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Integrating SaaS financial applications, including accounting, budgeting, planning and forecasting, with other critical business processes is not just about the technology necessary to accomplish these integrations.
While the technology is essential, it's also about looking at which SaaS financial applications have the most synergy with other parts of the business, such as HR, customer relationship management (CRM) and the supply chain, and bringing them together.
Companies typically choose SaaS financial applications because they're looking for additional flexibility, as well as rapid implementation and integration, said Hyoun Park, CEO and chief analyst at Amalgam Insights based in Arlington, Mass. They also want the ability to work toward digital transformation so they can more quickly align their business processes with digital capabilities, as well as have the ability to track the data and analytics associated with what they're doing, he said.
Therefore, the first points of integration with SaaS financial applications are typically sales, HR and the supply chain.
"That's because the CFO is increasingly being asked to be a strategic officer," Park said. "But here's the thing: CFOs traditionally only had access to the financial data. So to change that and become more strategic, the CFO needs to understand the sales data, most specifically the direct sales numbers, as well as the key drivers that are associated with sales, such as the opportunities [and] interest that is coming from the marketing side."
Consequently, the CFO may need both sales and marketing data to better align that information with more direct financial data. The first step, then, is for CFOs to get the relevant sales and sales opportunity data from relevant CRM and marketing applications, according to Park.
Financial and HR integration
Companies should also integrate financials with HR to better understand approval workflows, who works for whom and what the hierarchy is, said John Van Decker, research vice president at Gartner.
"You'd want to integrate into HR to get HR planning data to understand what the salaries and benefit calculations are and what they're based upon," he said.
Typically, HR feeds payroll and payroll feeds the general ledger, according to Van Decker.
"But you want to be able to integrate back into HR to understand why payroll may have changed," he said. "It could be that you've hired five more people."
From an HR perspective, it's also important to align talent with the company at large to ensure that the organization is recruiting and retaining the right skill sets that can better serve the business needs in general, according to Park.
As a very basic example, if a company is expecting to grow 10% per year based on how the company is currently constructed, it has to ensure that all of the key skill sets that are in place will also grow 10%, Park said.
"If you don't have a plan to bring on more people or to train the people that you have in place, you're not going to get to that 10% number," he said. "So companies need to make sure that their skills are also aligned to their growth plans, either through bringing more people onboard or [by] getting more upskilled people in place."
CFOs also need access to supply chain and inventory management data for a number of reasons.
"The integration point with your supply chain and inventory management side of things is pretty important as far as being able to attract product costing and work in progress and other financial metrics and measures that most CFOs and accountants want to see," said Eric Kimberling, CEO and founder of Third Stage Consulting Group in Denver.
Companies may need to integrate the supply chain into financials to understand changes in inventory, according to Van Decker.
"You'd want to understand, perhaps, increases in manufacturing costs, what's driving that," he said. "You would want to understand what the outlook is for the supply chain -- is that consistent with what you believe you're going to sell? And then, is it consistent with your future forecast for revenue and sales?"
Integrating finance and CRM
On the CRM side, a company could be tracking the commissions of its sales representatives, which it might need to integrate with finance, according to Kimberling.
"Your sales people are reaching out to all these different prospects, and when they close a deal in the CRM system, there's usually some kind of commission that's tracked, both from a finance perspective and an HR perspective," he said. "So that's an example of where HR and CRM should or could integrate with finance."
From a budgeting or forecast perspective, an enterprise that's forecasting its total labor costs for the coming year would want to include its headcount costs. Integrating finance with HR would enable the CFO or finance manager to get that information without having to ask the HR department, Kimberling said.
"The integration would provide finance with the data regarding what the current run rate is for employee salaries and benefits, for example," he said.
Van Decker said that a company that uses CRM for a process, such as a design process or an order process, should integrate financials with CRM.
"Eventually, you may be creating the billing out of a CRM solution. It may interface with a financial billing solution," he said. "There could be deductions and disputes management in a CRM system that you want to understand if, let's say, you're missing revenue. You may want to integrate into CRM to help you with collections. And perhaps you want to enlist the sales force to help collect in a case with a nonpaying customer."
Companies also want to integrate SaaS financial applications with HR to understand approval workflows, according to Van Decker.
An organization that uses a procure-to-pay system, such as Ariba, that's separate from its core financials might want to integrate with the software to understand its commitments versus its payments, he said.
"Maybe you use a procure-to-pay system to help automate the routing of an invoice before it gets released for payment in accounts payable," Van Decker said.
For project-centric organizations, the case for integrating financials with its human capital management systems is pretty cut and dried, according to Seth Lippincott, an analyst with Nucleus Research.
"You're going to need to understand allocation of resources from a human perspective for projects [that you're managing]," he said. "From a financials perspective, if you want a holistic look at what your actual cost basis is, if you want a holistic look at what your profitability is, unless you're taking those other cost centers or those other variables into account from a human capital management standpoint, you won't have a full picture of it."
The bottom line is that integrating SaaS financial applications with business processes, including the supply chain, HR and CRM, is important for a company's financial planning and analysis function to help understand what is happening in the business. It also offers the ability to make adjustments based on hits and misses in performance, Van Decker said.