When do your current system contracts renew/expire?
One of the most overlooked “traps” that I encounter with clients who are looking at a software replacement or upgrade, or executing a digital transformation program, is the risk that existing software contract terms & obligations are ignored. Everyone’s busy negotiating the new ones and planning the project/program.
Whether you are on annual maintenance/support for on premise systems or SaaS (software subscription) contracts, take another look now at the terms regarding automatic renewal, or minimum advance notice of cancellation before renewal date. Do this for all affected contracts.
Your business case for the new software should have included the savings from paying for software being replaced (and the related hardware too, if you system is on-premise). If you missed the option to cancel (or to re-negotiate to monthly or quarterly until you go live), then you will not make your business case work. That’s not a good thing to have to tell the CEO.
If you’re looking at modernizing or upgrading software, or executing a digital transformation strategy, and would like to discuss how to approach that, please reach out to me via firstname.lastname@example.org. Thanks!
A Software Selection Christmas Tale with apologies to those who dislike puns….
In the remote little village of ACUMATICA, somewhere on the GREAT PLAINS, a finance guy called JD EDWARDS woke up one morning and mused “Will today be just another WORKDAY?”
He needed a new system for his company, so he consulted a well-known SAGE in the software industry. JD asked him, “O great ORACLE, how can I be a FINANCIAL FORCE for my company? I need to be able to tailor the software to my business processes.”
JD knew of many software products, and the SAGE updated him on the changing DYNAMICS of the market. However, he worried that choosing the wrong one would SAP his company’s resources and also make his PEOPLESOFT.
So with an independent ERP consultant to help him, JD looked at a few leading cloud solutions over the next couple of weeks. After doing his due diligence he made his decision and went home.
That night as he went to sleep, he said to himself, “Well, now I can rest knowing that my company’s data is INTACCT.”
If you’d like to discuss how to also get a good night’s sleep, please contact us via the form below:
When it comes to ERP, CRM, Accounting and other business software, remember “An Ounce of Selection Is Worth A Pound of Implementation.”
Years back, when I had more hair on my head, the corporate office of the enterprise I worked for at the time brought in a BCG trained consultant to work with the management teams of each operating division. One of the take-aways from the strategic planning session was this summary of the role of the senior Finance Executive in the organization. I kinda liked it, because I found it help me identify what kind of person I needed to be my controller so that I could work with the CEO of our operating division.
DEFINING THE FINANCIAL ROLE IN AN ORGANIZATION
Financial Management is made up of 2 broad functions:
- Prevention of Loss in the Value of the Enterprise (Protection)
- Acquisition of Gain in the Value of the Enterprise (Productivity)
In everyday words:
- Stopping us from losing money we already have
- Helping us to make more money that we otherwise would have
|EXAMPLES OF PROTECTION ACTIVITIES
||EXAMPLES OF PRODUCTIVITY ACTIVITIES
|Obtaining effective security for a delinquent receivable/debt
||Educating managers with P/L responsibilities in the financial implications of decision making
|Designing effective risk management and hedging programs
||Designing a highly motivating results-linked incentive program
|Rapid, tightly controlled cash handling and reconciliation
||Negotiating cost-reducing supplier contracts
|Reconciliation of accounts
||Establishing a tightly measured productivity improvement program
|Inflation-shield clauses in contracts
||Designing innovative asset management programs
||Negotiating a lower cost-of-debt with fewer constraints
|Tax shield maximization
||Participating in industry organizations that can materially influence the competitive market
|Effective warehouse inventory receiving steps
||Setting up creative and competitive pricing practices
|Payroll processing and payments
||Develop finance function training for all finance staff
|CHARACTERISTICS OF PROTECTION ACTIVITIES
||CHARACTERISTICS OF PRODUCTIVITY ACTIVITIES
|Defensive, inward looking, preventive, procedural, technical, legalistic, bureaucratic, authoritarian
||Outward facing, anticipatory, flexible, interactive, participative, innovative, social, developmental, educational
|Banking relationships, preparing the marketing/ advertising budget, stakeholder reporting
PITFALLS TO AVOID
You will almost always produce mediocre, if not downright substandard financial management, if you try to get a clear-cut Protection person to handle the Productivity functions, or the other way round. Very few people do both well, but many do one or the other very well indeed.
Split the two functions. Coordinate them, but split them. Staff them according to their Critical Success Factors.
MULTI DIVISION ENTERPRISES
If a Division cannot afford a fully staffed, twin stream financial structure at each operating entity, then set up Protection functions at each operating level and a Productivity function at the Divisional level,
So, what kind of person became my controller?
The answer is: the Protector. My role was to help the divisional CEO grow the operation. Our corporate CFO was more of a protector too, but I preferred the business side.
Your company is doing well, making money. It does so in spite of some known, but ignored, issues. No one really feels pain at present, do they? There is no “burning platform.”
|Sometime in the future, you instinctively know, one or more issues will become a noticeable pain. Continuing to ignore an issue no longer works (I call it “taking mental Tylenol”). Once the “mental Tylenol” effect wears off, people will start to pay attention. It could take a year or more.
Finally, management will take action to recover. They will call it a step to improve performance. But, is it? I don’t think so.
Customer complaints rise
Orders ship later
Invoicing errors hurt DSO
Quality is declining
Processes cannot scale
Staff attrition rises
Let’s take a look at this scenario: Today your company is performing at a certain level (profitability, sales volume, net promoter score, etc.).
|Let’s index that and say we are at
|The problem we ignore for a year drags us down say 15% to
|Your management team says they can improve by 20% next year, which would bring us to
In my books, that’s NOT an improvement, it’s only a recovery (102 v 100). But, what if we decided not to wait, to get started now?
|We’re at the same starting point as above
|We implement the same improvement plan (20%), which takes us to
|And a year later that continuing improvement gets us to an index of
What did waiting cost you?
By doing nothing until things get worse:
- You’ve incurred further declines in performance (85 v 100)
- You’ve got less ROI to address the issue (and the effort and cost to remediate is likely higher)
- You’ve likely hurt your customers more
- You’re managing by reaction instead of by anticipation.
Isn’t that 42 point difference after 2 years attractive? Even half of it?
For more information on how we can help you act now, please contact us.