10 Warning Signs That it's Time to Replace your Consolidation System

Where’s the progress?

A couple of years ago, we sponsored a white paper by Ventana Research to get a good understanding of the speed of companies’ closing cycles. You would think, given all the advancements in technology and the maturity of consolidation applications, that companies today would be closing their books faster than ever before. But much to our surprise, the opposite came out to be true. We asked Ventana to update the research this year (When to Upgrade Financial Consolidation Software) and guess what they found…..

On average companies take longer to complete their accounting close than they did five years ago! In fact, only 38% reported they complete their quarterly close within five or six days, down from 47% previously - a 9% drop! What’s up with that?


The reasons

How can this be? Financial consolidation software has been around since the late 1980’s. There are a number of solutions out there and most companies (especially larger ones) have adopted them. Ventana does a good job of summarizing the need for more advanced consolidation applications in the paper. Some of the key items:

  • Growing demands on finance for reporting, both internal and regulatory
  • The age of existing Consolidation systems, which are no longer keeping up with needs
  • The functional limitations of many of these systems, requiring additional spreadsheets to augment the system
  • The need to include narrative as part of the ‘post-financial’ reporting cycle which produces external reports, board books, annual reports, etc.


Many older consolidation products have gone off standard support or are likely to in the not too distant future. For example:


If your consolidation product is more than 5 years old you or is only “life-support” this Ventana paper is for you.  It helps guide you through the decision criteria for deciding if and when it is time to start shopping for a new product.


The Top 10 Signs (3 of them anyway….)

Ventana goes through a comprehensive list of 10 warning signs that it’s time to replace your consolidation system. I’m not going to repeat all 10, but here are the top 3 (in my opinion):

1. Your monthly or quarterly close takes more than six business days.
2. You can meet some statutory and financial reporting requirements only by supplementing the system with spreadsheets.
3. The product is no longer on the vendor’s strategic roadmap or will not receive further enhancements.

The other 7 are equally telling signs. Importantly, the paper does give some recommendations on what to do if these warning signs are there, and if replacing the system is the right choice, it gives some evaluation criteria to consider.  

In today’s environment of ever increasing demands on finance it is time to evaluate all the resources available to you. Your consolidation system is probably past its prime. It may have served you well over the years, but investing in a system that can handle today’s reporting requirements and has the depth and breadth to handle future requirements as well is an investment that will pay off many times over.

What are your thoughts? Do you have a consolidation system that is showing its age?

 

Tagetik Collaborative Disclosure Management

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