The revival of financial systems
28 Dec 20
If you look at the history of business accounting systems, you can divide the development into several phases. During the years of the 70s and 80s, most accounting systems were named just accounting systems or financial systems when they included support for accounting. In these days it was quite common with stand-alone applications supporting for example, bookkeeping, invoicing, warehousing, and manufacturing.
In the late 80s and during the 90s, we saw an increasing interest in “integrated” systems where several processes were combined within a single and common application. This trend was also supported by the trend of “process mapping” and “business process reengineering” and where many organizations hired external consultants to optimize the business processes. The outcome and quality of all these consulting exercises were highly variable, but a lasting consequence was the opinion that “one should have a fully integrated business system”. This also coincided with the turn of the millennium when many organizations were facing system changes. As a result, a majority of all organizations switched to these rather large and complex business systems named ERP systems.
Now as we have lived with these fully integrated ERP systems for the past 20-25 years, we can state that the opinion of these applications is changing. The conclusion regarding the “large and fully integrated” business systems is that they can advantageously support large transaction flows, but at the same time act as a deterrent to business changes. In addition, they often require an unreasonable amount of time and cost to implement. This is not to say that all large ERP systems are not worth the investment.
If we look at northern Europe, it is again becoming common to accept a fragmented application environment and to accept several different ERP systems within the company Group. If we look at southern Europe, the rule is still that “all-in-one” is the best. Northern Europe here adopts a more modern and open approach when it comes to principles for how best to develop an appropriate business application platform for the future.
If we look at the current situation and forward, we see clear signs that the trend with “Apps” is growing stronger. The consequence of this is that the landscape of supporting processes outside the traditional ERP systems is growing ever larger. For the customer, this creates new opportunities at the same time as it requires the customer to take control of their infrastructure and think through how the system and information flow needs to be developed in the longer term. Simply supplementing existing applications with new apps does not solve the need for controlled and tidy information flows.
The purpose of this blog is to shed some light on the phenomenon of apps and the model to complement the existing application landscape with cloud-based services. A consequence of the trend is that we are once again beginning to see the importance of strong and pure financial systems that do not carry a heavy backpack of many other sub-processes that make implementation difficult, regardless of whether all pre-systems are used or not.
As a result of the years of integrated ERP systems the financial systems have been partially overshadowed. However, we are now beginning to see again that these have a role in the market. In a future where many of the process needs can be supported via external cloud services and apps, even pure financial systems can also have a significance in the chain. It is important, however, that they have well-developed interfaces to be able to import and export information via a wide range of communication methods without the need for 3rd party integration tools, and then not least open ledgers to collaborate with several external systems that handle invoicing, purchasing, service, etc.
Only in the last two years can we note a noticeable increase in the number of selection processes that refer to pure financial systems instead of ERP systems. And this is hardly a temporary trend, but it is a clear indication that accounting systems are once again becoming popular.