Feb 25, 2012

Social Manifesto for Enterprise Finance Apps

Despite the title, this post is not about the ’99 percenters’ in the workplace revolting against the ‘1% Finance/ Wall Street’ types, but just an attempt to apply 'social/ consumerization’ buzzwords in a specific domain. A recent post by Josh Greenbaum rightly points out consumerization as the final peak for enterprise software and it's interesting to see how it applies to financials domain.

Why Finance? It’s not the most exciting area, but the most important domain for business. You can survive without a CRM app on your mobile, but you don’t exist as a business, if you don’t know how much money you are making or losing every month. Here are some personal thoughts partly based on discussions with customers in my former life as an ERP Financials product manager.

I believe consumerization means bringing consumer expectations to any software at work. There are probably four levels of consumerizing Finance, with increasing business value - discussed in detail:
  • Intuitive user experience for Finance professionals 
  •  Empowering the non-Finance managers & employees through financial insights 
  •  Rich Collaboration between Finance and non-Finance 
  •  Consumerizing/ redefining financial business processes 
Note: For this article, ‘Finance’ mostly refers to the controlling/ management accounting function, which has the biggest interaction with the the business, but could also broadly include all CFO functions such as financial accounting, treasury, corporate financial reporting, strategic planning, budgeting, forecasting etc.

Finance professional user experience: Applying the consumer software principles to simplify financial user experience is a no-brainer. However, it may be ‘necessary, but not sufficient', since the business impact for the company might be limited.

Finance is a highly specialized profession requiring unique skills and pragmatic temperament. Clearly, most of us will struggle to post a GL transaction in any enterprise finance application, but most of us cannot build a complex budget either. Unlike the Silicon Valley ‘Millennial’ stereotypes, graduates entering finance professions often do not mind mastering the software tools to get their admittedly complex job done. I was surprised to see the fresh hires by SAP customers not complaining about 'Facebook-like' during my first ERP Financials training in Newtown Square, PA. Of course, any financial management software does need user experience improvement (what doesn’t?), but it may not be the crux of consumerization.

Empowering Managers and Employees: The financial future of every company is built day-in and day-out by employees, first-line supervisors, and middle managers, but these are the most ‘disenfinanced’ (like disenfranchised?) in an organization. Finance spends a lot of time with the senior management, but due to bandwidth constraints, they only provide crumbs of information to line managers, often as a large PowerPoint data dump file at the end of a quarter, with limited 'last mile' of human interpretation. Most first-line supervisors do not understand its implications for their daily work. Finance software can serve these consumer-like employees by providing (probably mobile-first):
  • Personalized insights with ‘you at the center’ combining aggregated data and intelligent analytics (‘your 3 largest expenses were x, y, and z, and the 3 biggest spenders in your team are a, b, and c) 
  •  Contextualized information based on benchmarks against org/ unit (‘your region x profitability is x% lower than the average for similar functions’) rather than raw historical numbers
  • Intelligent interpretation based on data trends at 90% confidence (without 100% data) and inferences (e.g., ‘travel is up this month, probably because of the x event in Orlando’) 
  • Forward-looking guidance for actions based on exceptions (a quote: ‘a GPS, not a rear-view mirror’) –e.g., ‘at the current rate of spend, you will run out of 3rd party budget in 15 days’
Many of you will recognize these as similar to the consumer finance software like Mint.com or newer start-ups – e.g., HelloWallet
Collaboration between Finance and non-Finance: Finance departments are probably not the most collaborative, partly due to the regulatory implications of ‘chatter’ that could easily land the CFO in jail. However, the online collaboration tools can simplify the rich conversations between Finance and the business, instead of email ping-pong with excel attachments:
  • Business context aware and embedded in daily work (ask a question directly from the sales report ‘why is the profitability so low this quarter’)
  • Short-term project collaboration – e.g., preparing documents for the Quarterly Operations Review with the top management
  • Workflow in context of an event (not a perpetual stream or feed) – e.g., planning and approvals for the next unit Christmas party
(Not calling it 'social finance', as money is probably not meant to be shared freely!)

Consumerizing/ redefining finance business processes: does not mean all financial processes need to be revamped. Many old processes have been proven to work (e.g., double-entry book-keeping) and best left untouched. Many others are strictly regulated (e.g., financial statement production) and cannot be tinkered with, except introducing enabling technology (e.g., XBRL).

However, many processes that touch the lives of every business person in the company are highly outdated, while the software just automates ‘paperwork’. For example, traditional static budgeting processes are mostly top-down and based on last year’s actuals with a ‘use-it-or-lose-it’ mindset. Managers spend a lot of time lobbying for budget or ‘horsetrading’ and are usually stuck in long approval battles, which are still not solved by ideas like ‘zero-based budgeting’. 

Consumerization means redefining processes from a ‘design thinking’ perspective putting the key ‘consumers of information’ at the center and using the company interest as the guiding principle, instead of rigid rules. Several other processes like travel management, marketing event planning, product portfolio planning, business case funding etc with heavy financial implications often operate in isolation, due to the high degree of unstructured interaction. Instead of automating these processes with software, ‘consumerizing’ them with the latest principles of personal context, collaboration, analytical insight etc have far more impact – will discuss some use cases in a later post.

Money is the lifeblood of any organization. Consumerizing finance software is probably not jazzy UIs alone, but is to look at the needs of every employee as a ‘consumer’ and incorporate ‘people-centric’ design principles. After all, corporations have people too!

Do you think Finance can be made better as a  'consumer' of Finance or a Finance professional?

Update (4/11/2012): Read the recently released CSFB research report 'Apps Revolution Manifesto'.  It's long, but well-researched and covers each enabling technology in depth.It has many interesting use cases for social, but was disappointing to see no finance use case at all.