How SaaS streamlined finance operations

By delivering application functionality as a globally accessible, web-based service, SaaS – or On Demand – has bridged the gap between business and IT says Ariba's Tim Minahan.
Written by Tim Minahan Ariba, Contributor
Commentary - Ten years ago, corporate finance departments' quest to identify solutions that could automate and streamline operations - and maximize cash flow - was an expensive and arduous one. Not only did finance managers need to navigate the overwhelming array of then-unproven solution options, they also needed to overcome growing resistance from internal IT departments that were intent on standardizing on a single ERP vendor.

On the one hand, who could blame IT for being reluctant to adopt best-of-breed software? The typical enterprise software installation involved lengthy rollouts of 18 to 24-months, cost millions of dollars in hardware and required countless hours of IT resources to deploy and maintain onsite. So, limiting deployment of non-ERP systems seems a logical way to standardize and limit burdens on already scarce IT resources.

Unfortunately, as increasingly frustrated finance directors learned first-hand, IT’s unwavering stance on system consolidation often failed to support the needs and business objectives of finance or any other functional department. As a result, finance’s productivity and performance was often hindered – not helped – by the company’s overarching IT strategy.

Software as a Service (SaaS) has changed all this. By delivering application functionality as a globally accessible, web-based service, SaaS – or On Demand – has bridged the gap between business and IT – enabling finance directors and other business line executives to access the functionality required to meet and exceed their goals while still toeing the line on corporate IT strategy.

In short, On Demand has sparked a fundamental shift in the way that companies of all types and sizes purchase and deploy software. Thanks to a shared Web-based delivery architecture, rapid innovation cycles, and pay-as-you-go, subscription-based pricing models, On Demand helps bridge the gap between business and IT in the following ways:

  • Rapid, low-burden deployment: With no costly software or hardware to deploy or maintain, On Demand minimizes demands and impact on IT, allowing finance directors to make technology decisions that support the business – not the other way around.
  • Lower TCO: A study from Triple Tree and the Software and Information Industry Association (SIAA) found that On Demand deployments are 50 percent to 90 percent faster with a total cost of ownership (TCO) five to 10 times less expensive than installed software. This is an attribute that should resonate both with finance and IT directors.
  • Rapid innovation: By their nature, On Demand solutions are function or business process specific, ensuring that the software finance departments use contains market-leading finance functionality – not just features that are add-ons to a general ledger. Most On Demand vendors deliver innovation upgrades on a quarterly or bi-annual basis, allowing them to be more responsive to customer and market demands. In most cases, these innovations are part of a base subscription.
  • Battle-tested performance and security: Delivering a common service to hundreds or thousands of customers requires On Demand providers to deliver far greater performance and greater data security than the typical enterprise. Their business depends on it. In fact, On Demand provider investments in processing power, bandwidth and security are usually well beyond the limitations of any single company’s IT budget and resources.
  • Flexible pricing: Most On Demand providers ascribe to a pay-as-you-go, subscription-based pricing model, allowing you to pay only for the functionality you require. In some cases, finance departments have been able to use the flexibility of the On Demand pricing model to move enterprise application investments from a capital expense to operating budget.
  • Customer service focus: On Demand inherently changes and improves the customer relationship. Success in this realm is measured not by initial license revenues but by user adoption, satisfaction and customer renewals. To remain successful, On Demand providers must deliver reliable system performance, top-notch service and support and continual application innovation and enhancements.

Importantly, On Demand functions as an extension of a customer’s existing IT infrastructure, helping it get more value from its ERP, EDI and legacy data systems without breaking the bank or incurring operational or financial risk. Leading On Demand solutions offer pre-defined integrations into leading ERP systems and services to support integration to legacy systems. For instance, many companies have long since implemented standard ERP and accounting functions. ERP is great for closing books, preparing financial reports and processing transactions. But finance executives often find that ERP fails to provide them with the visibility and strategic knowledge they need to plan and manage budgets, develop accurate forecasts and support business unit decisions.

On Demand solutions such as spend analysis, electronic invoicing presentment and payment (EIPP), and working capital management solutions give finance more visibility into enterprise-wide spend, streamline financial operations and improve cash flow – all while increasing the value of the data and features that have been locked up within a company’s existing ERP.

Thanks to On Demand, finance directors no longer have to be passengers on the road to operational excellence. Instead, they can develop transformation strategies and implement solutions capable of driving the processes.

Tim Minahan is Chief Marketing Officer of Ariba Inc., a provider of spend management technology solutions.

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