exist Peter Holladan.
Over the past 30 years, technology has had a huge impact on business. Changes in the way business works affect each of us. Yet despite the incredible tools we have at our disposal, business owners still face enormous friction when trying to acquire the only things that matter to the bottom line: customers and capital.
Most of the technology you buy usually works well on its own terms. It walks the talk and walks the talk. But the biggest problem is that technology from one vendor isn’t built to work with another vendor’s technology. A typical “office of the CFO” stack consists of a collection of disparate applications that barely work together, and if they do, it requires a team of specialists to manually align data between them, often using spreadsheets or flat file import/ export.
The problem with accounting software today is that it treats every business as if it lives on an island. The application focuses on one business at a time, and then only on one area of that business (payroll, expenses, etc.). This makes sense in a way – it’s how we learn accounting in school. You’re doing balance sheets for one business at a time, you’re not really thinking about how the different businesses work together.
But in the real world, business doesn’t work that way. Business is a multiplayer sport. All businesses cooperate with other businesses—we buy and sell with each other, we lend to each other, we obey each other, and so on. And our business is complex – our different systems need to work together to achieve combined results. It is not enough to specialize in one business or one area of that business. We need systems that work together to produce holistic results, like our company does.
You see, the accounting system vein this business. There is hardly any activity in a business that does not appear in the accounting system. Hire someone? Go on a business trip? one day vacation? Make a deal? sell things? buy something? Shipping anything? for what?
All of these activities appear in some way in the accounting system ledger. If you don’t have an accounting system, you don’t have a business. So when our accounting system doesn’t reflect how our business actually works, we have a lot of problems adapting it.
It’s time for CFOs to look for a better way. We should no longer accept fragmented applications that handle one part of our business well but not the rest. Or rather, we shouldn’t accept apps that might work in our business but forget the fact that our company works with many other companies, we want our systems to work with theirs too, without depending on Our people transfer data back and forth between systems that don’t work across companies.
It’s time to completely rethink the workflow between companies. Our current system was designed before computers existed, when we sent files back and forth by mail. The paperwork may have moved from mail to email, but it’s still handled manually and not really automated. What would happen if we rethinked how business systems should work together when connected?
A good place to start this shift is by focusing on the way we build relationships with other customers and other suppliers.
A typical supplier or customer onboarding process today looks like emailing our new suppliers and customers PDF forms, asking them to fill out the form so we can work together. Vendors/customers who receive responses to this form are typically:
“Oops, I have to fill out another form with the same information that I keep providing over and over again in different formats. “ Not a great introduction for our new partners.
In 2023, can’t we do better? What if there was an electronic system where companies could fill out the system only once. Then, when it’s time to share, they can refer to that information and provide it electronically to new partners so they can read it automatically.
This will be an important step in moving from systems that don’t work together to better systems that start talking to each other. Then, from this simple starting point, we can extend the digital relationship to more and more areas of business collaboration. Over time, we can replace all the emails we send back and forth with automated interactions.
Gone are the days when our employees should be wasting their time as the manual glue between systems that don’t communicate with each other. It’s time for CFOs to look for a better way.
Peter Horadan is Executive Vice President of Sage Digital Network and co-founder of Lockstep. Prior to these roles, Peter was CTO and Global Head of Engineering at Avalara, a leader in transaction tax management. Peter led the development of the SaaS version of Concur Expense, the global leader in expense management. Peter holds a BS in Engineering from Rensselaer Polytechnic Institute.