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Navigate the cloud-based financial software buying process

Workday and NetSuite users reveal how they overcame security worries and functionality snags to sign on with cloud-based financial software vendors.

Now that cloud data privacy and security fears are dying down in finance, experts say CFOs are more likely to assess cloud options when considering a new financial management system. But how should they go about evaluating these products to decide if they're truly the right choice?

Two users of cloud-based financial software offered up lessons from their buying processes. While the steps will be unique for each company, some similarities emerged that can help any finance department that is ready to invite in cloud vendors.

Defining cloud-based financial software requirements

For Tina Workman, vice president of accounting at Shelter Insurance, the overarching goal of adopting new financial management software was to bring the company into today's technology environment. The Columbia, Missouri-based insurer had been running an unsupported mainframe system for nearly two decades, and after years of making the case for new technology, Workman got approval to launch a project in early 2013.

In contrast, it was growth that prompted Veracode, a cloud-based application security company based in Burlington, Massachusetts, to investigate new financial software approximately three years ago.

"We were previously on QuickBooks, and [it] really didn't provide anything other than being a shell of a GL [general ledger] system," said Vice President of Finance Karen Higgins. "We needed a system that could streamline processes [to] become more efficient."

Both companies had an idea of the features they wanted in a new system from the start. For Workman, drill-down capability, compatibility with Microsoft Excel and better systems integration were top of mind.

Self-service was another critical area. In the current legacy system, "someone has to call accounting to get an answer to a question," Workman said. "We wanted to put that in the users' hands."

A software as a service (SaaS) deployment model was a requirement at Veracode, as well as integration with Salesforce.com, the company's customer relationship management system. Higgins added that the organization takes a best-of-breed approach to software purchases, meaning that they only adopt systems within a vendor's core competency. Flexibility was also of primary importance, as Veracode sought a system that could conform to the organization's processes, instead of the other way around.

Overcoming security doubts with cloud-based financial software

While Shelter had a request for proposal (RFP) process, Veracode did not. After sending RFPs to eight vendors, Workman said Shelter's list narrowed to four options: on-premises software from Oracle PeopleSoft, SAP and Unit4Coda, and Workday's cloud-based Financials product. The company also purchased a pre-written ERP requirements document and sent it to vendors to complete.

To keep Workday in the running, Shelter delegated a team to investigate the vendor's security standards and cloud features, such as uptime and updates. After this was completed, each of the four vendors presented a demo to a cadre of approximately 15 people.

Team members used a standard script for all four demos to ensure fair judgment. "We went through normal day-to-day processes: Show me how you do a journal entry, a fixed asset purchase, an expense report," Workman explained.

She noticed that the Workday demo stood out in terms of team members' reactions. "People were nodding their heads," she said. "It was obvious that it was an easy-to-understand system [and] everybody was following along. It was enlightening to see that from my perspective." After all of the vendors had presented, Workman said the majority of the team voted in favor of Workday, and the due diligence process began.

At Veracode, the software vetting team was composed of two people, Higgins and Accounting Manager Chris Martin, with some input from the CFO. Through their own research, they came up with a list of three vendors: Intacct, FinancialForce.com and NetSuite. While FinancialForce was quickly dropped, Higgins said it was harder to choose between the remaining two. Ultimately, NetSuite won due to greater flexibility and scalability.

"We found there were big public companies using NetSuite -- obviously NetSuite itself -- so we knew that the system could continue to grow with us," Higgins said.

But there were still some lingering doubts. For instance, while Intacct had built-in integration with Salesforce already in place, NetSuite did not. "We had to use a third party vendor that they referred us to," Higgins said. "That was a risk we took, [but] it was worth taking because integration was very important."

As opposed to Shelter's single-demo process, Veracode had multiple demos from NetSuite throughout the evaluation period, proving out various functions and sticking points. At one point, Higgins asked NetSuite "What are the top 20 things customers are asking you to fix?" and she said the answer was eye-opening. "There were some things on their competitors' lists that we took for granted that we couldn't believe they didn't have as a feature," she said.

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A specific function the team prodded into more was revenue recognition. "We would provide them with examples of how our deals could be structured and how the revenue should be recognized accordingly and have them prove out that the system was able to do it," Martin said. "Situations like that drove us to feel comfortable with the system and its flexibility."

Martin also said Veracode spoke with NetSuite's chief operating officer about how the company uses their own cloud-based financial software internally. He was impressed to hear that NetSuite's close process does not involve Microsoft Excel spreadsheets.

And even though Veracode set out to deploy a SaaS system from the start, Higgins said the company still took measures to evaluate NetSuite's security.

"SaaS is the way the software world works now, but we did have NetSuite on the phone with our CTO [chief technology officer] to vet out that [they] had good security," she said. The company also issued a security questionnaire to the vendor and requested relevant certifications.

Make a decision on demos alone at your own risk

While neither Veracode nor Shelter tested sandbox versions before signing on with new vendors, Rob Livingstone, principal and owner of Rob Livingstone Advisory PTY LTD., based in Sydney, Australia, said relying solely on demos can be a risky buying strategy.

"Testing a sandbox version should play very much to the cloud model because cloud [has a] perception [that] it's easier to implement," he said. "If it's quick and easy to implement, then why it is hard to implement a prototype sandbox environment? If it can't be done in a day or a week, the reality is going to be difficult and complex." Livingstone also recommended considering the cloud exit strategy from the beginning.

Regardless, Higgins said NetSuite has worked well for Veracode. "The fact that we're paperless on the whole revenue and accounts receivable side -- that's incredible," she said. Since the implementation, the company has expanded its use of the system to incorporate professional services automation, purchase ordering, and planning through NetSuite's OEM offering of Adaptive Insights. In the future, she'd like to see the vendor continue to expand into the accounts payable arena.

Workman called the day the contract with Workday was signed one of the happiest in her life, since it meant she would finally be leaving the legacy system behind. The company is currently in the final architecture and configuration phase of the implementation process -- ahead of schedule. The projected go live date is Sept. 1.

Even though the two companies are at very different points in their cloud financials projects, each shared lessons learned. In light of the fact that Veracode has expanded its use of NetSuite since the initial implementation, Martin suggested that buyers think about the current and future scope of a project.

"Really understand why you're implementing a new ERP. It shouldn't just be because you're large and you need to get off the small one," Martin said.

And Shelter's Workman recommended clearly defining selection criteria and considering implementation cost and time.

"Pick your selection criteria and rank [them] -- that puts that whole team on the same page," she said. "Think of things like ease of use, cost [of] updates. Maybe cost isn't the top one; maybe cost is the third."

Workman also added that the company should have tailored the ERP requirements document to reflect Shelter's most important needs.

"It was over 2,000 lines of requirements, and in retrospect we should've looked at that list a little harder and said, 'What do we really want this system to do? This isn't a wish list,'" she said.

Emma Snider is the associate editor for SearchFinancialApplications. Follow her on Twitter @emmajs24 and the site @SearchFinApps.

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