After decades of promise, finance automation coming into its own
Finance and accounting applications have been around for decades, but only in the last few years have software companies evolved them to the point where even small and mid-sized companies can realistically deploy them to supplement their use of spreadsheets and free up finance staff to do higher-value work, Robert Kugel, senior vice president and director of research at Ventana Research, told CFO Dive.
“One of the impediments to finance playing more of a strategic role in company operations has been the amount of time organizations spend doing repetitive stuff that can be automated,” Kugel said. “A lot of this busywork was appropriate 40 years ago, 30 years ago, but now we finally have sufficiently capable technology to make it possible to do much more automation and eliminate the need for manual work.”
A cloud-based shift
The evolution to cloud-based SaaS applications has been one of the big drivers in this shift, Kugel said, because it brings within reach of small and mid-sized companies the kind of automation that before was limited to large companies that could afford premise-based enterprise solutions that required internal IT staff to deploy and manage.
“In the past it wasn’t always practical,” he said. “Now I can get any of these applications in the cloud, which means I don’t have to invest in servers. I don’t have to go through the capital budget. I don’t have a lot of maintenance. These barriers have been eliminated.”
Marc Linden, executive vice president of Sage Intacct, one of the SaaS companies offering accounting solutions to companies, told CFO Dive the cloud approach has been a game-changer because CFOs can take the lead on integration, since the SaaS company handles the technical issues that would otherwise fall on the CIO or IT staff.
“One of the selling points we offer is, the finance team is freed up from those hard dependencies on an IT roadmap,” he said, “because SaaS externalizes that burden for the organization. The SaaS vendor takes on all of the deployment and implementation tasks typically that an internal IT department would be doing.”
There’s an advantage for the CIO, too, if the company is big enough to have one: it frees up the CIO and IT staff to focus on their own higher-value tasks such as designing process flows and data structures and making sure automation in different departments work together — and not troubleshooting problems with accounting software.
The indispensable tool
Spreadsheets have long been the indispensable resource for finance and accounting professionals and automation won’t change that, said Kugel. “Whether it’s personal productivity, ad hoc analysis, in a pinch, just pull out a spreadsheet and do what you need to do,” he said. “A lot of what you do day-to-day you still need to have spreadsheet skills.”
Where automation adds value is saving time on data entry and the tasks that require collaboration — preparing the financials and reports — because it helps ensure everyone is using the same version of the same data, greatly reducing the potential for error and reducing the time spent looking for and verifying information.
“You have issues when you have lots of spreadsheets floating around and you’re never sure who has the latest copy,” said Kugel. “So, by having one single source of data that’s the authoritative data — one version of the truth, as people like to call it — it’s a data management thing. Secondly, a lot of applications have ways in which you can message, collaborate, you can put notations in, attach documents, do all of that in the application, and you don’t have to send out a bunch of emails and then later try to retrieve those emails.”
There remains some resistance to cloud-based accounting applications but that will go away over time as people retire and younger people, who are accustomed to working with online applications, move up the organization, Kugel said.
“We’re making progress one gold watch at a time,” he said. “Leaving aside the millennials, the older generation that grew up happy that we had electronic spreadsheets as opposed to paper spreadsheets are increasingly seeing that there are better alternatives to using spreadsheets for many tasks.”
In the interim, finance staff that increase their use of automation tools should look to finance staff who also have technology skills to help guide the transition. “The reality is, people who were just trained as accountants don’t really pay a whole lot of attention to technology,” Kugel said. “So, it’s important for any finance organization to have what’s often referred to as finance IT people. These are people who understand what the job is, why you do planning and budgeting, and they also understand technology.”
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