You probably use an array of different software for the everyday work of your finance team. If you’re lucky, some of those applications will actually speak to each other.
But when does bolting together different software into a tech “stack” become unsustainable – and when would it be better to just upgrade the accounting system?
That was among the topics discussed at an iplicit webinar, Building Finance of the Future, which is available to watch on demand.
Paul Sparkes, Director at iplicit, was joined by Kenny Galloway, Head of Strategic Partnerships at the accounts payable (AP) automation business Lightyear, and Lauren McIlroy, Partner and Head of Virtual Finance Function at accountancy practice AAB.
If your accounting software integrates with many of the other core systems your organisation relies on, you’re probably already ahead of the game. There are plenty of finance teams who aren’t in that position yet and still have to extract data from one piece of software before keying it into another.
That kind of repetitive data entry is clearly not the best use of staff time. What’s more, it is prone to error – and it presents the risk that what’s in the finance system is not the full and up-to-date picture.
But while integrating the finance system with other applications can solve those problems, it can create challenges of its own. That was one of the subjects covered in iplicit’s webinar.
Paul Sparkes talked about two key options for getting separate software systems to talk to each other: API and iPaaS.
“API stands for application programming interface. It’s a term that’s been with us for a long time and it’s basically the connectivity of different systems, or interfaces, to each other,” he said.
“There's been some significant evolution in the last 10 years around this area with the advent of cloud native systems. Most of these systems have been built on a set of APIs from the ground up, which means integrating with other systems becomes much simpler. Not in all cases; you do need to do your homework.”
APIs drive iplicit’s integrations with Lightyear and with Microsoft’s Power BI, he said.
“iPaaS (integration platform as a service) is a low code, no code way of integrating different systems. So you don't even need developers in some cases to do these sorts of integration,” he explained.
“We work with two iPaaS platforms, one called Zapier and one called Besyncly. And those platforms allow us to integrate ‘out of the box’ with thousands of different systems. So we can integrate with HubSpot, Salesforce, Raiser’s Edge or JustGiving in the nonprofit sector and Expensify.”
How do you know when integrations will take care of your needs and when you need to upgrade the finance system? The webinar offered a few key issues to consider.
Can third-party apps really do what you need?
The arrival of cloud accounting software aimed at small businesses – primarily Xero and QuickBooks – led to a boom in apps that would integrate with those systems. Lauren McIlroy pointed out that those apps aren’t always able to do what their users expect.
“When the first wave of cloud accounting came in, there were all these apps that suddenly appeared on the app store that claimed they could do everything,” she said.
“I think it was slightly overwhelming and I think people have been quite badly burned with a few of the apps because the further they got down the path, the more they realised ‘Actually, this isn’t going to do what I needed to do’.
“I’ve worked with a number of products that seemed like they were going to work at the beginning but then couldn’t deal with some of the complications of FX for some of my clients, for example. So those are the kind of pitfalls that people really struggled with.”
Will the fees mount up?
Integrating other apps with your finance software comes at a cost – and if your organisation is growing, the fees can grow disproportionately.
Paul Sparkes told the webinar: “One of the things that we're finding quite commonly is that people start with smaller entry-level systems with a few add-ons and then, as that business starts to grow, they put in more add-ons and then perhaps they’ve got multiple legal entities.
“It’s not uncommon that the cost starts to run away. In those scenarios, you’ve got multiple legal entities paying multiple licence fees for multiple add-ons and you’re not getting all the advantages of a system that’s designed for that group environment and bringing data together.”
Have you become a group?
When your organisation has grown into a group of entities, it’s likely that old software integrations won’t do the job properly any more.
“As soon as you become a group, a tech stack with multiple add-ons, which isn’t really designed for a group, doesn’t work,” Lauren McIlroy said.
“If you have five different entities, you’re perhaps paying five licence fees across all of those entities. It’s really expensive and you’re paying more fees for something which isn’t designed for you in the first place, when you’d actually be better looking for a group solution.”
What software can’t you change?
It might be that one piece of software is so specific to your industry or your organisation that life without it is inconceivable. If so, you need to consider how well it can be integrated.
“We have clients that are fixed on specific things that operationally they need to keep,” Lauren McIlroy said.
“So how can we work around that, what does that look like and how can we get the system to best work with this unmovable piece? We need to be realistic; we can’t change everything in the businesses that come to us.
“A lot of people who do a similar role to me have a specific tech stack and a specific environment. They say, ‘This is what you need to use’. We don’t do that because, working in industry, I understood there are things that cannot change. So, for example, I worked for a fish processors and they had a sign-in system for the factory that had to stay and that had to speak to the finance system. There was no getting around that.”
Can you lay your hands on the data?
Lightyear’s Kenny Galloway stressed the need for any integrations to be focused on delivering data.
“Data is king. If you can't get the right data into the right place at the right time, you become very, very slow and stagnant,” he said.
This had helped drive the use of APIs to integrate iplicit with Lightyear, he said.
“Trying to get the data in as quickly as possible is essential. Customers don’t want to work with systems that don’t talk to each other,” he said.
Integration is a great solution if it means seamlessly connecting another useful program to a finance system that does what you need.
An example – as Kenny Galloway noted in our webinar – is iplicit’s integration with Lightyear. “We understand the value proposition in both products; we understand that the API is enabling further automation of both products,” he said.
But as we’ve seen, integration is not so sustainable if you’re stacking up multiple third-party applications in a bid to make up for the limitations of your core finance system.
Lauren McIlroy spoke of her experiences conducting thorough reviews of clients’ system needs.
She suggested asking: What are the pain points in the business? What are the things the finance system cannot do at all? Why do we need a different app in the app stack?
“I think people are tiring of ‘I need different apps to make my system work’,” she said.
This was particularly true for operations teams, she said, in organisations where people were using single sign-on across multiple applications.
She suggested properly exploring what a core finance system could do. “The less that it looks like more than one system, the better – for a finance team and from an operations team perspective,” she added.
Kenny Galloway pointed out that many organisations are aware they have a long way to go when it comes to adopting cloud technology.
“You would be surprised how many businesses out there are multi-entity, with some of the entities on cloud and some of the entities on-premises,” he said.
But as more organisations move to cloud products, they will want to take advantage of the right kind of integrations to make working life enormously easier.
Our webinar, Building the Finance Function of the Future, also covered some of the most common reasons for not embracing technology and the question of what AI will actually do for finance teams. You can watch the full session on demand.
To see iplicit’s powerful cloud accounting software and how it integrates with other systems, get in touch for a demonstration.