Sponsored by
Is Old Faithful Letting You Down? Outdated financial software can compromise much more than the accuracy of your financial reporting
Many businesses today are evolving faster than their financial software – a situation that can have serious consequences for the entire enterprise. Although the impact of aging financial technology can be slow to emerge, the challenges only increase over time. The pain is usually first felt by those responsible for reporting, as they have to work harder and harder to provide timely, accurate information. Eventually, the problems become significant enough to warrant executive level attention. Complaints from frustrated employees and colleagues in other departments make their way to the CFO, who will almost certainly be having difficulty reporting at the executive level. The costs and resource requirements also become eye-catching, as aging 50 systems become more expensive to support. The challenge of propping up old technology and creating workarounds for functional deficits inevitably extends the burden to IT, whose time 40 would be better spent helping drive the business, rather than trying to prevent it from grinding 30 to a halt. 20
While it will likely provide little solace, CFOs should know that outdated systems are certainly an unusual problem. A recent SimCorp poll found that 56% of senior finance execs lack 0 confidence in the accuracy of their present accounting systems, while 52% of them say their biggest barrier to improving financial operations is an outdated accounting system.1
10 not
• In the US, the number of late filings is rising (see chart at left), and technology is increasingly cited as a reason. In the KBRG Midcap 1200 Index (as shown), the number of companies listing technology as a cause of late filings role by 38% over the past three years.
Number of Late Filers in KBRG Mid-Cap 1200 stating technology was a cause 50 46
43
• Ten years ago, 58% of companies in Ventana Research’s benchmark survey could close the books in five days. Now only 49% can do so.2
36
• Eighty-nine percent of 200 organizations surveyed by the Aberdeen Group in 2013 still use spreadsheets, despite the fact that 88% report that their spreadsheets often contain errors.3 2010
2011
2012
Data Source - Audit Analytics and KBRG
Karlo A. Bustos CEO & Chief Analyst M: 617.898.7476 E: kbustos@kbrg.co l www.kbrg.co l
1
2013
Outmoded software not only makes reporting difficult, it also impedes innovation. Antiquated systems can gradually make companies more rigid and slower to respond to opportunities. One recent Ventana Research study showed that 77% of executives who say they have accurate data feel their companies can manage change well. By comparison, in companies where the executives don’t have confidence in their data, only 35% say they can do so.4 Part of the reason is that managing an old computer system takes a lot of time and energy. Today, most analysts aren’t data scientists; they’re data janitors. Another recent study found that 68% of analysts surveyed spend more time collecting and standardizing the data used in their analytics than thinking about what it actually means. Only 28% said their efforts focus primarily on analysis and trying to determine root causes.5 SimCorp survey, quoted in Forbes (Jan. 16, 2013). “Financial Close Takes Longer,” Treasury & Risk Magazine (May 1, 2012). 3 “Financial Planning, Budgeting and Forecasting: Removing the Hurdles,” Aberdeen Group (March 2013). 4 “Finance Analytics Requires Data Quality,” Ventana Research, Robert Kugel Blog (April 2014). 5 Ibid. 1 2
Financial Management Challenges of Outdated Systems
|
|