While small businesses may talk about their accounts software, when you move up into the enterprise space – whether at Government or public sector level – it’s all about financial management systems. And the difference is not just one of naming.
At the big business level, the ability to computerise the standard ledgers in an efficient manner is no longer a differentiator – all the big players such as SAP, Oracle, Agresso, and JD Edwards do a highly efficient job of managing the various ledgers that need to be kept. What companies are looking for is a platform that enables them to send and receive documents electronically, provide information to staff outside the core accounts department, and run off management reports that enable them to get a good fix on their financial health.
While most financial systems have a life-cycle of five to seven years before an organisation will consider upgrading or replacing it, vendors report a recent pick up in sales. According to Suzanne McClelland, an account manager with SAP Ireland, the events of September 11 and the financial scandals at Enron and Worldcom combined to depress sales as big business shied away from tampering with their accounting systems.
New legislation, particularly in the financial services sector, are placing new requirements on multinationals and how they manage their financial information. “People are looking for an audit trail to prevent the kinds of things that happened at Enron and Worldcom,” she says. “We’ve always had a full audit trail so it’s nothing new for us, but people are now looking for features like anonymous whistle blowing.”
McClelland has also seen that sales cycles are getting longer as customers spend more time choosing the financial packages that best suits them. “They know that the technology can do it, but they want to know can they live with it,” she says. “They want to know if it suits their business – nobody is going to change their business to suit the software.”
Mentec is the exclusive Irish distributor and professional services partner for Agresso Business World in Ireland. It has installed that particular financial package in 70 Irish Government organisations ranging from local authorities to the health service, according to sales and marketing director, David Knapp (pictured). With most of those installations happening over the last five years, the euro changeover was a significant driver, but the public sector has also upgraded its financial software in order to move from cash-based to accrual-based accounting.
“It’s about accounting for expenditure when you raise or receive an invoice, which is a fundamental difference,” says Knapp. “If you consider it only when you get cash you’re not predicting the future – you’re just looking at the past. If you know you’ve got revenue of €1m coming but you only count it when you receive it, you’re being a little blinkered.” By moving to the same accounting practices used in the business community, the public sector is also making it easier to recruit skilled financial personnel.
Implementing a new financial system has a major impact on all parts of a business – whether in the public or private sector. For that reason Knapp sees an increasing demand for flexibility in solutions from customers. “They have a clear idea of what they want to do but it’s only when they get there that the detail of the impact becomes apparent,” he says. “As a result, they don’t want anything too rigid; they want to be able to change the structure of their chartered accounts if necessary.”
Removing paper entirely from the purchase-to-pay cycle is also a hot topic, according to Eamonn Morris, managing director of iB Solutions (formerly Torex Business Solutions) whose Integra system is used by a number of Irish organisations, particularly in the public sector. “People are starting to recognise the benefits of receiving documents electronically but they are let down by the suppliers who are not able to do it,” he says. “The very low number of suppliers is not as much as it should be in order to realise the benefits. We estimate that you can save €1 on each transaction by doing it electronically.”
Extensible markup language (XML) is the silver bullet in regard to the electronic exchange of documents, ensuring that data can be imported without re-keying – even if the two companies involved are using different financial systems. Like the vast majority of application providers, iB Solutions uses eBIS-XML from BASDA (Business Application Software Developers Association) as its preferred flavour of XML.
Support for electronic procurement is also becoming an essential feature. In this regard the Government is forcing the agenda through a series of initiatives. In the private sector it’s very much about cost control and reigning in maverick purchasing. As a result, Morris is seeing a lot of activity around integration with online marketplaces so that electronic catalogues can be provided to all staff.
In fact, this theme of providing information and hooks from the financial software into the wider organisation is a recurring theme. The concept of self service – whether for staff to fill out expenses claims online or enabling customers to get basic accounts information through some kind of portal – is gaining a lot of momentum. This will ultimately have significant human resources implications, as the ultimate impact of this trend is that large numbers of accounts clerks who currently process purchase orders and invoices will potentially be replaced by software.
By John Collins