The Value of Consolidating Your Systems
A place for everything, everything in its place.
- Ben Franklin
The meaning behind the centuries-old idiom, most famously attributed to Mr. Franklin, can be many things, but all come from a central idea of form and order. It’s an idea of things being stacked neatly and put back in the right place when not used.
Form and order. Just saying those words brings about a calmness, doesn’t it?
The exact opposite of those ideals might well be a quite common example of today’s enterprise: a global conglomerate made up of numerous interlocking acquisitions. Each of these previously separated organizations operates under individual financial systems now forced to work together in an unnatural harmony to, hopefully, produce a streamlined, unified output.
Now, let’s take out all the acquisitions from the equation. A large enterprise built from the ground up can still find it difficult to produce a single source of financial truth through a maze of internal systems for billing and credit, expense management, AP, AR, inventory management, budgeting, asset management, procurement and payroll among others.
Each system of your business expected to work together requires a smooth and sensible integration. One failed integration and the whole interlocked web of systems fails. Think of each of these integrations as the space given between two dominos carefully placed next to each other on the floor as part of an elaborate design combination. The falling dominos only work if each one is given the proper space between - too close and you just have slightly tilted, jammed up dominos; too far and all movement halts before the finish. Either way, it’s not the result you want.
Digital Transformation Does It Again
The digital transformation happening across all industries today is helpfully and hopefully forcing companies to re-examine existing processes and structure, for reasons including cost savings, operational efficiency and long-term growth and expansion.
Using this type of change to consolidate financial systems wherever possible is clearly a growing trend and for good reason.
A recent Gartner report forecasts that by 2023, 40% of finance organizations will consolidate to a single outsourcing service provider for all F&A operations, up from 24% in 2019.
Crediting the network effect of automation, Sanjay Champaneri, Research Director in the Gartner Finance Practice, said, “the more disparate F&A processes that can be consolidated into a single interconnected automation initiative, the greater the potential gains are.”
Put another way, per a study by McKinsey from a few months back, finance’s potential for inefficiency based on a lack of automation is considered one of the highest areas for potential company disruption. Because, as we all know, the office of finance plays such a critical role in an enterprise’s success these days, this section of the business requires the same level of connection as other departments like IT, HR, Legal and Procurement.
With the ultimate goal being greater ROI for the organization, let’s consider the benefits of consolidation, based on the four levels of consolidation maturity. What are the four levels of consolidation maturity? Glad you asked.
The Four Levels of Consolidation Maturity
- Logical consolidation confines system management to a location with benefits including less operational headcount, reduced maintenance costs and improved service to end users.
- Physical consolidation would bring all components of an IT ecosystem to one physical datacenter location. This simplifies networking, reduces power costs, provides for a more efficient backup process and allows for increased security measures.
- Workload consolidation reduces the number of components under management, extending beyond physical hardwares to connections, software, operating systems and peripherals. An infrastructure simplification such as this allows for easier management, more flexibility and less headache-filled alterations.
- Transparent consolidation, the most mature level of consolidation, is reserved for organizations with all computing resources, including storage, handled at one site.
The Seven Ultimate Benefits of Consolidating Your Systems
- Improved Standardization - Reducing the number of systems reduces costs, beyond the obvious savings in licensing and annual maintenance fees. Reductions also show up in necessary training costs and less engineering headcount necessary for monitoring, maintenance and helpdesk.
- Improved Business Intelligence - A single source of truth through data coming from one place offers clear operational benefits. The business intelligence delivered is likely to be provided faster with more breadth and depth than collecting and organizing information from several input areas. Consolidation of systems is not only an improvement for IT management, but for business operations as well.
- Improved Flexibility - By consolidating systems, IT managers are able to develop a more standard system build, allowing for speedier deployment and ease of offering new applications and services for the business.
- Improved Management - Fewer systems means fewer systems to be managed and with more standardization, that management effort itself is simplified. And with that time redirected, more effort can be spent studying patterns and anomalies in order to fine-tune and improve standard operating procedures.
- Improved Security - Fewer physical systems present a greatly reduced attack surface and an environment easier to protect.
- Improvements in Upgrades and Changes - Benefits are realized in patch management with few resources necessary, a faster process and minimal disruption to performance. Changes and upgrades on single system solutions can be done in a production environment without impacting other vital operations, and done quickly.
- Improved Disaster Recovery, Backup and Business Continuity - Consolidation reduces the need for local backup at remote sites and allows IT to re-engineer DR processes so testing can be done in real time with little impact to users.
For a business to achieve the ultimate digital transformation, traditionally siloed processes and controls within finance must seamlessly extend to the broader organization in a connected, collaborative ecosystem. An ecosystem that must not only communicate critical financial data and status across the company, but also gather pertinent details to inform overall growth and long-term success efforts. Efforts which in pre-transformation times were informed via inefficient manual communication and tracking methods.
Traditionally, there has been good reason for financial operations to be siloed. These inherent risks and compliance needs included continual oversight, detailed audit tracking capability and a powerful system of controls.
Today’s technological advances have allowed for the creation and design of tools with the capabilities and functionality to meet these challenges head-on. Benefits combined with form and order.
Form and order and consolidation. The sound of that has a nice ring and calmness to it as well.
If you would like to learn more about how the unified platform of RecVue's billing, revenue and partner compensation solutions can help your organization’s complex billing processes down the path of consolidation and/or automation, contact us for more information or to schedule a demo.