FinTech innovation has opened the floodgates for thousands of enterprise apps from which companies can choose. One of the most attractive characteristics of the enterprise app space is that out-of-the-box solutions can save on research and development costs, with companies rolling out enhanced onboarding and integration capabilities to limit disruption.
Data integration between back-office platforms is now an essential component for businesses deciding to adopt a technology. In the accounting space, that means integrations with enterprise resource planning (ERP), accounts receivable, accounts payable, procurement, banking and other portals.
However, the data integration challenge in corporate accounting is about more than the movement of information from one platform to another, said Scott Love, CEO of enterprise software developer company Codence.
“Integration in the technology space has gone from really hard, and in some cases impossible, to now very possible — but that doesn’t necessarily make it easy,” Love told PYMNTS in a recent interview. “But it’s not because of technology hurdles.”
The biggest hurdle in data integration is the standardization and normalization of data, so that when information moves from one platform to another, all the data actually fits together.
To illustrate the point, Love offered the example of one Codence client that uses a time-logging solution, which had to be integrated with an invoice module. Yet, data in the time-tracking platform was organized based on different company accounts, whereas accounting data was organized according to individual projects. The solution existed in how to integrate time-recorded data to individual project data.
“It was an information challenge, not a technology challenge,” Love explained. “The actual integration, the moving back and forth of data, was easy.”
In another example, he pointed to a different client operating in the media space that had to integrate its accounting platform with a media storage technology solution.
It’s a classic apples-to-oranges conundrum. According to Love, “it’s easy to underestimate the challenge, the process, of getting two systems to work together.”
For many organizations in their digitization processes, though, data integrations are a non-negotiable requirement when adopting new tools. This is one reason why companies may choose to work with a firm like Codence to custom build accounting software into their firms. It’s also why, today, chief technology officers and chief financial officers are encouraged to forge closer ties, particularly as the application programming interface (API) ecosystem places the data integration conundrum front-and-center at the executive table.
Love noted that he sees APIs as a growing presence in corporate finance, as banks react to the demand among consumers and businesses to take control of their own data. This trend has also shone a spotlight on the importance of data security for organizations, he added, a concern that is likely to increase as the enterprise continues to address data integration challenges.
“Staying up to date on standard security practices and encryption technology is a really important piece of the puzzle,” he said. “We live in a world where things are interoperating, and we can’t just live in a universe where you have your data on your server and it’s not connected to anything. It just doesn’t work anymore.”
Challenges like these can make custom app development a critical option for organizations. In the accounting space, the customization doesn’t focus on the accounting function itself, Love noted — businesses likely do not want to dramatically alter the financial management modules. What can be customized, though, is the relationship of that accounting data to information stored in other platforms across the enterprise.
When an organization attempts to address the accounting challenge alone, Love said, it can run into several challenges. One is what he described as “math phobia.” Accounting data is often viewed as unapproachable, particularly among executives without sophisticated financial literacy, but they could gain valuable, actionable insights from it nonetheless.
There is also the challenge, of course, of data silos, and the need for companies to be assured that information will remain protected if and when those siloes are broken down.
“If you approach a controller or CFO, and talk about integrating an accounting solution with the rest of the business, you have to be sure that data is secured and properly managed,” he said. “You won’t just crack open your general ledger to a CRM database guy.”
Finally, Love added, one of the largest challenges of accounting data is to not only be able to view and analyze it, but gain deeper meaning from it. This is where the importance of data integration comes in: Presenting accounting information in the context of data from other areas of the enterprise can add an enhanced level of visibility to financial executives.
“Anyone can sit down in Excel and plot revenue growth over time,” he said. “It’s less about the data itself, and more about the kinds of questions you’re asking of that data. The simple questions are easy. ‘What’s my income statement?’ I could do a search for that. But, ‘Is my business healthy? Am I in a good place?’ Those are a little bit harder.”