to achieve,” said Rod Butters, CTO of Kenandy.
“We took this approach of saying, ‘Hey, let’s first break the assumption that
building ERP involves building a bunch of modules.’”
Kenandy opted to bypass the software module approach, which Butters
believes leads to brittle, hard-to-change nests of complex integrations, and
instead built its ERP functionality as microservices that can easily be linked
with the data residing in a company’s Salesforce applications. This no-module
approach instead emphasizes a schema built around object-oriented tables,

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and Kenandy has 150 such tables that Butters claimed can do everything a
company needs from its ERP system. The vendor starts by tracing through a
customer’s business processes, mapping the needed tables to the business
needs.
“We have all the information together in one place, not in one module or
another module,” Butters said. “It’s an information-centric view rather than a
module-centric view.”
As an example, Butters said one of Kenandy’s larger customers had 120
different applications running in its ERP environment when it came to the
company for help. It had added all of those modules to handle things its core
ERP system couldn’t do, but because it was using such a small portion of
each module’s capabilities, Kenandy was able to help the company eliminate
90 modules, replacing them with its more lightweight and nimble tables, he
said, and keeping 30 specialized applications that offered functionality the
company couldn’t find elsewhere or do without.

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CUSTOMER-CENTRIC ERP REPLACING PRODUCT-CENTRIC MODEL
The bigger issue, according to Kevin Roberts, director of platform technology
at FinancialForce, is that ERP historically has been built for what is now an
antiquated view of business: build a product, deliver it and bill for it. Today,
however, companies are organizing themselves more around the customer
than the product, and they are bundling services into their offering, turning the
old ERP model on its head.
“The reason people aren’t buying ERP in a traditional way is that traditional
ERP isn’t built for the business models our customers are trying to move to,”
Roberts said.
That view reflects FinancialForce’s market position, which takes advantage
of the fact that Salesforce customers tend to organize their businesses
around the abundant access to data and analytics provided by the Salesforce
platform. This enables FinancialForce to tightly integrate its ERP offerings with
its customer relationship management environments.
Roberts pointed to GE, which was once known for the products it makes,
but which now refers to itself as “the digital industrial company.” GE used to

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focus on sales of devices or units, while now those products are just part of an
overarching solution bundle designed to sell business outcomes.
“Now I’m including the software that maintains and monitors, or that can
change capacity,” Roberts said, playing the role of a GE executive. “I’ll sell you
-- for a monthly fee -- ambient air as a service.”
Naturally, GE is far from the only company making this transition.
“A lot of traditional businesses are evolving into digital businesses,” said
Forrester’s Hamerman. “Products with high-tech software in them create
things that business models have to adapt to.”
It’s that fast-changing business reality that has companies ranging from young
startups to stalwarts like GE discovering that grandma’s ERP just won’t cut it
anymore. Now, there’s a new generation of ERP providers eager to help them
cut the cord.

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How specialized SaaS ﬁnancial software can
LINDA ROSENCRANCE
When it comes to evaluating their requirements for moving to SaaS financial
software, CFOs would do well to heed the words of author Lewis Carroll:
“Begin at the beginning and go on till you come to the end; then stop.” And
that means first figuring out what they want to accomplish by moving their
financials to software as a service.
“It is really important to understand the needs of the business first,” said
Heidi Pozzo, founder of Pozzo Consulting. “Only then can the [SaaS financial
software] be lined up to determine the best solution.”
When CFOs think about what they want to do with SaaS financial software,
they should determine whether they’re specifically trying to handle payments,
planning and budgeting, or if they want to improve analytics or consolidation
as well as close and related audit capabilities, said Hyoun Park, a Boston-
based consultant in enterprise technology offerings and strategy. “Companies

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shouldn’t simply think about moving financials into the cloud as this one big
giant task that needs to be done all at once,” Park explained. “It’s better to
think about specific pieces of finance that are currently broken or could be
improved.”
Every company is going to have different types of challenges transitioning to
SaaS financial software, depending on complexity and size, according to Park.
“Relatively simple companies or centralized companies will probably have an
easier time handling consolidation and close [in the cloud],” he said. “But at
a certain size, everybody is looking for better analytics and the ability to drill
down in greater detail and provide that across the entire company.”
Companies running on-premises systems that decide to deploy SaaS financial
software also have to think about connectivity from an IT perspective, Pozzo
said. “Payroll is usually the most critical function,” she noted. “If the pipeline
goes down for any reason, how do they gain access? They need to think about
the ability to connect and get the information. And if they’re already in the
cloud, the SaaS financials still need to talk to the other systems.”

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HOW TO EVALUATE YOUR REQUIREMENTS
To evaluate their requirements for implementing SaaS financial software,
CFOs should run through all their accounting functions and determine whether
they can replicate their basic accounting processes in the SaaS module, said
Dan Wall, a vice president at consultancy A.T. Kearney Inc. “What analysis are
you doing in FP&A [financial planning and analysis]? Are you doing margin
analysis, this analysis, that analysis? Can you replicate those in FP&A?” he
asked. “If you can’t, can you customize or bolt on something to the SaaS
module to enable that capability that’s core and critical?”
Basically, it’s just a requirements match for CFOs to determine whether the
SaaS financial software being considered will allow them to execute the
business functions they consider to be core to the company, Wall said. “We
did a comprehensive review on the basis of selection for a large pharmacy
retailer not only of [financial accounting and controlling] and FP&A, but also
merchandising, warehousing, human capital management,” he reported.
Wall said his team evaluated whether the company could move to a SaaS multi-
tenant system for both functions. “We started by going through a number of

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user stories and feature sets,” he explained. “The first thing you want to do is
ensure that the functionality you have in an on-premises solution, assuming
that’s the initial state, can be replicated sufficiently in the SaaS model. There
are tradeoffs there.”
Very often the on-premises system has been customized to such a degree
that a company will spend an enormous amount of money maintaining it and
keeping the integrations to other third-party applications current, he added.
“You might have found that you’re not keeping current with the latest releases
because you can’t maintain all of those integrations, or those customizations
prohibit you from moving to the next version,” he said. “So while you might
find that the functionality is limited in a SaaS application, you might find that
to be a benefit because it forces you to keep current; it forces you to maintain
consistency with best practices.”
Usually, that’s the driving factor for transitioning to SaaS financial software and
not necessarily replicating functionality from on-premises to the cloud, Wall
said. It’s not so much whether an organization can actually execute certain
processes that are “commodity” processes. Rather, it’s about whether the
organization is willing to give up some customization, which is not often a

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core differentiator, and shed some of the baggage and deploy SaaS financial
software that might provide less functionality but will keep the business
current and costs down, he said.
Pozzo said there are a number of things that set good finance departments
apart today, including the ability to work strategically with the rest of the
business, find new revenue sources to help improve profitability and point out
trends that sales or operations need to know. “If you’re thinking about spending
money on technology today, you’d be looking for those more strategic [SaaS
financial] tools because pretty much any system can do the block-and-tackle
stuff,” she said.
WHAT TO ASK VENDORS OF SAAS FINANCIAL SOFTWARE
When it comes to evaluating vendors of SaaS financial software, CFOs need
to ensure that the systems integrate with products they already use, said Dave
Key, managing director of consultancy Cloudstrategies.biz. “If you’re a big
Salesforce shop, then you want to make sure it runs well with Salesforce,” he
said. “It’s very important to look at the ecosystem because financial systems
move together with your other systems.”

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For larger companies, legacy ERP vendors such as SAP, Oracle and Sage are
the best fit. Smaller companies looking to adopt SaaS strategy for financials
would do well to consider first-generation SaaS vendors such as NetSuite
or more modern SaaS platforms like Intacct, according to Key. “With SaaS
vendors, look at their pace of innovation and look at what new capabilities
they’ve introduced over the last two years,” he said. “You’re looking not just at
what you’re buying today, but what you’re going to have a year or two years
from now.”
CFOs should also insist that vendors have policies in place to enable them to
choose when they take new software releases, Key suggested. “You don’t want
to a take a new software release when you’re in the middle of your quarter-end
close,” he said.
Therefore, CFOs should ask vendors if they can choose when to do upgrades,
and the answers should be “yes” 100% of the time. “If the answer is ‘no,’ then
say, ‘No, thank you. I’m not going to take the chance of you doing an upgrade in
the middle of one of my closes,’” Key advised. “If the answer is ‘yes,’ ask what
kind of window you have to choose your time when it’s convenient. That should
be a minimum of 60 days, but 90 is preferable.”

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Although most systems have sound general ledgers, CFOs should also ask
vendors about whether their systems can report on profit by customer as
well as by product or service line, according to Pozzo. “That way you can see,
when you’re looking at your business, how much money you’re making in each
of the areas of the business,” she said. “It’s those sorts of things that people
really aren’t thinking about. Many times that comes in a reporting tool that
isn’t always the part of the financial package of the ERP system. Sometimes a
bolt-on tool is all the business needs.” Pozzo said one of her clients was looking
at spending millions of dollars on a new ERP system. However, when the real
business needs were outlined, the company realized it only needed a reporting
tool, resulting in a fit-for-purpose solution that saved millions.

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AP automation software saves time and paper at
DAN RING
Before automating the accounts payable process, leaders at Wildman
Business Group were hampered by some 50,000 paper invoices a year that
would land on desks and fill filing cabinets.
The company, based in Warsaw, Ind., reached a crossroads where it needed
to add more staff or purchase accounts payable (AP) automation software,
according to Claudia Keirn, assistant controller at Wildman Business Group.
They chose to purchase software.
The company, which has 226 employees and offers uniform and linen, facility
services, apparel and utensil products, purchased on-premises ABBYY
FlexiCapture for Invoices through a reseller, User Friendly Consulting -- which
also helped with planning and implementing the application -- and went live
with the AP automation software a year ago.

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“It’s been awesome,” Keirn said.
PRINTING IS REDUCED
Before deploying the accounts payable software, an AP clerk would file paper
invoices in cabinets, she said, adding that under the old manual process, the
invoices would be printed and delivered to leaders of five different divisions for
approval.
With the new automated process, invoices are emailed in PDFs, and then with
a point and click, they are put into a folder in FlexiCapture for Invoices. The
software uses optical character recognition (OCR) to read key points on the
invoices to match it with a purchase order, Keirn said.
The AP clerk now determines where to route the invoice, but the company
is working on automating the process for routing the invoices to the correct
people for division approval, she said.

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TOOL CONNECTS TO ERP AND SHAREPOINT
A division leader will look at the invoice, and he or she can approve it and send
it to an approval queue.
The AP clerk will run a validation in the AP automation software to ensure a
purchase order existed, for example, and then click a button for her approval
and send the data into the company’s Sage ERP for managing transactions.
ABBYY FlexiCapture for Invoices is also integrated with Microsoft SharePoint
for electronic filing, Keirn said.
“I love that portion of it,” she said. “No more filing cabinets.”
She said the system saves more than 30 hours of work a week, considering
the AP clerk was working 50 to 55 hours and is now working 40 -- and
the company was planning to hire a part-time worker in lieu of purchasing
FlexiCapture.
NEW AP AUTOMATION PLANNED
The system also has eliminated the printing of more than 50,000 invoices a

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year, Keirn said. She praised the application, which is used by about 10 to 12
people, and said it will be even better once more automation is added for the
routing of electronic invoices to divisions.
“Our AP clerk can still do the job, and every day we are getting more and more
invoices; that process is growing. And we still have one clerk, and she has time
to do all of her statements and she is doing more things than she ever could
have dreamed of doing before.”
FAST GROWTH FOR AP AUTOMATION
AP automation software is growing rapidly, largely because it can relieve a lot
of pain for businesses.
According to Daneen Storc, senior product marketing manager at ABBYY
USA, Wildman Business Group is among 800 to 1,000 companies in the world
using ABBYY’s FlexiCapture for Invoices, which was launched two years ago.
ABBYY, based in Milpitas, Calif., has three additional headquarters, including
Moscow, Munich and Kiev, Ukraine, and most research and development
projects are done in Moscow, according to its website.

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Storc said FlexiCapture for Invoices is a “true enterprise solution.” Because
the technology delivers highly accurate results out of the box, is quick to
deploy and offered at a good value, it is now more applicable to SMB and
smaller AP departments, she said.
SOFTWARE CUTS INVOICE CYCLE TIME
Storc said the AP automation software, which ABBYY plans to release as
multi-tenant cloud-based software as a service during the second quarter
of this year, can dramatically reduce the time required to process invoices,
improve accuracy and visibility, and eliminate piles of paper.
FlexiCapture for Invoices can cut the “full invoice cycle time,” or the date of the
invoice to the date that it is ready to pay, from 18 to 20 days to 5 days or less,
she said.
In addition, she said, for a paper-based, manual AP department, automation
can reduce the cost of processing each invoice from $21 to $30 per invoice to
$3 to $5. And, she said, e-invoicing reduces human error during manual entry
of information into AP systems and, therefore, eliminates the potential for

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disputes.
Paper invoices are still rampant, she said, but there’s nothing that gives leaders
in finance more heartburn than seeing paper invoices sitting on someone’s
desk, partly because of the risk of missing invoices and compliance issues.

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