Buzzwords and jargon are everywhere in fintech and many firms throw around overused terms when describing their solutions without the real depth or description of what the value is to the finance team.
For example, most consolidation vendors claim to have out-of-the-box functionality or marketplace applications but what does out-of-the-box really mean? Are all consolidation solutions the same? What’s the difference and why should you care?
The difference is quite significant and can lead to many undesirable outcomes such as longer time to implement, increased total cost of ownership, and a much higher reliance on IT. The question of whether a consolidation solution is truly out-of-the-box or not is not often explored during the sales process mostly because buyers think that all consolidation solutions are the same…at least on the surface. In this blog you will learn:
- The difference between true out-of-the-box and wannabes
- How out-of-the-box functionality delivers value
- Key questions to differentiate when evaluating a new consolidation solution
The Difference
Many vendors claim to offer out-of-the-box functionality but what they are really offering are templates or starter kits. Templates are good for fast tracking an implementation but in the end customers are left with a highly customized solution that is long to implement, costly, and difficult to maintain and upgrade. Templates require some level of configuration or programming because they must be adapted to the customer’s dimensionality and chart of accounts. Once this configuration is completed, customers must thoroughly test each template and resolve any potential errors.
When new versions of the templates are available either because bugs have been resolved or enhancements have been made, customers must go through the entire configuration process again. They must download the new template, configure it, test it and deploy it. This makes upgrade projects very costly, time consuming, and very risky. True out-of-the-box functionality works right away, without any configuration, coding or testing.
What would you rather buy? A solution that is pre-configured and turnkey or a solution like Ikea that needs to be assembled. Innovative and modern cloud-based SaaS consolidation solutions, like Fluence, deliver out-of-the-box capabilities with the following characteristics:
- standard functionality that respects GAAP
- does not require configuration to implement
- does not require any coding or programming
- adapts automatically to the customer’s dimensionality and chart of accounts
- new versions are deployed automatically without the need to reconfigure and test
- new functionality is constantly deployed and works without any configuration
The Value
Modern technology vendors invest heavily in providing true out-of-the-box functionality and leverage recent technological innovations like the Cloud. With consolidation, the foundation of the solution should be built upon standard generally accepted accounting principles (GAAP) which do not change from customer to customer. This enables modern vendors to focus on building flexible software layers around the foundation to support a turnkey implementation with no need for customization.
Out-of-the-box functionality can include reports, input forms and calculations like foreign exchange, non-controlling interest or equity pickup - or even feature rich applications like allocations. Choosing a consolidation solution that avoids the risk and complexity of customization gives your team precious time back to accelerate the close process and make better business decisions.
Firms that partner with modern technology vendors realize value across a multitude of dimensions including:
- faster time to implement – be live in weeks not months
- lower initial implementation cost
- lower total cost of ownership
- faster and less costly upgrades
- less reliance on IT – owned and maintained by Finance
- no need to learn to code or program
- easy to learn and high user adoption
- reduced risk
In the end, implementing templates and starter kits leads to highly customized solutions, and customization typically leads to increased investment and resources. All companies, regardless of size, industry or geography must respect generally accepted accounting principles (GAAP), and when it comes to consolidation, there is absolutely no need to customize. Some customers may think they need a customized solution because they have different dimensions and chart of accounts but modern solutions adapt automatically to these differences and do not require customers to customize.
The Questions
So how can finance teams see through the smoke and mirrors before making a costly decision? It’s quite simple really, ask three key questions.
- Does your out-of-the-box functionality require any initial configuration? Please describe the initial setup.
- Does your solution adapt automatically to my dimensionality and chart of accounts? What level of configuration or programming is required to implement your software?
- What happens when there is a new version of your software? Please describe the upgrade process in detail.
Conclusion
Many organizations depend on human effort to accurately close their books in a timely manner, but as Piper Sandler describes, “rising labour costs (inflation) and declining labor participation rates (demographics) have created a structural headwind for businesses to “do more with less (people)”. This statement is especially true in the Office of Finance. While the space is evolving, most consolidation solutions have not yet fully embraced the power of the Cloud. Legacy vendors are adapting on-premise solutions in an attempt to modernize and meet the needs of the market, but the divide is wide between these hybrid offerings and true cloud-based, out-of-the-box solutions. Modern consolidation solutions like the Fluence platform lead with innovation to address the needs of today’s CFO.
About the author:
Guy Ménard develops the products that differentiate Fluence from any other vendor in the consolidation software market – an easy-to-use solution for mid-market companies that provides robust functionality at a fair price. Throughout his 25-year career in professional services, pre-sales, and account management, he’s helped hundreds of customers get more value from their technology investments, including Disney, Xerox, Lockheed Martin, and Cirque du Soleil. Guy has a twin sister and married a twin, and he has two beautiful children - but not twins! He loves to cook for his family, especially grilling on an open fire using natural firewood. He’s also a CPA and PMP with a degree in accounting.
