THE CHALLENGES OF FINANCIAL DATA CONSOLIDATION IN AN ACQUISITION CONTEXT
Growth through acquisition brings considerable challenges for Finance groups, particularly in terms of the production of consolidated information for all legal entities. We are exploring the options available to Finance groups to quickly resolve this important issue.
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The challenges of consolidating financial information
The growth of many companies often involves a series of acquisitions. These acquisitions will cause significant stress on the entire organization, particularly in terms of aligning operational processes and IT systems. This is even more true for the organization's financial data.
At the operational level: How to align month-end, year-end, budgetary and forecast cultures and processes?
At the organizational level: How to reorganize the Finance function within the new consolidated entity?
At the technological level: How to integrate data, particularly historical data, as well as bridges between operational systems and accounting modules?
Although the first two challenges are important, they are also the ones that are most often best planned before acquisition and for which there is less dependence on IT. We will therefore focus on the third aspect, that of technology, and explore the possibilities available to the Finance group after the transaction.
What are the possible options?
The first option is to do a migration of historical data and integrate everything into a single ERP / accounting system. This option seems a priori the most obvious because it promises, apparently, to resolve a large part of the potential technical problems.
Elle reste cependant très coûteuse et risquée car elle implique des changements organisationnels non négligeables (support TI, changement de processus dans la société acquise), nécessite des investissements massifs et présente des risques importants à court terme lors de sa mise en production pour la continuité de certaines opérations clés de l’organisation.The second is to leave the ERP / accounting systems in place and do the consolidated reporting manually in Microsoft Excel. This option is the simplest technologically but in return it requires increasing the number of resources of the Finance groups more than necessary. (therefore an increase in labor costs) in order to compensate for the lack of automation (in particular with the numerous manual operations that will be required to transform the data as well as the additional validation that this will require).
C’est une option également risquée pour la continuité des opérations du groupe de Finance car elle induit à long terme un épuisement des ressources menant à un problème au niveau de la rétention d’expertise critique.The third is to leave the ERP / accounting systems, but to consolidate all financial data (including historical data) in an automated manner in a specialized financial reporting solution. This option is still little known, but has the advantage of 'offer the best of the two previous options. It is in fact less expensive and much more flexible than the first while resolving the significant problems linked to the lack of automation of the second. It can also prove to be a low-risk transitional step by postponing a major investment such as integration into a single ERP/accounting module until later.
Pour les organisations en phase d’acquisition, il est important de bien évaluer les options qui sont disponibles pour le groupe de Finance afin de s’assurer de la continuité des opérations de fin d’années, fin de mois, budgétaires et prévisionnels dans un contexte post-acquisition.
Beyond the two traditional approaches (integration into a single ERP/accounting module or human process in Microsoft Excel), there is now a third approach to both reduce immediate business continuity risks while benefiting from reliable consolidated data and automated.
Conclusion
We have shown that the challenges of consolidating information are significant, but that there is now a new option that allows Finance groups to integrate financial data from an acquisition. See how our Swift Finance solution quickly overcomes this challenge.
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