This week, I had the good fortune to sit down with Alyssa Filter, CFO at Tropic, along with the amazing team at The Circle. The topic du jour was financial systems consolidation. Specifically, how are CFOs prioritizing when it comes to making process and technology decisions for their organization?
What’s most important to today’s CFO? Driving down costs, improving accounting process efficiency, or better outcomes and business results?
3 Key Takeaways
1. CFOs are owning more technology decisions
It struck me right away how the role of CFO is changing. Now more than ever, companies are looking to their financial tech stack to meet – and even outpace – all of the creative new business ideas that come up. Today, it’s not uncommon for accountants to be wrangling upwards of 45 systems (sometimes more!) to get the job done. This proliferation can create challenges downstream when teams are trying to find information and do the necessary accounting and reconciliation to prepare the books.
The CFO is assuming a lot of responsibility for their company’s tech strategy – and that’s not exclusive to financial tech.
Naturally, this drives many CFOs to ask a series of good and necessary questions. For example:
- Is my technology spend appropriate for my organization?
- Should we put controls in place to manage the growing technology expense?
- How do we evaluate our needs?
- How do we ensure there are not multiple systems doing the same thing?
- Are we getting ROI from our current tools?
2. More CFOs are prioritizing process efficiency over cost-savings
At least the ones in this room were. Take this with a grain of salt, but it was an interesting observation. When the group split for deeper dives around consolidating for process efficiency vs for cost-savings, 80% of the room joined the efficiency discussion. Going around the group, there was a common concern about negative impacts on the business from having so many systems of record.
Peeling this onion a little more, two specific questions emerged at the heart of the concern:
- Will it take too long for these different systems to sync?
- What will happen when there are seemingly inevitable battles over which system is right?
3. Consolidation doesn’t always mean optimization
In fact, consolidation may be a red herring. CFOs love improving efficiency and saving money. But with this group of CFOs so focused on the available discussion options, a large and beautiful forest may have been missed.
Meaning: the more important question CFOs should be asking is not do I have too many systems, but are my systems solving business needs effectively?
It's perfectly ok to have many systems – and to spend lots of money on those systems – if they each solve real problems and provide positive ROI. Particularly in accounting, when problems are solved, that often means time is being saved. And that means other resources (see: humans) are freed up to focus on the next challenge or opportunity.
When purchased business systems do fail, it’s often because either the problem wasn’t clear or the user wanted so much customization that they lost track of the benefits of standardizing.
Final thought
If you really want to prioritize efficiency, don't look at your systems in terms of quantity – look for quality! Consider the big picture of what you’re trying to accomplish, then leverage the expertise of domain experts and lean in to adopting up-to-date best practices.
That up-to-date piece is important. When best practices don’t learn and evolve, they cease to be best practices. Want a practical example? Digitizing your data and old processes. Yes, it’s a best practice, but it’s outdated. It’s 2024! Digitization is table stakes. If your goal is to be competitive – you should demand more of your tech and your data. And you can! Technology has ushered in a new era of problem solving.
We are all asking ourselves “where can we be better, move faster, save money?” Technology consolidation is one lever worth exploring – and in many cases, you may pull it. If you’re finding issues of redundancy, minimal return on what you’re investing (time + effort + money), lack of adoption (ie. shelfware), or simply just a better way to do things, consolidation can be the prudent decision. But like any good investment, technology is rarely set-it-and-forget-it. It takes care and feeding. Consolidation may solve a short term frustration, but in the long run, your technology will provide the biggest payback when it’s thoughtfully applied to solve real problems, and not create new ones.
Want more insights and advice on the state of fintech from accounting leaders? Check these out:
[Video] Top 3 Ways to Uplevel Your Finance Tech Stack in 2024
[Video] Women in Accounting & Finance: How to Be a Tech-Savvy Leader and Why it Matters
