Tuesday, February 15, 2011

Why are we afraid of accounting processes?

office of Jacob Fugger; with his main-accounta...Image via Wikipedia
I didn't question it too deeply when I was a product manager for an enterprise Business Process Management (BPM) software firm, although it was always there nagging at me: why don't we do more work with accounting systems and the Finance team in general? They are core to the running of a business, but BPM (at least the stuff I worked with) generally tries to avoid those types of business problems. Looking back on it I think there are two easy reasons. But before I get to them, I'll repeat to myself and others the justification that always came out from the marketing team's collective mouths:
Our solution, ExeClassyProcess720 (made up name, and now waaay uncool as any teen snowboarder will tell you - since everyone is landing 1080's now) focuses on the bigger business problems. You know, like the ones that address the customer facing transactions which when done consistently well help companies attract new clients and make current clients more profitable and happier. That back-office stuff doesn't interest us because that involves working with accountants, and they never have any money to spend.
That's a fictional description of how enterprise BPM justifies any particular niche it works within. The real issue is not the first piece of the discussion, which may be a very realistic way of positioning an individual product if that's where its strengths are. But it is the second piece that really gets to the meat of the matter: it is perceived that any team that reports to the CFO is unlikely to have any money to spend on improving how they work. Is it really true? After all, Oracle seems to do a pretty good job making money out of businesses requiring Financials packages and all the related modules.

So BPM software vendors go the easy way - they look for the obvious issues that they can solve, then when they run out of the easy stuff they get stuck. So during a vendor's decline, it goes down justifying to itself why it can't address the thousands of other process problems that appear in a business, because the mind-set is still locked in the "can't go near the Finance team" mode.

Back to my two easy reasons why BPM avoids anything that has accounting software related to it:
  1. BPM'ers are scared of accountants as we don't know their business
  2. BPM doesn't play well with other software, despite all the hype

Why are BPM'ers afraid of accountants? We've been pretending we know or can learn other people's business better than them for years, so why can't we raise the same level of BS with accounting? Probably because the numbers don't lie, whereas there is such a lack of formal measurement in other parts of the business that its easy to "bluff it and hope" when fixing some of those other business problems. 

The reality is that accounting packages really don't address well many of the inputs and outputs related to the financial running of the business and could really do with some help. I'm thinking of travel expense reports, accounts payable invoice handling, and even the financial planning and forecasting process. These are ripe opportunities that any BPM'er could address, if they could get over their allergy associated with accounting.

The fundamental issue I think is that enterprise BPM is put off by the fact that an accounting system exists and is the guardian of its data. Business processes can only touch that data, feeding it, watching it for an hour or two like a good aunt or uncle, but always returning it safely and soundly to the watchful accounting system when its time is up. Despite all the 'web services' hype, BPM tends to be greedy. It wants to consume that data, chomping on those healthy numbers and mixing it with its diet of junk food data from operational processes. If it really can regurgitate those numbers in any useful form, they needs some really good cleaning up before returning them home.

Despite the rather gruesome imagery, BPM just doesn't play well with others. The accountants that BPM'ers are afraid of will make them look dumb, and the data that those accountants so carefully enter into the accounting system are just too pristine to mess with in a BPM solution. So BPM software and practitioners back off, and wonder why the big consulting firms just get bigger. 

For small firms like Consected this is great. It leaves plenty of room for financial management systems, ERP, and big consulting firms to do such a bad job that eventually the CFO will recommend some new investment in technology, with a proven ROI (imagine that in other parts of the business). At that point the non-BPM crowd get their chance to show that business processes can be made better where there is an accounting system and that we can all play well together.

A post from the Improving It blog
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Software Akuntansi Laporan Keuangan Terbaik said...
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