Beyond IT: A CFO’s Guide to Technology Evaluations

Software solutions are aiming to do finance jobs better—everything from billing to compliance to accounts payable. To scale the business, CFOs and senior finance leaders need to identify how critical it is to examine potential opportunities that can streamline or improve finance operations. Adding more bodies isn’t always the best choice, particularly when there is a lack of available resources or increased competitive pressures. Software can also lead the way to better processes and best-practice adoption overall.

Software evaluations are often full of technobabble that has less to do with business needs and more to do with dangling “request for proposal” (RFP) hoops in front of vendors. There’s a place for IT checklists, but ultimately, a decision is either a sound business one or not. So, what are some evaluation points that work for every type of software product?

Here are some key questions that you should ask your internal team and/or the technology vendor to ascertain whether a proposed software solution is a true business fit and a sound decision:

Does this solve a business problem that’s worth solving?

If there is a known compelling event coming up and human resources are not available, technology is often the best approach to resolving this problem. There are many software solutions, but does the one you’re evaluating solve a problem that’s worth solving? Does the solution alleviate an issue that is perplexing the team? Does solving this problem relieve the need to hire more people or free up more senior members of the team to focus on critical issues?

Difficult business problems revolve around pain points that affect multiple areas of the organization. Software is almost always about productivity improvements—reducing complexity and tedious processes to free up time. If the problem was taken care of, how would this affect those who are currently dealing with the problem? Where can their skills be applied for the betterment of the organization?

Does this solution solve a problem better than we can with our current toolbox?

In the past, it seemed like nearly every finance problem could be solved in Microsoft Excel. However, spreadsheets do not “excel” at transactional activities, and they naturally don’t connect to external systems that invariably must be addressed. If your organization decides not to continue hiring staff who can execute these processes, the next step is to deploy either a custom application or an off-the-shelf one that is geared towards the operation and execution of processes. Of course, custom applications require an investment upfront, which depending on the scale of your operation, may or may not be one worth undertaking. To make an informed decision, you need to explore the cost differences between the following:

• Hiring up to meet objectives (including outsourcing)
• Developing and maintaining a custom application
• Accruing subscriptions and fees for a purchased solution

Why are we doing this now? What are the risks of not acting?

Tying purchases to timelines is a tried-and-true best practice. However, you need to ensure that your decisions and your timelines are adequate to meet future needs. Before making a decision to purchase new software that likely has long-term implications, ask yourself these questions:

• What are the growth aspirations for the next 12 months? Can the proposed solution handle this?
• If you don’t employ a solution within the proposed timeline, how will this impact the organization as a whole? What specific projects will be impacted?
• Does this technology have the potential of consolidating other technology, thereby reducing gaps in process and complexity?

Technologies that impact or aid finance operations are not something that you add and subtract on a whim. The organization is not designed that way. Therefore, it’s important to establish a reliable pillar that can stand long term. At the same time, coordinating the right solutions can be a challenge. Work with the chosen software vendor on what timing works best, and how their solution may impact other projects. If there is a corporate-level objective, it may also need to be factored into your decision.

An example of this situation may be the implementation of a new ERP. You may think that holding off on other projects would make sense until the core ERP is in place, but an ERP is a repository. It’s not necessarily transactional in nature. In other words, it does not actively solve front-end processes. Waiting to deploy solutions until you employ an ERP may end up costing you more because implementations can take a year or longer, resulting in delays and value benefits that might be achieved through other modernization solutions.

Are the financials sound and believable?

Any software vendor that sells to finance should be able to articulate a financial benefit. The vendor should have a believable, detailed return on investment (ROI) analysis that fully explains the value of their solution. However, the default ROI shouldn’t be set in stone. Be ready to challenge the vendor on the ROI analysis as a point of discussion.

The ROI should address the initial and ongoing investments your organization will need to make. It should identify the payback period and the operational impact. Nearly all software, unless it is replacing an existing tool, will have an ROI that’s reflected in labor hours and work. Finally, the ROI needs to be a tool for measuring success after the software is deployed. Work with the vendor to establish quarterly check-ins to match results with promises.

Can our team make this solution work?

A software vendor should be able to handle the limitations of an existing team. For example, one of your team members may have the best intentions but the burden of their existing workload is having a negative impact on their abilities. The ideal software vendor can provide the necessary assurances for a well-run project and implementation.

It’s absolutely critical for the vendor to articulate the implementation process, the roles that each of your team members will play, and a measured success path. Be sure to ask the vendor for references—the best validation is positive feedback from others who have staked their operation on the same vendor.

What does this technology mean for my position?

They used to say, “No one ever got fired for buying IBM.” These days, only the largest enterprises buy IBM as a meaningful solution to business problems. So, unless you’re the CFO of one of the top 500 companies, evaluating solutions means balancing fit, speed to implement, and cost. But even then, this combination may not be enough.

Financial operations are a sensitive, high-risk area of the business that requires trustworthy partners. The best vendors demonstrate how responsive they are by the quality of customers they keep and by acting as consultants to your unique business. This is how you know you are getting a partner, rather than just a vendor.

As the finance leader, you will find that this relationship becomes more crucial over time. Finding the right partner now, while you’re in your current position, may inspire you to partner with them again should you move to another company and build on your long-term personal success.