Today, most of the discussion around financial software is on new and sexy areas like Software-as-a-Service, in-memory data, and analytics. And for good reason, since there is a lot to learn, explore, and admire in these new and exciting technologies. The more fundamental areas of accounting software, such as the general ledger, don’t necessarily get the same attention among finance and IT professionals. For one, there is a feeling of “been there, done that.” Secondly, there is a belief that the legacy designs and structures of these systems are so deeply embedded, there is no feasible way to improve them.
Very understandable sentiments, but it turns out that putting some creative thought and focus on the core fundamentals of accounting systems—combined with the opportunity to apply some of those exciting new technologies and a willingness to rethink and rebuild core system structures—can yield results with astonishing innovation, benefits, and value. A good example is the general ledger’s chart of accounts, and you can’t get much more basic in an accounting system, or find a perceivably less sexy technology, than the architecture of the chart of accounts.
Yet the chart of accounts design in an accounting system is a big deal. A good chart makes everything smoother and easier, but define a poor chart and you pay for it over the life of the system. The chart of accounts in traditional financial software often mutates into an unmanageable behemoth requiring additional custom software just to interpret it for data entry or unwind it for reporting, due to the limitations and rigidity of 30-year-old system architectures. And fixing something so deeply embedded is not only hard and unglamorous, it is also practically impossible, short of starting completely from scratch. So the chart of accounts doesn’t get fixed, and users of traditional financial software make do with clunky systems and workarounds.
However, if you do start over and rethink, redesign, and rebuild as we did at Workday, the results can be revolutionary. Our customer Guggenheim Partners LLC was able to dramatically reduce general ledger complexity with its deployment of Workday, which we talk a bit more about in a news release.
In Workday Financial Management, the rigid code block structures of traditional financial software don’t exist. Instead, Workday captures transactions as business events in order to create a comprehensive financial and operational view of a customer’s business. Customer-defined Worktags are tagged to transactional data and used to identify the key dimensions of the business that management would like to track and analyze, such as customer, product, region, and project. As a result, customers can vastly simplify their chart of accounts structure without losing critical business visibility.
Another Workday customer, AAA Northern California, Nevada, and Utah, talks in this case study about moving from a complex chart of accounts to something “tangible and useful” with Workday, by reducing thousands of accounts to just a few dozen, and simplifying administration while improving multi-dimensional financial and operational reporting. The result was a chart of accounts that is intuitive, easy to understand, and vastly simplified.
Our customers are pleased by what they can achieve with Workday Financial Management, and that makes what we’ve accomplished in such areas as the chart of accounts—dare I say—exciting? Hot new technology is always cool, but re-thinking the basics can be sexy, too.