As CFOs prepare the finance function for the future, many find themselves hampered by old technology, disparate systems, and clunky manual processes. Cloud ERP platforms deliver the information, intelligence and time needed to drive the business forward while reducing costs, driving productivity and managing compliance.
We sat down with Annexa CFO Ken Kent to discuss how cloud ERP supports finance leaders to build stronger cultures of analytics and data-driven insights to better support business strategy and decision-making.
As Annexa's CFO, what are the most significant advantages or insights from utilising cloud ERP in your role?
First, there's the advantage of connectivity. In the past financial systems were disconnected from most other business systems, with financials sitting outside of the systems in spreadsheets. Almost everything was siloed. Cloud-based ERPs allow you to bring everything together. Rather than using multiple systems, you have native modules that bolt into the ERP platform so you can centralise your detailed sales data, fixed assets, inventory management, advanced revenue recognition, tax modules, etc. And this interconnectivity means not only are your systems brought together; your data is too.
Then this connectivity gives you the advantage of speed to access and consume the data. You no longer need to wait until the end of the month processes, and there's no need for consolidation to understand and start using the data. You get an instant view of your current financial position. Better still, you can drill into the data that used to be sitting disconnected in other systems and see what's actually happening at any given time.
But it's not just the financial insights. Think about inventory management. A cloud ERP gives an instant view of what's available, what's selling, and what hasn't, and you can also manage more of those insights. So, you're getting access to more insights into not just what the static financial numbers are but what they're made up of and what's driving those numbers. Without cloud ERP an organisation may have had a different team analysing the inventory data, but it wasn't connecting back to the financials. And this was happening across all the departments, with little tie back to finances. Cloud ERP eliminates these disparate repositories and instantly provides exponentially greater insights across the business.
What are some of the biggest technology challenges faced by today's CFOs?
Data integrity is one of the most fundamental things CFOs must look for. There's no point having a whole bunch of data you can't use because you can't validate or trust it. So the role of the CFO and the finance function in building out ERP and CRM systems have become part of the CFOs job.
In the past, finance teams would find ways to pay for the tools that sit outside of the design and implementation only to question the integrity of the data they were expected to consume. But now, it's fundamental for the CFO to understand the true position of a business because it's that data and insight that allows them to make decisions faster, even daily. So cloud ERP does away with the monthly meetings where you talk about what happened and try to pivot or react. Instead, you're now talking about the data in real-time, and that means you need an ERP that overcomes the challenge of data quality.
Cyber security also becomes a big issue because, with a cloud ERP, you have all your financial and customer information sitting in a single repository. It's great because you can make use of the data to form decisions and turn on a dime, but if the data is not secure, you're at risk if that information gets into the wrong hands. The use and protection of all this data are also governed by complex privacy laws that CFOs, along with risk managers, must ensure remains private and is stored and used for its intended purpose. So it's a big challenge for CFOs, and with penalties increasing and compliance laws being strengthened globally and in Australia, it's becoming increasingly important.
Given the number of digital finance technologies on the market, what are the key capabilities CFOs should look for when evaluating an ERP solution?
Scalability is crucial. As a business grows, you want your ERP to grow with you. So, if you're looking at integrating new businesses or if your business is growing at pace, you want your ERP to maintain that growth pace. You don't want to consider whether you need a new server or if your infrastructure can handle new business. Scalability is something that the ERP is responsible for, which means you can continue to bolt on new businesses and organically grow the business at a rapid pace.
And then, you need to consider the native ERP tools you will rely on. So, for example, let's say you're using tax modules; you will want those tax modules to be keeping pace with legislation changes across the various jurisdictions you operate. And that's something that, while you're conscious of, you don't have to deal with it; the ERP vendor should be keeping those capabilities up to date, keeping pace with the change and environments that you're working in.
What ERP function has delivered the most value to the finance function at Annexa?
One of the big pieces for accounting is advanced revenue recognition. This is native NetSuite functionality, and it allows us to manage quite complex transactions and recognise revenue based on complex accounting standards without the need for manual processes and multiple spreadsheets. So from sales order through to invoicing and revenue recognition, the processes have been largely automated.
We've also recently expanded into New Zealand. NetSuite allowed us to spin up a new
subsidiary in New Zealand. We didn't have to buy new equipment, and we were able to set up a new company in New Zealand in just a couple of days, including integrating it with our payroll systems. So we know first-hand how easy cloud ERPs make it to expand your business into new territories. For other companies expanding globally, it's probably one of the most significant benefits of using a cloud-based ERP tool like NetSuite because it's already set up to cater for multiple jurisdictions.
What are some of the immediate changes experienced by the finance function after an ERP is deployed?
On day one, the conversation between the CFO, the finance team and the business changes instantly. It is far less about historical variances to a budget; the conversations are immediate: "This product doesn't deliver the predicted revenues. What if we change it to X, we could get a multiplier of Y". Finance is no longer just a set of numbers it's real-time insights into what is working and what is not. You have the proof points, and you can spot problems, talk about them with confidence and collaborate to make changes fast.
Companies that spend months consolidating and building out financial reports will not get changes to market fast enough. They're going to get caught out.
Final thoughts?
I've evaluated ERPs multiple times in my career, and there are two major elements to consider. One is the cost. Not just the cost of implementation but the cost to run the system. And the second piece is finding an integration partner.
As a CFO, you are already constrained by your current workload and the resources available to do existing work. This makes integrating or changing to a new ERP tool quite challenging because you have finite money to spend and finite resources to continue business as usual.
When implementing a new ERP, the challenge is to resist replicating the same processes: your new ERP should eliminate or enhance processes. But with limited knowledge of the capabilities of the new ERP, the best thing you can do is find a partner who can come in, understand your current constraints, and implement a tool that delivers value for money but also enhances or even completely overhauls your existing processes. In my view without a partner steering the transformation, you may as well invest the money in your sales team or on functions that directly connect to revenue generation. But working with a partner, you can ensure that you're spending your time, money and effort in the right places to deliver the tools that help you drive better discussion and inform decision making that eventually deliver higher ROI.
Explore the critical C-Suite considerations for determining the cloud ERP architecture that’s right for the CEO, CTO and CFO, their teams and their entire organisations.
Annexa is a leading NetSuite partner with extensive experience designing and implementing comprehensive and customised business systems, including payroll solutions, financial management, warehouse management and ecommerce solutions.