Add SaaS to the New Alphabet of Accounting

As a finance guy involved in the Software-as-a-Service (SaaS) world for the past six years, I’ve been truly amazed at the technical elegance of SaaS and the radical improvements it has made to enterprise software economics. But after hearing, “Yes, but it’s just technology, the business user doesn’t care,” one too many times—and after giving this quite a bit of thought—I can strongly say that idea is absolute nonsense.

The Saas model brings significant and unique value to the finance organization in at least two fundamental ways that aren’t possible with traditional on-premise financial applications:

• Finance Organization Transformation. In their excellent “2010 IBM Global CFO Study,” IBM researchers determined that the first step to transforming a finance organization to “Finance Excellence” is to establish a consistent set of business processes and data definitions. That’s a virtually impossible task for an organization with 15 separate ERP accounting systems spread across its enterprise (a fairly typical scenario due to traditional software’s cost and implementation model). A true SaaS-based accounting system is a single, global system with a consistent set of processes and definitions that’s used across the entire enterprise, making that first step to excellence possible.
• Up-To-Date Compliance with Laws, Regulations, and Standards. I recently had cause to look at the “Intermediate Accounting” textbook I used in college in the early 1980s (don’t ask). It listed all the Financial Accounting Standards (FAS) in effect at that time—all 33 of them! Since then (and pre-U.S. GAAP Codification), more than five times as many additional standards are in effect. Add to that the dramatic changes represented by the “new alphabet of accounting”—SOX, COSO, COBIT, IFRS, XBRL—and recent changes to accounting requirements for leases, revenue, equity compensation and the rest, and you have a very dynamic accounting landscape that makes staying current not only a constant challenge, but a significant governance risk. Yet organizations using traditional ERP systems may be using a version that is two-to-four years behind their suppliers’ current versions, often times because it’s too time-consuming, difficult, and expensive to get current. In contrast, real SaaS systems for financial management are always current, significantly reducing compliance risk and expense.

I know these finance-specific benefits caught the attention of organizations that chose to move off their on-premise accounting software and on to Workday, including AAA Northern California, Nevada and Utah (AAA NCNU), which we’ve just announced is now live on Workday Financial Management, Human Capital Management, and Payroll. In addition to the traditional SaaS benefits realized by AAA NCNU—including a 60 percent reduction in total cost of ownership over its previous on-premise system—there’s a lot more for us number crunchers to love about SaaS (don’t get me started on what SaaS has done for the chart of accounts—I’ll save those juicy details for another blog).

SaaS really isn’t just for techies anymore. It provides significant business value to finance and accounting organizations, especially those looking for every edge and tool to becoming the very best teams they can be.