New approaches for the data driven chief financial office

Information technology and services firms are facing a growing set of complex operational and strategic challenges. New fast-evolving business models and technologies—including the cloud, mobile devices, the internet of things and artificial intelligence to name a few—are creating a defining moment for technical services firms.

These technologies have the potential to upend the business models of tech services firms. In practice, that translates into pressures on:

Price: Firms need to evaluate and understand their market environment to properly price their services and create competitive bids that provide satisfactory margin.

Utilisation: There’s a strong need for optimised utilisation of resources and assets to eliminate unproductive, nonrevenue-generating idle time.

Performance: Crisp operational execution—with on-time, on-budget performance usually spells the difference between success and failure.

Growth: Firms must pro-actively plan for future growth, ensure and retain profitability and customer satisfaction, and avoid unprofitable, low-margin business.

To respond to these opportunities and threats, finance organisations must understand the new business mandate. They need to build their processes and deploy best-of-breed technology to create greater efficiencies, increase customer satisfaction, improve operating margins and prepare for future growth. Finance professionals must provide leadership as the firm strives to deliver high-value services at disruptive price points, decrease operating costs, launch innovative new services, and continue to increase revenue.

Ultimately, the finance team achieves success in tech services through a best-in-class approach that blends and unifies finance best practices and airtight project accounting in one system with shared data, reporting, and processes.

Tech services firms strive to achieve value

In the tech services industry, value and business performance are achieved by optimising execution in several ways. Firms strive to improve on the following key performance metrics:

• Revenue growth
• Stronger win ratio
• Decreased revenue leakage
• Improved operating margins
• Percentage of billable employees
• Increased employee utilisation

The barriers for tech services firms

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.

Four new mandates for finance in tech services firms

The rapid innovations and widespread adoption of technology within tech services firms is creating a pivotal moment for financial leaders—the previous ways of managing finance and operations data will no longer suffice. Although the path forward is challenging, several key mandates have emerged that, when followed, can position finance teams in tech services firms to achieve and maintain better business performance.

1. Modernise 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 or analysis together. That means breaking down silos to create end-to-end, compliant processes for project-based accounting, time and 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 financial management foundation shows you projects and operational and financial information in one unified view.
2. Support the entire project lifecycle: 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 optimised 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 analyse 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.

The benefits of cloud financial management solution for tech services

Tech services firms can achieve tremendous benefits by adopting a best-in-class finance and project accounting technology foundation. In most instances, they revolve around four key areas:

Precision: You can improve efficiencies, increase billing accuracy, strengthen compliance and accelerate closing cycles using an end-to-end financial management solution that spans accounting, project management, time and expense, billing, and revenue recognition.

Reliability: Improve the predictability of your business execution, including delivery, scheduling, resource utilization, billing accuracy, and customer retention by ensuring you capture and use accurate time and expense and project data in a cloud system that is easy to deploy and adopt across the organization.

Project and company profitability: Earn new business and retain loyal customers by ensuring on-time, on-budget delivery driven by complete visibility into active projects. That translates into greater volumes and healthier margins. Leverage historical information to price future projects and optimize both revenues and margins.

Growth: Identify the best customers and market segments for profitable growth, hire the right talent, and ensure that backlog and revenue projections track to plan through complete visibility into the performance of your overall business.

About Sage Intacct

Sage Intacct is the innovation and customer satisfaction leader in cloud financial management. The Sage Intacct innovative and award-winning applications are the preferred financial applications for AICPA business solutions. In use by organisations from startups to public companies, Sage Intacct improves company performance and makes finance more productive. Hundreds of leading CPA firms and value added resellers also offer Sage Intacct to their clients.

Contact us at Akuna Solutions and explore with a Sage Intacct implementation specialist how to leverage the most modern technology available today to support your organisation’s mission. 

Photo by Adi Goldstein on Unsplash