Finance Transformation with Platforms vs. Best-of-Breed Applications

Summary

In this edition, we will be covering the following items:

1. The challenges with best-of-breed software applications

2. The case for using platforms, like Microsoft’s Power Platform

3. Thoughts about a viable middle ground for your organization

The Problem with Best-of-Breed

As organizations grow and build the systems they need to operate, they face a difficult choice. There are numerous solutions on the market for each business function and the decision to purchase any one software application can be difficult enough on its own. Many organizations soon find themselves managing a vast and complex “web” of different, specialized software tools. The costs, complexity, and overhead of managing this array of vendor solutions can quickly balloon out of control.

1. Integrations and Interdependencies: Navigating complex integrations and interdependencies between systems can be expensive and time-consuming for organizations. It can take a lot of work to ensure that your CRM, ERP, inventory management, HCM, and all other tools are “speaking the same language”. The complexity is made worse when one of the systems changes – all of the hard-won integrations now need to be reconfigured and tested.

2. Lack of Synergies and Systems-Switching: There are world-class solutions in the marketplace for each business function – however it becomes challenging for an organization to develop the competencies to use, maintain, and optimize tools when there are simply so many different systems to work with. Many clients of ours have business teams who must navigate between 5+ systems to get individual workflows done. 

3. Costs and “Subscription Fatigue”: In addition to managing the complexity and internal overhead, many organizations find themselves paying a high financial cost for “SaaS sprawl” – the licensing costs can often add up very quickly.

The Case for Platforms (Like the MS Power Platform)

Microsoft’s Power Platform, including tools like Power BI, provide a suite of easy-to-learn, configurable tools that give organizations control and autonomy over their digital transformation journey.

1. Native Applications Can Form an Intuitive Ecosystem: Leveraging tools like Power BI, Power Automate, and others, your organization can take ownership of internal tooling and leverage an ecosystem of integrated tools that we designed to be used together. Leveraging these common platforms can give the organization the power to orchestrate the work, tools, and outcomes of Finance, HR, Sales, Operations, and more.

2. Centralized Process Live in One (or Fewer) Systems: When teams get to spend less time switching between systems and can configure centralized tooling to their needs, they can streamline processes and increase productivity. This will increase synergies between teams (using shared, interoperable systems), make employee onboarding smoother, and enable each team to focus on doing what they do best.

3. Systems Synergies and Reusability: Investments made to solve one team’s problems can be leveraged to give other teams a head start. Done correctly, this makes the incremental effort of time and energy for each new transformation initiative much lower.

4. Manageable Billing and Spend Control: Streamlining the number of tools your organization needs can help reduce both the overhead costs of the processes and the direct expenses of software licensing. However, this needs to be done thoughtfully, to ensure that TCO of the platform is managed and below that of the multiple systems it replaces.

You Don’t Need Wholesale Migration to Platforms to Reap the Benefits

In practice, most organizations will use a blend of specialized software applications and multipurpose (extensible) platforms. There are valid reasons for using best-of-breed solutions (for any function of the business). But this should be done selectively and, where possible, the organization should consider seeking to optimize for (controllable) configurability and simplicity for its business teams.

1. Many organizations find themselves navigating a complicated (and expensive) web of software applications to run their operations.

2. This can create inefficiencies, overhead, and distract from the core functions that business teams want to spend their time focusing on.

3. It can be costly and difficult to manage the numerous integrations between these specialized tools.

4. Leveraging platform solutions can enable organizations to streamline operations, develop synergies between teams, and consolidate their technology stack.

5. Importantly for FP&A and other teams, this is one of the critical benefits of using tools like Power BI, Acterys, and the Microsoft Power Platform to build “in-house” tooling – Power BI is a logical and lower risk starting point to your digital transformation journey.

In the Next Newsletter

We will learn more about getting started with financial analytics in Power BI.