Building a business-case and ROI for integration and process improvement projects can be a challenge. In talking with Finance and Finance IT leaders, we still engage in common discussions around these questions:
- How are you extending your applications to meet your business needs?
- How are you handling processes that span multiple applications?
- How are you handling variances across countries and LOBs?
- How do you rationalize after M&A activity?
- Are you able to generate needed reports and audit trails?
- Have you considered the impact on future upgrades?
Often, we discuss these challenges within the context of a pace-layered approach to applications. Pace-layering is a framework, made popular by Gartner, which recommends an architecture where systems can evolve at different times and at a pace that is optimal for the business. Systems fall into one of the layers and the model can be used to help build a business application strategy.
Here is a quick overview of the model and the characteristics of the three levels:
Figure 1: Pace Layering Overview
Often, finance department staff and leadership will ask how this can apply to them outside of automating and squeezing dollars with more efficiency. Fortunately, there a few key areas in this framework that can be tapped for more justification to fund projects. Here are three main areas to look for business and IT benefit to help in the project approval process:
1. Protect the system of record by moving logic and process to the right place. This is where platforms like SOA and BPM for integration and process management can allow the Finance Department to put the logic, user interfaces and processes in the right places to both support their business, but also prevent costly upgrades in the future. Benefits for a business case can come from both reduced maintenance, visibility to processes that are brought out to the right layer and speeding up time-to-market on changes by decoupling from the ERP release cycle.
Common Finance Department Use Cases: We see this benefit in use cases like AP / AR Automation, capital expenditure approval processes and complex management of data around customer or supplier records. Exception management user interfaces and other more custom processes within the finance area can also fit here.
2. Automate to lower long-term cost and free up dollars to innovate. This is the most common justification in many process management or integration projects, especially if there are paper-based or other manual processes that are causing delays and possible loss in a process. The key justification that can be raised here is to move those savings dollars to other areas of the business for growth and investment. This justification will likely catch the eye of senior leadership.
Common Finance Department Use Cases: Month-end and quarter-end close processes, order to cash and order to pay processes, approvals and exception management and paper-based processes.
3. Connect the layers to enable innovation. In order to enable innovation, connecting the data and systems between the layers is critical. This is where SOA and a service-focused approach can provide justification for your business case. Unlocking the data in the system of record and other operational systems can make starting new projects faster. This agility is a critical justification for new project investments.
Common Finance Department Use Cases: Order to Cash processes that are automated can provide visibility and access to information for new products and new connections with customers. Other use cases include master data management around suppliers, customers and other key data types.
Figure 2: Benefit Areas
For a next step, review your existing financial system process portfolio and assess it against the model above. You can build some of these factors into your business case and help justify the investment in your Finance processes and systems.