SaaS ERP identifying hidden IT costs for Headland CFO

Thanks to the ease of procurement, SaaS-based software is increasingly allowing CFOs to call the shots when it comes to technology deployments. For some, that's causing something of a tense relationship between the CFO and CIO.

But at Headland Machinery, moving to a SaaS-based ERP — NetSuite's OneWorld — has been a boon for the company, allowing it to gain strong insights into both its customer base and its own organisation.

"We have remote locations and guys literally working all over the place, so we needed systems which could connect very easily, be easily set up and run with, and which was just one solution rather than disparate systems for sales, financial, service and marketing," Headland Machinery's joint CFO and CIO, Lucas Vear, says of the company's business challenges pre-SaaS.

"We needed one view of the customer so we could orientate them and service them accordingly and provide them with the appropriate service; rather than not knowing what areas of the business are doing what for the customer. In the past we would have had to invoice out of different systems and we didn’t know exactly what their costs were in totality. That's why we went to the SaaS model."

SaaS Benefits

Vear says a major benefit of moving to SaaS-based ERP has been in the revelation of a host of IT-related costs — such as hardware, maintenance and support — that the business was not aware it was carrying.

"Once you evaluate that, you can see that you are carrying all these additional costs which aren't necessarily transparent in your business," he explains. "It can be something like the cost in having to train people on all the different systems you have, or in having on-premise rather than SaaS, it is all the additional hardware costs you incur, or hardware support — it's all the layers that go with that."

In addition, SaaS-based ERP has empowered the CFO role, Vear says, because he is able to drive cost savings within the business, and to deliver clearer reporting, as well as analytics, to management.

"You want information on-demand and you want to be able to deliver reports to different parts of the business," he explains. "If I am sitting in the CFO seat I might be interested in financial information, but I can also track and report the opportunity pipeline, or I can look through and see the effectiveness of marketing campaigns, I can also track freight and see where it is."

"One of our pain points in the past was stock loss — having a one system solution where you have a location who holds the stock as opposed to only finding out during a stock take that you don’t have that stock anymore and you have no-one accepting responsibility for the stock. Now you either have the stock with you, it's being invoiced to a customer, or is being returned and can be traced."

Vear says SaaS is indeed an attractive proposition in not having a massive upfront cost associated with a major software purchases, such as an ERP system. But the real advantages are greater control, and wrestling power back from the vendor.

"The other proposition there is that if I am not happy with the delivery of the software then I just stop the subscription to it," he says. "It means for the software vendor that they then have to make their software relevant to the users as it is the case that if it doesn’t keep up with the needs of the users, then they will just stop using it."

Transforming the CIO-CFO dynamic

In wearing both the CFO and CIO hats at Headland, Vear says that SaaS transforms the CIO's role in particular because it reduces his or her responsibility for hardware management and focuses them more on software optimisation.

"In the past, the CIO would look at data security, hardware management, support, networking… SaaS eliminates all that," he says. "The responsibility for hardware, backups and security is with the SaaS vendor."

The CIO, Vear says, is then now responsible for ensuring that the software the organisation uses is tailored properly and that the organisation is getting the most value out of it.

"SaaS also massively changes the role of the CFO, because you no longer have the problem of 'where is the data' — you now have data which is real, live data," he says. "The reporting requirements are more focused on ensuring that the integrity of the data coming through is accurate, rather than taking the data outside the system and massaging it, and doing separate reports and everything."

The focus for the CFO, then, and his or her supporting staff, moves to data integrity: knowing where the organisation's data is falling down and having the ability to go in and fix it, Vear says.

"The focus is moving away from methodical monthly reports to focusing on that real time data and making sure it is relevant," he says. "Because you now have the CEO wanting real time information and wanting real time reports. Even with the chief marketing officer it is about segmentation of your data so that you can be effective in your marketing. Data is king."

On the procurement side of things, Vear says SaaS is changing the CFO-CIO dynamic through making CFOs responsible for the business case, the budget, the acquisition and deployment and the CIO responsible for the integration, the data and the different tools the business needs to access the data.

"It is just a change for roles for the CIO," he explains. "Instead of being focused on the hardware and security components, their focus will be on devices and the optimisation of software. They will need to be strong applications people rather than hardware people."