Most organizations will fail to realize the full value from purchasing new financial applications because they’re not accounting for digital capabilities they’ll need in the future, according to Gartner.
Finance departments should seek solutions that will enhance their ability to innovate, rather than settle merely for efficiency gains, Gartner advises.
“The criteria on which financial applications are being selected today largely do not reflect the future needs of these departments,” says Gartner’s John Van Decker, whose title is vice president analyst.
The firm’s research found that 79% of financial application buyers sought to improve efficiencies, while 59% targeted better business outcomes. Those results suggest that buyers are overemphasizing simply improving their systems of record, while not accounting for differentiation and transformation opportunities, according to Van Decker.
Leading finance departments, Gartner said, will seek to accelerate efficiencies by driving cost management and revenue growth opportunities.
However, only 36% of surveyed buyers thought improving cost management was a reason to upgrade their financial applications, and just 9% cited driving revenue growth as a factor in their buying decisions.
The purchase of financial software, including financial planning and analysis and financial close applications, continues to be driven by ease of use, functional capabilities, flexibility, and price. That suggests buyers largely view the market as commoditized, with the result that organizations aren’t capturing the solutions’ full value, according to Gartner.
“We continue to see many organizations fail to go beyond the basic functionality of the solutions they purchase,” Van Decker said. “Some organizations see their solution as simply an upgrade on legacy technology and overpay for advanced functionality they never use. In other cases, a lack of user training or not thinking through how the solution relates to their finance transformation strategy is to blame.”
To ensure a solution drives greater value, application buyers should define a project plan before implementation, Gartner counsels. Also, the firm adds, they should look for focused solutions that feature predictive analytics, AI/machine learning capabilities, and proven acceptance outside finance for use in integrated financial planning.
Gartner research shows that those in charge of financial applications must support a range of new technology initiatives. Almost half (49%) of survey participants said predictive analytics was a top finance technology initiative, while 36% emphasized artificial intelligence and machine learning.
“When assessing vendors, it’s crucial to understand how they will incorporate AI and machine learning into their product, as we anticipate those technologies will be mainstream within three to five years,” says Van Decker.
Blockchain technology remains a lesser concern to today’s application buyers, but it should on their radar screens anyway, according to Van Decker. He predicts it will impact core financial implementations and become foundational to the financial consolidation process within five to eight years.