By Jim McGeever, Chief Operating Officer at NetSuite
The software industry never stands still. Successful software companies develop and hone skills to respond to a major shift in customer buying patterns or to a new competitive threat. However, today’s rapid pace of market upheavals requires software companies to act nimbly and decisively at an even more rapid rate, while providing the stable financial base all businesses need. The challenge for any CFO and finance team is a balancing act – how to ensure that the finance department fully supports the organization’s continual need to flexibly change its structure while still retaining all the necessary financial controls.
Finance Needs to Enable Company-Specific Change
Software companies today are a highly diverse group supporting a wide array of products, deployment models and distinct operations. Indeed, many support multiple products and models within the same company. They look significantly different than they did 10, five or even one year ago.
For instance, we’ve built out a whole new product line – a thriving omnichannel cloud commerce business – in just the last three years. Some software companies, like ours, may provide only cloud-based software, while others run hybrid with on-premise, hosted and cloud operations. At the same time, increasing numbers of software companies now include other businesses such as a professional services arm or even a hardware component, for instance, wearable devices.
Use Disruptive Change to Rethink How You Run Your Business
All this diversity and change means software company’s CFOs need to ensure their finance team is using a financials solution that is not only highly flexible and scalable but also readily adaptable to the very specific needs of their individual organization. What you’ll see across innovative software companies like Box, which has disrupted the storage business, Qlik, which has disrupted the traditional business intelligence market with a focus on visualization and employee self-service, and DocuSign, which has disrupted the centuries-old process of signing a document, is that they’ve employed a unified real-time financial system that supports and will continue to support business growth and change.
Here are some key questions to determine whether an organization has this kind of financial system already in place to enable it to benefit from the forces of disruptive market change:
- Is the chart of accounts flexible enough to support significant changes in the company including acquisitions, divestitures or regional and vertical expansion?
- Are all record-to-report business processes fully integrated with each other?
- Are those processes efficiently streamlined?
- Can the finance team easily access all the data from the financial systems?
- Can finance consolidate and drill down into that data, and is it real-time and accurate?
- Can the finance team confidently use that data as the basis for reporting, budgeting, planning, forecasting and decision making?
- Can the finance team share relevant financial data companywide internally and externally with partners and open the books to investors and auditors?
If your CFO and finance team answer ‘no’ to any of the above questions, it’s time to rethink your underlying financial software and determine whether to extend what you already have or to invest in a new system. What your finance department needs is a scalable, adaptable and flexible financial system that can adapt to business growth and change.
Embrace Disruption from Finance
The right financial system can allow a software company to embrace disruptive change by providing the ability to:
Uncover New Business Insights. With complete real-time visibility into all financial data, a CFO can empower finance staff to become full-time analysts who can easily query and create reports which identify new information, trends and patterns. Those insights can help the CFO present a more compelling case internally to their C-level and board colleagues or to external investors for making a particular technology or business investment. The knowledge gained may also suggest an additional product or service the company can provide to its customers or partners.
Support Brand-New Business Models. A software vendor often begins by selling a single product, but over time will look to expand its product portfolio, provide different versions of the same product, and attach a range of services. The company needs to be able to identify innovative ways of packaging its software and services to match the changing needs of customers. Consider how subscription-based, cloud-based software is rapidly displacing traditional one-time payment on-premise software. Ideally, a software company needs to be able to experiment with new business models and get full insight into their success in order to determine whether the new model is a viable business going forward. Finance can help both identify potential areas for new ways of doing business and use real-time data to assess the likely success of such ventures.
Use Data as the Currency of Collaboration. Disruptive companies are ones which operate on a single source of data truth across the entire organization. Finance, Sales, and Services aren’t silos of information but instead must actively engage in two-way sharing of real-time, relevant data. Each department has a piece of puzzle when it comes to engagements with customers – by pooling their joint knowledge, they can all work to better serve that software buyer. The same is true with partners – the sharing of data lays the groundwork for tighter collaboration and the ability to present a single face to the customer. Finance, which may have been more of a data silo in the past, can help lead the charge to collaborate and share data for the benefit of the entire company.
For every software company, the future is uncertain and unclear and the next set of disruptive change is yet undefined. Over the next five years, some companies will undoubtedly need to completely reinvent their core business and their organization. Having real-time control over and insight into the entire organization on a global basis, the ability to share data internally and externally, and quickly identify interesting trends and support new business models will collectively become increasingly important. A CFO and finance team with all these tools at their disposal can help adapt their companies on an ongoing basis to take advantage of disruptive change rather than be overwhelmed by it.
Jim McGeever, NetSuite Chief Operating Officer
As COO, Jim McGeever is responsible for many of NetSuite’s internal operations including sales, services, support and administration, and spearheads NetSuite’s industry and customer satisfaction programs. He joined NetSuite in 2000 and, as CFO, rapidly built a global financial organization across seven countries and was a driving force behind NetSuite’s successful IPO in 2007. He holds a B.Sc. from the London School of Economics and in 2007 was named Bay Area CFO of the Year.