Software forms the baseline of any successful business operation. Hence why it’s typical that the intelligence of the software closely correlates with the rate of business performance.
This trend has been identified by Nishant Nair, who is the CEO and Founder of the enterprise-grade recurring billing and revenue management platform RecVue. He has spent in excess of 20 years helping companies embrace quote-to-cash, subscription, and consumption-based processes and technologies to drive business growth. He has strong experience in leading business process and systems transformation at high growth, global companies including LinkedIn, Yelp, and Equinix.
In this guest-authored article for The Fintech Times, Nishant discusses the issues with legacy systems and how they are making companies less competitive and costing businesses a fortune.
Business success is a competition.
Imagine your corporate leaders toeing the starting line, folding their body in half as outstretched fingertips touch the ground, and nervously hopping up and down. All these final stretches in the last moments of preparation before the starter’s pistol goes off to begin the race.
Unfortunately, many of these competitors, limber as they may be, have no chance. The race begins and while all those around them start running – moving quickly through today’s established landscape of adaptable, digital technology – all they can do is walk.
Why the slow pace?
This massive competitive imbalance is most likely the result of outdated legacy IT systems. These ingrained solutions can slow everything down, making even the smallest processing issues more challenging to identify and address.
Companies stuck with these systems – and the CFO tasked with addressing this mess – might find data spread across multiple legacy systems instead of applying technology and APIs for a single, simplified view of data to ease decision-making. Software development is likely to be characterised by long, clunky release cycles, little to no flexibility, and ultimately, failure. Instead of innovation, any hoped-for collaboration between IT and business teams becomes siloed and stagnant.
Since costs are always front and centre in the mind of a CFO, let’s consider things from that viewpoint:
- Given the millions of lines of code that make up these old applications, developers may have to spend more of their valuable time debugging rather than developing new features for the business.
- Higher maintenance fees for legacy vendors and support of obsolete hardware may have to be dished out, not to mention huge data centre costs.
- Applications written 10 or 20 years ago clearly can’t conform to current requirements so CFOs should plan on a pricey investment for compliance.
Organisations locked into legacy systems typically will invest in them at a level sufficient to keep things running, but insufficient to support strategic growth and scale.
A couple of other challenges a CFO might face as a result of legacy systems include:
- A view of these financial systems as expensive, back-office enablers instead of strategic investments which can create value for the organisation.
- No automation and standardisation of basic processes such as order-to-cash, procure-to-pay, and record-to-report cycles, etc. Without this, business and finance leaders are operating in the dark without financial intelligence such as predictive demand, usage-based pricing, product configuration, supply chain logistics and partner payments.
Implementing a new financial system provides a great opportunity to streamline and simplify the corporate structure.
It’s an opportunity to get back in the race.
Here are some ideas for how this can be accomplished:
- CIOs and CFOs should work together for a more holistic view of a new financial system’s value. This cooperation will help identify the right processes and controls improvements, and articulate the broader value of a new system to leadership.
- Focus on the culture, not solely on optimising processes. Do this by understanding the broader technology trends and how those can be translated into core business needs.
- Continuously invest in internal training and the technological upskill & development of staff.
- Take the necessary steps to automate and standardise core processes as this will improve the accuracy and efficiency of operations, gain analytic support and reduce operational costs.
- Openly question the company’s existing system, as well as any incoming system under consideration, with regards to:
- The ability to align with business objectives, both in the near and long-term.
- Whether the technology is scalable to support business model changes and expansion into new markets and revenue streams.
- The availability of reliable predictive intelligence.
- The capability to enable compliance, audits, reporting, and revenue recognition.
Finance leaders, hoping to become competitive again, must leverage the opportunity this legacy system crisis has forced upon them to collaborate across teams and implement these available technologies.
If done correctly, an organisation has the potential to increase efficiency, improve collaboration and visibility between finance and the business, increase organisational agility, and ultimately, foster true innovation.
It’s time to get back in the race.