B2B Payments

Why The Enterprise Must Take The Lead On Back-Office Integration

Celigo Talks Back-Office Data Integration

With Software-as-a-Service (SaaS) now a staple in the enterprise back office for businesses large and small, data integration has surfaced as a key challenge for firms that need to obtain the highest possible return on investment.

In financial functions, adoption of procure-to-pay, expense management, accounts payable (AP), accounts receivable (AR) and other apps is on the rise — particularly as today's corporates are forced to accelerate their cloud migrations to support remote working environments.

But accessing siloed portals from home does not guarantee that technology will present a holistic, real-time view of financials. And according to Celigo Founder and CEO Jan Arendtsz, SaaS platforms' embrace of the API may be misguiding corporates toward promoting back-office integration themselves.

Speaking with PYMNTS, Arendtsz sounded off on the state of corporates' back-office integration journeys, and why firms should leverage cloud migration to develop a blueprint for how their own financial functions will coexist, collaborate and provide heightened financial visibility.

A Connectivity Challenge

When an organization adopts a SaaS platform in the area of, for instance, procure-to-pay, the bare minimum of data integration must occur at the intersection between that platform and the system of record – typically the enterprise resource planning (ERP) portal.

Increasingly, FinTechs and developers of other enterprise apps are building proprietary APIs to enable connectivity, not only with the ERP and other foundational platforms, but also with adjacent apps. A procure-to-pay solution may announce connectivity capabilities with accounting portals, as an example.

The problem with this strategy of promoting back-office connectivity, said Arendtsz, is that often, these connections fall short of what corporates really need to promote operational efficiency.

"When you buy these various business apps, a vendor may say, 'don't worry, we connect to your ERP.' That in and of itself is fine," he said. "But imagine if you have 20 other SaaS apps in the back office, and each has an integration built natively by the vendor itself. Each integration doesn't know about the existence of the other. It's not all meant to work together."

This is the point of "critical mass," he pointed out, at which point corporates begin to understand the shortcomings of relying on third-party platforms to facilitate data connectivity.

A Spectrum Of Maturity

For Celigo, this is also the point at which to step in and facilitate these data integrations. But first, it must assess where an organization sits along a spectrum of integration maturity.

On one end are the organizations, often smaller, that tend to manually move data from one portal to another. At the other end are firms that have approached the creation of their back offices with a holistic "blueprint" in mind for how each platform will work together.

"As you can imagine, the truth typically lies in the various shades of grey in the middle," said Arendtsz. "Most companies may come to the back office [with a focus on] automation of business processes, with sometimes three or four processes in mind. But they don't think about it holistically: How is everything going to work together?"

In the case of a procure-to-pay solution, technology may enable the automation of purchase order generation or invoice processing. But when it comes time to pay a vendor and then account for that financial transaction, how that procurement platform speaks with adjacent accounts payable, accounting and ERP portals can have a massive impact on a firm's ability to truly automate and gain financial clarity.

A Mindset Shift

When asked whether he believes organizations truly understand what it means for the back office, Arendtsz said that "unfortunately, the short answer, by and large, is no."

But amid a global pandemic and market disruption, corporates across the board are quickly evolving and adjusting their mindsets to emphasize the role that cloud-based platforms play in supporting their operations. That means the current moment presents a significant opportunity for firms to develop that interconnectivity "blueprint" as they migrate to the cloud and explore a growing mass of enterprise app options.

And rather than have those apps take the lead on data connectivity, Arendtsz noted, firms stand to gain the most when they take the lead on building their back offices with data integration in mind.

Today's businesses must consider a multitude of factors in their digital migrations, he said, from selecting a cloud-based accounting platform to adjusting their online presence and eCommerce strategies to plan for long-term shifts in their customers' shopping habits.

"Especially in the last six weeks, we're in a situation where we're seeing tremendous interest around the back office to make things more efficient," he said. "Doing more with less seems to be the mantra, and automation is the key theme. How can businesses automate to get a better ROI and obtain better visibility?"

——————————

NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

TRENDING RIGHT NOW