In our third article of this series, we look at the risk around software and vendor selection. What risk needs managing when buying an external SaaS product into your finance team?
Generation CFO’s recent research into the impact of coronavirus on business in the UK, found that “implementing cost control” was the second-highest priority for CFOs. 75% of respondents stated that cost control was “critical” or “very important” to their immediate goals and actions.
Our research also revealed that buying new tools to enable this level of control was critical too. When asked the question, “Has your finance transformation strategy priority changed due to COVID19?”, over 52% of respondents answered the priority had “significantly increased” or “increased” in priority.
These two results indicate a need to buy enabling tools, and a reprioritisation of technology projects. But before you start inviting software companies in or downloading apps, there are a number of considerations and risks you must consider to ensure a successful digital finance project.
Keeping everyone App-y
When you are under pressure to fix a problem, improve a process, or be seen to be taking action, there is a risk that you start looking for things to buy before really understanding the problem you want to fix.
Take “implementing cost control”; what is it that CFOs and controllers are looking to fix during COVID19? Is it the budget process? Is it the workflow to process and approve spend? Is it the ability to control, even stop spending? Which one is it?
Without truly understanding the problem, there is a chance that you start buying apps for specific fixes that may or may not be a strategic priority. Call it a “whack-a-mole” approach.
Before you know it, at best, you are adding complexity, at worst, you are exhausted from managing your new shiny apps. So the first thing to do when looking to buy an app is to fully understand the problem.
Build an internal ‘digital transformation’ team
The best way to do this is to build a community of problem solvers from your finance team and outside your finance team, including all areas of the business – sales, marketing, operations, IT – to act as a new “digital transformation” team.
A team that will include a mix of talent, knowledge and experience whose goal is to find business problems to fix, to discuss the problem so it can be better understood and defined, and to prioritise the problem that needs a timely solution.
Once a project priority had been agreed, the team would work on a solution; taking into account these wider considerations in order to add app features from across the company, to agree if it’s a “build” or “buy” (and to avoid a “whack-a-mole” approach) by defining exactly what a viable solution is. Only then do you “start” the buying of software.
This effort may seem unnecessary – even excessive – but it is essential to ensure you get what you need, and you get as complete a solution as possible.
And the good thing about this approach is it’s a low-cost initiative and low-risk activity. Nothing is being spent on solutions that may or may not be needed or a strategic priority. Plus, the above process will educate and engage the team and its future users, so app adoption is more likely to happen once implemented, which is a critical barrier to an app’s success.
For more information on vendor selection, we recommend these articles.
An ‘Appy example
Using the “cost control” example, you may find after discussion with your new digital finance team that the priority need is the ability to control or stop spend quickly, rather than improving the budget process or variance analysis reporting process.
Consequently, you look at your existing procurement card and/or corporate card users and limit the business’s use of them, but if the business needs the flexibility to purchase during the crisis, you may need to give everyone a way of spending via card. Now you must contact your card provider to ensure you can set limits and alerts to ensure you have rigour around your spending.
This is where the value of this new digital finance team comes in, as they discuss in more detail and agree on the real fix. The priority issue that needs a solution is the controller’s ability to monitor spend in real-time, set limits and receive alerts if these are breached. During a pandemic, waiting for reporting to measure spend is simply too slow.
This is where tools like Soldo, the spend management platform can help, where traditional card issuers cannot.
Finding a partner
Ask anyone who has been on a date, not all potential partners are desirable, even welcome, and buying an app is no different. And when it comes to business software it is totally OK to do a bit of background stalking, but what are you looking for?
A partner, of course. Some software companies see themselves as a supplier of technology and do not create a partnership. They are not looking to build a relationship post-sale, they are not looking for input into a product roadmap, they are not building a user community, they are looking for a ‘one night stand’ and not interested in your project success, so it’s best to avoid them.
Some partners can’t pay the bill. Maybe not an obvious one, but if your priority project is business-critical, it is wise to check the financial backing and stability of your partner, otherwise you may be left with an app that isn’t being developed or supported anymore, and at worst, an app that stops working as the SaaS company has gone bust.
In our recent interview with Soldo CFO, Dynshaw Italia he explained, “Soldo has invested heavily in its product before scaling as a growth company, We are in a position to do this as we are supported by the world’s leading investors, joining portfolios that include Facebook, Spotify, Monzo, Slack, Citymapper, Deliveroo and Secret Escapes.”
So not every partner is equal and having a good understanding of their product development approach, user community and funding is critical to the selection process.
We are all under pressure to perform, to be more adaptable, to enable the business, get digital.
One great option is to set up a new digital transformation team and start digital finance projects.
This is a great opportunity to join and lead your digital finance team, making sure the issues and risks are fully understood and a wide number of ideas are incorporated into the project team.
Once what you need is clear, make sure you partner with a technically viable and financially viable partner who will give you the solution your business needs.
This article was written by Christopher Argent, Founder of GenerationCFO.com. For more information on Generation CFO services, please contact us here.
Soldo is a spend and expense management platform, complete with Mastercard® cards, intuitive admin and effortless reporting. Their mission is to simplify the entire business expense cycle, from beginning to end. We use the smartest financial technology to solve the three key business spending problems: delegation, control, and reporting. Learn more here.