IS YOUR LEGACY SYSTEM FIT FOR PURPOSE?
Struggling with slow data collection for financial close?
Pieces of information still gathered in excel sheets?
Manual activities and reconciliations slowing you down?
According to analysts there will be a shift in financial consolidation solutions in the next three years towards new generation cloud tools. Many established software solutions are going out of support or will be in the near future. For example:
- Hyperion Enterprise
- IBM Clarity 6
- Cognos Consolidator
- SAP BPC (Microsoft version)
- Longview Khalix
…just to name a few.
This change is being driven by changing requirements in financial processes. In a survey conducted by CCH Tagetik, 94% of financial executives shared that they are unhappy with their existing financial system. They feel systems are outdated and not fit for purpose. They find themselves resorting back to traditional manual processes that are time consuming and error prone. They often find themselves struggling to collate data from multiple systems, using excel sheets along with manual data validation of accounts.
Can you relate to the above challenges? Do you use tools or consolidation software that do not support your group reporting needs? If you have answered yes to the above, your financial consolidation system might be ready to retire. Here are some signs to watch out for:
1. You are worried something will break if you upgrade or change something in your consolidation software
If you do not run updates on your consolidation software with the fear of breaking data connections with other third-party systems, you are not alone! If your financial consolidation software has not been updated in the last six months, you run the risk of non-compliance to the latest regulatory changes.
Updating your legacy system can be very expensive as it may require external product experts who usually charge a premium. It also requires your IT time to put in extra effort to ensure that the upgrade doesn’t have any knock-on effect on any other systems.
If your consolidation support is difficult or too expensive to upgrade – it might be time for a change.
2. How dynamic is your existing consolidation software?
Financial regulations and operating standards are ever-evolving. Does your consolidation software adapt accordingly? Or are you making do with the existing software with some external plug-ins or custom developments? Many organisations feel it will be too expensive to move from there existing consolidation software. Therefore, they install custom patch solutions to include any new functionality required.
In the long run, these custom patches increase total cost of ownership (TCO). It can be better to migrate to a new generation consolidation system that is dynamic and built with changing regulations in mind.
Modern consolidation tools such as CCH Tagetik have easy migration paths making it easier to transform financial close and consolidation.
3. High Complexity of the system – Historically, financial software has been created by IT and customised to suit business processes such as finance. However, these solutions are complicated for the end-user. Businesses end up spending a lot on training staff in complex systems and retention of staff becomes expensive.
CCH Tagetik is a system that has been created finance teams for finance teams. The system has a simple user interface. The user interface follows a simple/natural flow of tasks that a financial manager would follow in the process of closing.
If you are spending too much on staff training and retention: that is the third sign that your legacy consolidation system is ready to retire.
4. Does closing and consolidation take six days or more?
If your employees are struggling to get all the information required for closing together, you are in danger of slowing down the consolidation process. When the system fails to support, employees resort to workarounds such as using offline methods and excel sheets.
This also poses a compliance risk as inaccuracies, delays and lack of control and governance creep in at this point.
Close time frames should be reducing – with the levels of automation available in today’s tools, organisations should be able to close and consolidate financial accounts in under 6 days – even for group companies.
5. Product or solution is dropped from road maps
Many financial consolidation solutions are going out of support, being phased out of vendor road-maps, being replaced by new cloud solutions and dropping of the industry analyst reports.
Any of the above is a bad sign. This means the will be no more investment in development or improvement of those solutions and they simply run out of life with ever reducing upgrade and support from the vendors. At this time organisations are using this natural cycle in software as an opportunity to reap the benefits from new age cloud consolidation solutions – simpler, easier to use, more self services and greater functionality making jobs easier.
Gartner predicts that by the year 2020, 80% of large organisations will have replaced their legacy solutions because it’s not fit for purpose. If you relate to any of the above, we urge you to look beyond historical financial management and use this comparison matrix to choose the consolidation software that best meets the needs of your finance team.
About CCH Tagetik
CCH Tagetik is a financial and regulatory reporting tool that has been adapted for lease management. Over 200 global organisations already use the CCH Tagetik solution. It empowers decision makers and business users across all departments, helping them work smarter, streamline business collaboration, and make insight-based decisions with confidence.