Using Benchmarking Analytics to Improve Accounting Productivity and Employee Engagement

Benchmarking, or comparative analysis, has been around a long time. It’s always been one of those promises made by software vendors with analytics, but typically unfulfilled in reality, in terms of real adoption or genuine usefulness.

Often it's the sizzle part of a dashboard demonstration for a vendor – where they can wow the audience showing how a company’s financial performance compares against industry averages, by importing data from a third party data provider and comparing key financial and management performance measures such as Revenue Growth, Profitability, Revenue Per Head etc.

While interesting – it turns out that it’s not that useful to many, hence the rather tepid adoption within analytics deployments. If your company is less profitable than your industry peers, you probably knew it already – and to actually find the root cause of the issue is often a separate project entirely – and where the real work is. The insights are often too far removed from where the real action is, in the departments where people and process are at work.

Benchmarking to Improve Actual Business Processes

So it’s with interest that I saw a demo of the newly launched Blackline Insights, at this week’s company InTheBlack conference in Atlanta. BlackLine is a cloud provider of solutions that automate and streamline the close process for accounting organizations – enabling then to automate millions of bank reconciliations, quickly resolve intercompany reconciliations, and take the overall manual effort out of the close process.

But this is where it gets really interesting, with 1,200 customers across 120,000 users they have a huge amount of data about the productivity and processes of those accounting organizations they serve. The kind of data we're talking about here are process measurements like on-time completion rate, average completed assignments, or average rejection rate. With benchmarking, BlackLine customers can see how their own accounting function stacks up with the broader community, by metrics, by industry, and organization size.

Creating a Level Playing Field Between Employees and Managers

The opportunity is to enable continuously improving efficiency through continual measurement. But the really good news is that it cuts both ways, because it also creates a level playing field in the accounting organization between employees and managers.

The reason is that in addition to enabling management to identify opportunities to improve the close process by identifying areas of underperformance or lower than average productivity, it can also be used to ensure management doesn’t have unreasonable expectations on what the team can realistically crunch through during the close - by measuring against what's actually realistic in the industry. It’s actual data that accounting staff can use to establish common ground for productivity expectations, and it equips all parties with data to set goals that everyone buys into.

For example, perhaps the team is burning the midnight oil to get reconciliations done, but management is setting higher goals. With benchmarking, they can look up the norms in their segment – and share it with management to justify hiring or operating more effectively as an organization – real employee empowerment. And management can set goals for accounting productivity not just on gut, but also comparing with other high performing companies – realistic goals that employees know have been established with rigor and fairness, so everyone gets bought in. Data drives decisions - in both directions. That's a little more democratic.

Business process benchmarking opens up a whole opportunity for measurement - from comparing the speed of close, industry error rates, responsiveness, or speed of resolution.  It even offers future opportunities around gamification, perhaps with badges and awards for achieving business process excellence, such as being in the top percentile of performance in the industry. There's even potential of translating measurable business process excellence into LinkedIn profile fodder! 

Down the line, linking accounting efficiency benchmarks with business performance measurements can finally provide linkage between company performance and accounting process performance, providing narrative to shift the accounting organization from cost center to value center.

The Cloud as Benchmarking Enabler

The cloud makes it possible for Blackline, because everyone is running on the same codebase, and the same platform, enabling metrics to quickly be aggregated across customer usage data. It takes all the hard work out of collecting, comparing and using the data for both BlackLine, and their customers.

Interestingly, this kind of benchmarking is incredibly hard to do using tools designed for an on premise world (or fake cloud solutions)– because it requires aggregating usage, and application level metrics, across customers: so centralization and a common code-base and schema are key. You also need to get to scale in terms of the number of customers across industries to make the data useful and insights.

It’s also a pretty big contrast to the old method of business process benchmark measurement -- using infrequent surveys from professional associations and analysts, because often the measures aren’t granular, typically not broken down by industry, and then you’ve got to reconcile the data (pun partially intended) between your own internal business process measures and the survey provider. In this area, it offers the opportunity for BlackLine themselves to actually be a benchmark data provider, and even provide narrative on trends in accounting organizations based on the data.

But one of the most interesting implications for solutions like BlackLine insights is fostering a sense of community amongst users. With everyone in the Blackline community running the same solution, for the first time it enables accounting team teams across organizations to compare stats, and share tips on how they moved the dial to improve them. Everyone is sharing performance metrics, on the same playing field, and using the same platform they can actually use to improve them.

Cloud has offered up the opportunity for better benchmarking for some time, and the intersection with business process and community offers compelling value It'll be interesting to hear stories of benchmarking in action at IntheBlack 2016.

The Fake Cloud Comes to Budgeting and Planning Applications

Legacy on-premises providers are feeling the heat, as more and more businesses worldwide continue to migrate to the cloud for added agility, greater collaboration, and faster data analysis.

This current cloud momentum has left many legacy players playing catch-up. They’re frantically migrating their products to the “cloud” – but it’s really just the “hosting” of old. The truth is that they’re gluing together old products to a delivery model that was never designed to work together. Worse still, they’re marketing it as if it is a real cloud solution. The “cloud-washing” phenomenon has now come to the budgeting, planning, consolidation, and business intelligence space, where legacy providers are warming up two-decades old software, painting puffy cloud pictures in brochures and presentations, and hoping their prospective customers can’t spot the difference. The truth is, you can’t just move on-premise software to a datacenter, and call it “cloud”. Ultimately, the customer is the loser in this scenario.

Even the media is fed up with fake cloud providers that try to pass as SaaS vendors.

Why? Because there are real, meaningful differences between solutions born and bred in the cloud, and those that were forced into the cloud to try to keep up with today’s business needs. Customers who are unable to navigate through the sea of SaaS-queraders and who are fooled by the fakers are destined to be stuck with expensive, antiquated solutions to run their businesses.

So the question is this:

Can You Spot Fake Cloud Budgeting and Planning Applications?

Here are four warning signs to look out for:

Fake cloud budgeting and planning solutions are much more difficult to use.

For a budgeting and planning solution to be successful, finance needs to be able to make change independently. That means creating new plans, allocations, or dashboards without IT or a busload of consultants. Fake cloud solutions still carry their complex heritage. Running them in the vendor’s data center still means a complex and IT intensive user experience for you in these areas:

  • Building financial plans
  • Updating security settings
  • Creating reports
  • Writing allocations and formulas
  • Make changes to business structures
  • Tuning the application for performance

One easy way to sniff out a fake cloud? Look for multiple administration consoles, non-browser based tools to administer the app, and large amounts of IT facing/technical administration functionality. Even better – ask to take a free trial, and watch the SaaS-Queraders scratch their heads, wondering how it’s even possible given their solution’s complexity.

In contrast, a true cloud solution is designed from the ground up for business users to manage and change the application themselves because it had to be designed that way. If you can take a Free Trial – and be using the application within just a few minutes with your own data, then you can be pretty confident it’s a real cloud solution.

A conversation with a reference customer starts with “What version are you running?”

With fake cloud solutions, all on-premise/hosted customers are on different versions. It’s much harder to share knowledge and best practices when your peer is running a different version of the software – one that might be 5 years old. In fact, when fake cloud providers “release” new software, their on-premise customers wait years to upgrade and each hosted instance requires upgrading separately - often an onerous and risky process. With cloud-native solutions, 100% of customers are always on the latest release. Everyone is speaking the same language, creating a strong community for sharing tips, tricks, and adopting the latest functionality.

Fake cloud solutions are often an “operations horror” behind the scenes.

With fake cloud solutions, you don’t want to see what’s going on behind the curtain – it’s often ugly. Transition of all that IT “ops” complexity is kept away from you. Good for you – but bad for the vendor – because those old premise solutions were never designed to run “as-a-service”, or be easy on IT. Often, fake cloud solutions each need many instances for each customer, that each requires its own “care and feeding,” and personal upgrading. The fake cloud vendor quickly ends up with hundreds, or even thousands of instances. Each instance also requires personal patching, fixing, and maintenance. It’s incredibly easy for customizations and optimizations to break during an upgrade because the applications weren’t designed with easy upgrades in mind.

In contrast, true cloud solutions are multi-tenant with a single code-base that’s designed to automatically migrate customizations with each new release.

A slower pace of innovation.

The best cloud companies innovate faster than fake cloud providers. Why? Because they can focus on one codebase and one platform. Imagine a world where your development team has to maintain 4 or 5 different versions of the software to support all the different customers running those versions. And imagine if all those versions were on different platforms and operating systems – Windows, Linux, Solaris, Oracle, DB/2, SQL Server. It’s a matrix of complexity, which saps innovation and resources.

Contrast that with a real-cloud vendor. All of the customers are on the same version and platform. It means a 100% of the R&D team focuses on improving the application that YOU are running, not someone else’s code-base.

Use these four tips are a starting point to avoid getting burned by the fake cloud - and do your own research, as they're merely the tip of the iceberg as far as warning signs to be wary of.