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The CFO Software Stack: Picking the Best Software

The CFO Software Stack: Picking the Best Software

Strategic considerations for selecting the best software for your business.

At Founders Circle Capital, we’ve been exploring the ins and outs of the CFO’s Software Stack with the CFO|Circle, our private community of CFO’s leading hypergrowth companies. Finance leaders touch so many aspects of the business and a critical piece is owning and managing the majority of their company’s software stack. 

In our first post on the topic, we focus on best practices for implementing software and the importance of a dedicated role to manage the stack.

In this post, we cover the five of the most requested business activities in more detail — Enterprise Resource Planning, Business Intelligence, Contract Management, FP&A, and HRIS — recommending strategic considerations and specific systems for each function.  Here are the takeaways from our conversation: 

A Refresher – System Implementation:

Before jumping into a discussion of specific business functions and their accompanying systems, it’s helpful to revisit the best practices for system implementation.  Apart from selecting the best software for your company’s needs, implementation is the most important factor in any systems conversation.  

There are generally three parties engaged in a successful implementation process: the vendor’s Professional Services or Customer Success organizations, your company’s internal domain expert, and a project management entity.  A company may choose to hire an external consulting organization to handle implementation. Or it may instruct in-house talent to drive the process; regardless of who handles implementation, there needs to be internal ownership to manage the system and all of its actions.  While team members with robust and functional skills should be able to implement and maintain systems initially, eventually, a company should hire a point person to handle the overall management of its systems and act as a single source of truth.  Ultimately, a company should focus on installing a systems lead before committing to significant scaling.      

Strategic considerations and specific systems for each five most requested business activities:

Enterprise Resource Planning

Enterprise Resource Planning (ERP) 

As the top requested category to dive into, ERP systems automate business processes and provide insights and internal controls for many day-to-day activities.  ERP software helps firms manage all the complex processes that affect their business, including accounting, procurement, project management, risk management, compliance, and supply chain operations.  

There are a number of strategic considerations to be made before implementing an ERP system.  First, a company needs to understand how the system will scale with the business.  In all likelihood, business attributes such as your go-to-market motion or pricing model will not remain the same for an extended period of time, and your ERP needs to have the flexibility to grow and adapt alongside the firm.  Further, the ideal ERP system will be as integrated with the core business functions as possible.  Choosing an ERP with a variety of robust functions streamlines data into a single system of record, eliminating the confusion that comes with having multiple additional systems to support the main software.  Finally, the best ERP will be easy to manage and won’t require a large team to keep it running smoothly.  Circle CFO peers recommended that ERP be owned and run by the Accounting team, which provides a different perspective on the data than the IT or Business Systems groups.    

Human Resource Information Systems

 Human Resource Information Systems (HRMS/HRIS)

HRIS software was another topic the CFO|Circle was eager to discuss.  These systems encompass the functionalities needed for effective Human Resource Management, including recruitment, performance management, and development.  With an HRIS, a firm can map everyday processes to identify and eliminate bottlenecks, control costs, and ensure team effectiveness.  

Like ERP, a company needs to ensure its HRIS can scale as the company grows.  By implementing a solid HRIS early, a firm will not have to worry about playing catch-up as they add more employees into the system.  Further, HR teams should determine what metrics they’re looking to track with the HRIS, as the quality of reporting can vary from system to system.  Determining what data points will give you the best insight into your employee base will help you decide on an HRIS.  Additionally, teams need to consider the payroll functionality of their HRIS systems and choose the system that best fits the company’s needs.  For example, companies with international employees must implement an HRIS with international payroll abilities, as that function is not universal.  In general, the community recommended that the HR team own the HRIS and generally have an operations person run the system itself.  

Business Intelligence

Business Intelligence 

By building out business intelligence functionality, firms can retrieve, analyze, and transform data into useful business insights for the strategic planning process.  Business Intelligence systems are critical for a company’s continued success, providing data warehousing, data visualization, and dashboard tools that teams can use to create a roadmap for the future.  Generally, while the data analytics team will own the engineering process and input the data into the system, each function will often have a dedicated analyst working in partnership with the engineers to provide teams with requisite functional expertise.  While the systems themselves are important, building out your teams with the right people first will help the company efficiently install its systems down the line and will ease the challenge of the BI system’s decentralized management structure. 

“The systems discussion really comes down to people and teams. It’s more relevant getting that right and then letting the systems fall into place.” -Lee Kirkpatrick

Businesses looking to implement a BI system must first determine how much of the company’s activities the system will encompass.  While teams analyzing and reporting on go-to-market data will often possess a different skill set and audience than teams working with product data, a successful BI software will marry those two functions into a single reporting structure.  Additionally, firms should take their desired usage pattern for the software into account when choosing a system, whether they just want to share out reports or enable organizations within the company to self-serve their analytics functions.  Regardless of what system your firm chooses, it’s best to start early and small with the implementation process, adding in new workflows slowly so as to not overwhelm the team.  Moving too quickly without the necessary functional expertise can create issues within the data and prompt employees to mistrust the data and resist the change.  Ultimately, getting the CEO to engage in roadmapping the organizational structure of your systems will help avoid confusing negotiations across teams and align everyone towards a shared vision of the future.        

Contract ManagementContract Management

When it comes to contract management, many firms only decide to implement a system to automate their contract processes after the sheer volume and variety of contracts overwhelms the traditional manual process.  By implementing a Contract Management system early on, business teams can self-serve from templates owned by legal, agreeing on and managing routine contracts at scale from one unified workspace.  

A solid Contract Management system helps a firm reduce the manual, low-value, repetitive work that comes with negotiating, amending, and analyzing legal contracts.  By providing employees with a centralized repository of contracts, it is extremely easy to tag and search for specific documents in a timely manner. Automating these processes eliminates the inevitable errors and enables your company to scale. The ideal Contract Management software will integrate well with the systems that the “main producers” of contracts, usually the sales team, operates within, streamlining the process (and making it an easier “sell” to those users).  Finding a system that also provides data on contract speed and other relevant metrics offers teams insight into ways they can improve.  

Generally, the Contract Management system will be centralized with Legal, as they have the most responsibility for contract compliance.  However, ownership can vary depending on the specific needs of your company. CFO|Circle members described how both finance or deal desk could run the Contract Management system.       

Financial Planning & Analysis

FP&A

FP&A systems allow firms to create budgets, forecasts, analyses, and reports for decision-making.  While many firms have dedicated FP&A teams, thesystems they use to track and analyze the data vary widely based on the size of their FP&A team and the revenue managed.  Earlier stage companies with smaller teams can get away with using spreadsheets to keep track of their analysis, but it’s important to introduce a more automated system as the business and FP&A team scale.  One CFO suggested implementing more robust FP&A software once the headcount of your FP&A team reaches the mid-single digits, providing a centralized source of truth for multiple team members and doing it earlier before it’s too late.  

Before implementing FP&A software, a company first must determine the problem it’s looking to solve.  While a system may be implemented to fix a specific problem, usually within the FP&A function, there are often many additional benefits. Join The CircleFor example, a firm might choose a specific system to increase the efficiency of their FP&A team or they may choose a different system for better reporting and collaboration with business functions.  The community suggested that companies determine how they plan to use their FP&A software, as their intended usage plan will inform how robust a team’s system should be. Implementation of FP&A software can take anywhere from a month if you are fully heads down to a quarter in duration if you’re starting with the basic modules. And longer if you’re bringing in sales forecast, revenue, P&L, etc.  Ultimately, as the implementation of a system benefits the FP&A team most of all, the FP&A team should own system management and determine the necessary level of functionality.

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