Software companies are known for their ability to grow, adapt, and transform themselves so as to counter the challenges thrown up by changing times, varying customer buying patterns, and upcoming competition. They need to be able to act swiftly and assertively, while maintaining a stable financial base for their organizations. Finance departments have to strike an ideal balance between helping their organizations to stay agile enough for quickly adapting to changing technologies while simultaneously providing them with a stable financial base.
Requirements for Finance:
Market economics have changed so much that today, software companies support a wide array of products, operations, and deployment models, in various formats – cloud-based, on-premises, hosted, or hybrid. With so much diversity at play, financial teams of software organizations have to be equipped with solutions that are not only flexible and easy to scale, but also can rapidly adapt to the specific needs of the organization. Innovative companies that have succeeded in disrupting traditional businesses have employed financial systems support business growth in the present and will continue to do so in the future despite growth-related changes.
To check how well prepared your organization is to face the future with adequately modern financial solutions, answer the following checklist:
- Are your financial charts adaptable to organizational transformations such as acquisitions, vertical and regional expansion, etc.?
- Are the record-to-report businesses streamlined and integrated with each other?
- Is all the finance data in real time, accurate, and easily accessible to the finance team for effective consolidation and analysis?
- Can the data be used for budgeting, forecasting, and decision making?
- Can the financial team share the data internally as well as externally (partners) and also with auditors etc.?
If your finance team answers ‘No’ to any of the above questions, then it is time to reconsider the decision to keep the existing financial system versus investing in a new one which can effectually change and grow with your company.
So what should your contemporary financial system look like? An ideal financial solution system for software companies of today should have the following capabilities:
- Discover new business ideas: When finance team members have access to accurate, real-time data and the tools to analyze them deeply, they give their the CFO the power to take significant decisions on the basis of data and present them to both internal (board members) as well as external (investors) stakeholders. Thus, data from finance teams can be the driving force for changing business direction and launching new products/services.
- Support novel business models: Traditional systems of selling software (one-time payment, on-premises) are being rapidly replaced by newer business models such as cloud-based, subscription-based sales. In order to succeed in these dynamic times, software companies need to keep exploring newer avenues of selling their products and services. In this regard, data-enabled finance can help not only to identify potential areas of expansion but also predict the probability of success in them.
- Use data for collaboration: In today’s business setting, separate departments in any organization cannot afford to be data silos; on the contrary, they can collaborate and flourish by sharing relevant data across departments – finance, sales, and services. Sharing and joint-owning of data is beneficial not only within an organization but also among partners, resulting in better collaborations, better customer experience and more business.
Need of the hour:
In the software sphere, disruptions are occurring at a rapid pace. In five years, the very nucleus of many software companies might need to undergo a complete change. To keep up with the upcoming trends, new business models, and innovative products, it is essential to have crystal-clear vision into immediate, accurate and predictive data, and share it pan organizationally. A finance team equipped with the right tools to achieve this will be prepared for forthcoming disruptive challenges confidently and competently.