Through Peter Horadan.
Technology has had a massive impact on business over the last 30 years. The shift in the way business is done is affecting each and every one of us. However, despite the incredible tools at our disposal, business owners still face tremendous friction when attempting to acquire the only things that matter to the bottom line: customers and capital.
Most of the technology you buy works well on its own. It does what it promises and keeps what it promises. The big problem, however, is that one vendor’s technology is not designed to work with another vendor’s technology. The typical “CFO’s office” stack consists of a series of balkanized applications that work little or not at all together, requiring a team of specialists to manually shuffle data between them, often using spreadsheets with flat-file import/export.
The thing about today’s accounting software is that it treats every business as if it lives on an island. Applications focus on one company at a time, and then only one area of that company (payroll, expenses, etc.). And that makes sense to a certain extent – that’s how we learned to keep accounts at school. They do a balance sheet for a single company at a time and don’t really think about how different companies work together.
But in the real world, business doesn’t work that way. Business is a multiplayer sport. All companies work with other companies – we buy and sell from each other, lend and borrow from each other, fulfill each other and so on. And our businesses are complex – our disparate systems need to work together to achieve a common outcome. It’s not enough to just focus on one business or one area of that business. We need systems that, like our companies, work together to achieve an overall result.
You see, accounting systems are the business. There is almost no activity in a company that does not show up in the accounting system. Hire someone? Go on a business trip? Take a vacation day? make a deal? To sell something? To buy something? Send something? Use something?
All of these activities show up in the books of the accounting system in some way. If you don’t have an accounting system, you don’t have a business. So when our accounting systems don’t reflect the actual way our business works, we face many problems to adjust it.
It’s time CFOs demanded a better way. We should no longer accept Balkanized applications that do well with part of our business but don’t work with the rest. Or, further, we shouldn’t accept applications that might work in our company, but are unaware of the fact that our company works with many other companies, and we expect our systems to work with their systems as well, without looking into it rely on our people to send and transfer data back and forth between systems that don’t work across the enterprise.
It’s time to completely rethink the workflow between companies. Our current systems were designed in the pre-computer era, when we sent paperwork back and forth in the mail. This paperwork may have moved from the post to email, but it’s still done manually and not really automated. What if we reconsider how business systems should work together if they were interconnected?
A good starting point for this transformation is to focus on how we build relationships with other customers and other vendors.
A typical supplier or customer onboarding process today looks like emailing a PDF form to our new suppliers and customers and asking them to fill it out so we can work together. The supplier/customer who will receive the response of this form is usually:
“Yuck I have one more form to fill out with the same information I keep giving in different formats.” This is not a great introduction for our new partners.
Can’t we do better in 2023? What if there was an electronic system where companies could only fill out their system once? Then, when it came time to share it, they could simply reference that information and make it available electronically for new partners to scan automatically.
This would be a small and important step from systems that don’t work together to a better way where our systems start talking to each other. Then, from that simple starting point, we can expand the digital relationship to more and more of the things our companies do together. Over time, we may replace all of the emails we send back and forth with automated interactions.
We are well past the day when our employees should be wasting their time manually gluing between systems that don’t communicate with each other. It’s time CFOs demanded a better way.
Peter Horadan is EVP, Sage Digital Network and co-founder of Lockstep. Prior to these roles, Peter was CTO and Global Head of Technology at Avalara, the leader in transaction tax management. Peter led the development of the SaaS version of Concur Expense, the global leader in expense management. Peter holds a BS in Engineering from Rensselaer Polytechnic Institute.