Whether your firm is in IT services, Design Services, R&D, or even Construction Consulting, chances are you’re facing a growing set of complex operational and strategic challenges. New fast-evolving business models and technologies such as the cloud, mobile devices, and the Internet of Things are creating a defining moment for technical services firms that aim to gain control.
The challenges for finance professionals in the tech services industry come from a variety of sources, both internal and external.
- A Constrained Financial Infrastructure—In too many organizations, information and financial processes are trapped in silos, thanks to patchwork processes and outdated technology. Finance teams struggle with inefficiencies, lengthy closing cycles, billing errors, and compliance issues that are all directly traceable to disconnected finance processes, disjointed project management, and poor support for complex revenue recognition frameworks.
- A Constrained Operational Infrastructure—For many firms, budget and schedule issues are constantly hampering team performance. Cost overruns, unanticipated delays, billing errors, and a systemic lack of support for projects, teams, and resources all stem from overmatched, antiquated systems infrastructures.
- Inaccurate Project Information—Disconnected processes and systems—a separation of financial data and operational data—inevitably lead to incomplete and inaccurate data, which means an inability to see accurate project information and project profitability. That translates into billing disputes, lower customer satisfaction, client churn, slower revenue growth, and margin erosion.
- Inaccurate Histories, Inaccurate Forecasts—When you don’t have reliable financial and operational data, you don’t enjoy a true picture of your profit history. Soon, you’re facing poor market segmentations, incorrect margins, and off-target bids. The absence of reliable historical data also undercuts efforts to create proper forecasts to direct the company’s future efforts.
So how do we solve this problem?
The previous ways of managing finance and operations data will no longer suffice. Rapid innovations and widespread adoption of technology within tech services firms is creating a pivotal moment for financial leaders.
Here are four new mandates for finance in tech firms to achieve and maintain better business performance:
1. Modernize the Finance Infrastructure—
To avoid costly failures and lapses, the savvy tech services firm must embrace the financial infrastructure of tomorrow, a system that provides comprehensive— but simple-to-use—functionality to bring finance, projects, and reporting/analysis together. That means breaking down silos to create end-to-end, compliant processes for project-based accounting, time/expense capture and approval, billing, and revenue recognition—instead of the weekly spreadsheet scrambles, billing errors, lost T&E dollars, and slower manual workflows. The right ERP foundation shows you projects and operational and financial information in one unified view.
2. Support the Entire Project Life cycle-
Tech services firms live and die by the quality of their project execution. Ideally, you want to automate and connect your entire project lifecycle to achieve consistently reliable project delivery. Of course, manual tracking and validations erode confidence in your information and processes, and project teams will simply avoid systems and processes that are too complex to drive up adoption. You’ll need to maintain a strong emphasis on the importance of usability and manageability which means providing easy ways to generate reports, clickable graphs with drill down capability, and scroll through dashboards of key indicators.
3. See Real-Time, Actionable Metrics—
In tech services, the only time is real time. Can you instantaneously track any project and determine if it is on-time and on-budget? You need to avoid surprises with real-time views into budgeted, billed, and actual amounts, as well as budget and schedule variances. That means you can focus on customer satisfaction, not disputes and delays.
4. Turn Insights into Optimized Business Performance—
Fine-tune your business plans to not merely understand past performance, but to take action to improve future performance. For instance, you can analyze historical project profitability to strengthen forecasts, improve sales planning, identify the types of projects that are more profitable, make smarter bids, and drive profitable growth.<
Forward-thinking tech services firms are striving to move beyond outdated finance paradigms—spreadsheets, manual processes, error-prone workarounds, and audit-unfriendly exceptions. Today, tech services firms need the ability to bring finance and operations together in a single, integrated system that enables seamless collaboration, real-time information sharing, and crisper execution. That means these firms need a cloud ERP solution that innately understands and supports project-based business models.
Want to learn more about the benefits of Cloud ERP for Tech Services? Contact us or download Intacct’s whitepaper, “Four New Mandates for Finance in Tech Services Firms”
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