Chief financial officers (CFOs) often have a love-hate relationship with their enterprise resource planning (ERP) systems. They're a staple of corporate finance and, as of recent years, are accelerating their shift into the cloud. As such, the ERP system can now play a more flexible role across more areas of the enterprise to deliver deeper insight into financial positions and trends.
Yet, while adoption of ERP tools is nearly ubiquitous, particularly among larger corporates, satisfaction with the solutions in-place seems to be capped. Panorama Consulting conducted research earlier this year that found more than one quarter of corporates described their ERP implementation process as a failure, and satisfaction with their implementations sunk from 81 percent to 42 percent. Analysts said that, even while corporates are satisfied with the ERP systems they have chosen, they're largely struggling to deploy them effectively and get the most return on investment (ROI).
While ERP systems have been around for 25 years or so, recent evolutions in corporate financial technology are redirecting the position of ERP within the broader ecosystem of digital platforms. Now, one of the most important roles of ERP is to act as an aggregator of corporate data.
However, Mike Lipps, CEO of corporate reporting solutions provider insightsoftware, said that just because the ERP system can gather key financial information doesn't mean CFOs are able to easily access and make sense of it.
"Most ERPs have a net promoter score that is quite low, if not negative," he said in a recent interview with PYMNTS. "Yet, it really is the repository, the single source where you can dump all of this data inside of a business. In this day and age, you really don't know how to operate without an ERP."
He pointed to Panorama Consulting's report, which found the availability of information to be the number-one benefit cited by professionals of their ERP systems in place. However, when it comes to strategic benefits of ERP systems, the numbers are relatively low: Only 17 percent said their ERP solution has resulted in better-informed decision-making, and even fewer said it led to enhanced visibility into operations. Overall, nearly all the benefits associated with ERP solutions, from better controls and compliance to lower IT maintenance costs, were experienced by less than half of survey respondents.
"The challenge sometimes becomes: 'Your greatest strength is your greatest weakness,'" said Lipps. "The fact that the ERP ends up being the place where you can put all of your data makes it much more difficult for these larger enterprises to figure out how to leverage and easily access that data [they] need to make a specific decision."
For firms like insightsoftware, there is opportunity to bridge these gaps between the potential benefits and expectations of ERP solutions to the actual outcomes of ERP implementation. In pursuit of technologies that can enhance CFOs' ability to get the most out of their ERP systems, insightsoftware recently announced multiple acquisitions of solution providers that can tap into the data trapped within ERPs.
One of those acquisitions was of Excel4apps, a company that offers corporate reporting software based off Microsoft Excel. Interestingly, Excel spreadsheets have followed a similar path in corporate adoption to the ERP solution: While spreadsheets hold a reputation for being outdated and manual, adoption in the corporate finance department is widespread. As a result, for all of its shortcomings, the spreadsheet program often acts as a source for troves of valuable financial information.
"It's a love-hate relationship with Excel," said Lipps. "Something like 80 percent of the time that finance folks are working, they're working in Excel. It is, by far, the number-one instrument for financial roles inside of these businesses."
While corporate FinTech has taken to pushing corporates off spreadsheets in favor of more automated solutions, Lipps noted that he still sees a future for spreadsheets in corporate finance, particularly in the immediate future. Additional tools can augment the power of spreadsheets, just as they can enhance the potential of ERP tools, allowing CFOs and their teams to make use of the information these solutions hold.
"The trick is to provide 'Excel on steroids,'" he explained. "To make it easier to pull all of that data from multiple sources together into reports, that makes the lives of finance users much easier. If we're talking 15, 20 years from now, you can envision Excel usage to start to decline. But I, personally, think that's a long way off."
The next evolution in corporate finance and reporting, rather, will be solutions that unlock the data within ERP systems and spreadsheets. Looking one step beyond that, Lipps said, is empowering CFOs to take that data and make more informed predictions and more accurate forecasts. This is what led insightsoftware's latest acquisition of CXO Software, enabling businesses to streamline their financial reporting capabilities by being able to aggregate data across ERP systems, regardless of the ERP type (or how many a large corporate might have in place).
The "next horizon" for corporate finance will be technologies that can bridge data repositories like Excel spreadsheets and ERP systems for streamlined month-end reporting and analysis, as well as to link these capabilities with budgeting and forecasting teams to allow businesses to look ahead. And yes, spreadsheets and ERP solutions are probably going to still play their part in this evolution.
"The future of the way the CFO operates is the day when the CFO doesn't have to go through page after page of manual reporting," Lipps said. "They will, ultimately, be able to do their month-end report on their iPad, and that day is actually much sooner than people realize."