As more businesses are turning to the cloud to handle their financial management systems, many new independent software vendors, and the legacy, on-premise software providers are packaging their suites as SaaS offerings. This could be tempting to companies as they see this reducing one of the burdens of on-premise systems – eliminating the need for hardware and the IT staff to support it. But that only eliminates a small percentage of the drawbacks to suite software, so let’s further examine what’s wrong with SaaS suites.
THINKstrategies, in its white paper, “The Best-of-Breed Advantage for Financial Management: Get the Full Benefit of the Cloud,” states, “The fundamental shortcoming of SaaS suites is that the vendor is trying to be ‘all things to all people’. By offering a broad set of functional capabilities, the SaaS suite vendor is unable to deliver the deepest and most current innovations to meet the organization’s specific needs.”
THINKstrategies cites three primary risk areas to consider when determining if a suite or best-of-breed approach is best for your business:
- Deployment Risk
- Performance Risk
- Long-term Risk
Numerous research studies have shown that larger software deployments feature greater complexity and a higher risk of failure.
A 2012 McKinsey & Company study, conducted with Oxford University, examined numerous global software deployments and found that on average they run 45 percent over budget and require 7 percent more time than projected. Worst of all, the study determined these large deployments delivered 56 percent less value than predicted.
Suites by their nature are larger and more complex than best-of-breed applications because more systems are deployed and processes created in a full suite, all extending across a single platform.
To avoid this risk, companies sometimes choose to start with only a portion of the suite, such as the accounting and finance module, but this restricts the functionality of the module because it’s designed to work across the entire system. For example, a quote-to-cash process that involves CRM, accounting, payments, and other modules require that all modules be present in order to function, so the company is stuck installing unwanted modules to make it work.
Even if deployment succeeds and SaaS suite vendors provide basic functionality across a wide array, they cannot provide the deep functionality and the latest innovations in specific areas. Upgrades and improvements must come through the entire suite, limiting how often and to what degree they can be made across the board.
Adopting the suite approach forces each part of the organization to compromise and use the officially sanctioned solution offered within the suite – for instance, the accountant cannot opt out of using the suite GL.
Limiting choice and hampering workflow with insufficient tools will damage employee morale. Employees will seek their own way around the disadvantages they experience or even just perceive, thereby further limiting the functionality of the suite package and lowering your ROI.
A CFO must maintain tight control over the company’s financial management system, so that system must evolve to keep pace with changes or growth in the business. But a suite vendor cannot focus solely on the development needs of the finance department – they are responsible for development across the spectrum of the suite. Therefore, suite vendors lag behind the innovations that are being developed by the best-of-breed providers, who focus on a single specialty. This means a functionality gap you experience now will only grow over time.
A further issue arises because a suite by nature must share the infrastructure, so even when improvements are made and ready to be installed for one module, they often are delayed until an upgrade to the infrastructure can be implemented at the same time. This leaves your finance platform stuck at the mercy of system-wide improvements that could be held up somewhere else in the company or from the suite provider.
Lastly, the greatest risk of suite software is that you become locked in with your suite provider, or you’re left searching for a new, expensive solution and going through the headache of unplugging from the suite and starting over.
To Suite or Not to Suite
We hope by now that we have provided you with some valuable insight and that you have a better understanding of which approach is the best your company.
Contact us to help you craft the best of the best-of-breed solutions for your financial management system.