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Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals
Navigating the Build vs. Buy Decision
...
Today’s Speaker
2
Ø  20+ yrs in finance
Ø  Expert in revenue recognition
and back office automation
Ø  Chief Business O...
Today’s Take-a-ways
3
•  Manual processes (the status quo) are the right answer
•  Upside/downside of growing your own sol...
Taking the lead in IT decisions
4
Accenture 2014 High Performance Finance Study, CFOs:
•  40% drive decisions actions impa...
The Choice Chart for FinTech
5
Do	
  Nothing	
  
Manual	
  
Processes	
  
3rd	
  Party	
  
Solu7on	
  
Homegrown	
  
	
   ...
When Manual Processes Work
6
Ø  Start-up/early stage company
Ø  New go-to-market strategy
Ø  No/few business processes
...
Benefits of Manual Processes
7
Quickly	
  adjust	
  to	
  market	
  changes	
  
Tes7ng	
  of	
  processes	
  
Evolving	
  ...
When Manual Processes Fail
8
•  Have repeatable processes filled by an ever-increasing
accounting or finance (or sales, ma...
When Homegrown Works
9
Ø  Light automation suffices
Ø  Nothing in the market
Ø  Increases valuation
Ø  Skillset and ex...
Benefits of Homegrown
10
Highly	
  customized	
  to	
  meet	
  your	
  specific	
  requirements	
  
Control	
  over	
  the	...
When Homegrown Fails
11
•  Bubble Wrap Bob!
•  Maintaining levels of
compliance, service, and
security
•  Inability to shi...
When 3rd Party Software Works
12
Ø  It meets core business
requirements
Ø  Time-to-market is critical
Ø  Current and fu...
Benefits of 3rd Party Software
13
Vendor	
  responsible	
  for	
  support,	
  defects,	
  product	
  updates	
  
Vendor	
 ...
When 3rd Party Software Fails
14
•  Product only meets 20-30% of your use cases
•  Inability to modify functionality in an...
Best Practices for Build vs. Buy
15
1.  Validate need for technology – no tech just for tech sake
–  Legit business need?
...
Best Practices for Build vs. Buy
16
3.  Identify architectural requirements
–  Information security strategy
–  System int...
Build vs. Buy Considerations
17
Cost	
  Type	
   Build	
   Buy	
  –	
  OnPrem	
   Buy	
  –	
  SaaS/Cloud	
  
Build	
  Out	...
Cumulative Spend – Build vs Buy
18
	
  -­‐	
  	
  	
  	
  
	
  1,000,000	
  	
  
	
  2,000,000	
  	
  
	
  3,000,000	
  	
...
In Summary
19
•  Build vs. Buy decisions are scenario dependent, even
within companies.
•  Technology cannot fix poor busi...
Additional Reading
20
•  http://news.dice.com/2013/07/11/build-versus-buy-the-7-
most-important-questions-to-ask/
•  http:...
Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals
Thank you!
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Navigating the Build vs. Buy Decision for Your Finance Technology Needs

Something that vexes every finance and accounting organization is the challenge of managing your internal technology portfolio to meet the changing needs of your constantly changing company. Should you continue to patch that old system or buy something new? Should you use point solutions or broad-based platforms? How much is the right amount to invest and which direction has the highest ROI. Well, as it happens, the answer is, “it depends”. This event will focus on how to perform a build vs. buy analysis for finance and accounting automation projects covering these very issues, helping you form a coherent technology strategy, along with tactics for execution.

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Navigating the Build vs. Buy Decision for Your Finance Technology Needs

  1. 1. Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals Navigating the Build vs. Buy Decision for Your Finance Technology Needs
  2. 2. Today’s Speaker 2 Ø  20+ yrs in finance Ø  Expert in revenue recognition and back office automation Ø  Chief Business Officer at goTransverse Ø  Favorite Food: Doritos! Mike Murphy, CPA
  3. 3. Today’s Take-a-ways 3 •  Manual processes (the status quo) are the right answer •  Upside/downside of growing your own solution •  Upside/downside of going with a specialized vendor •  Best practices when performing a build vs. buy ROI analysis for FinTech projects
  4. 4. Taking the lead in IT decisions 4 Accenture 2014 High Performance Finance Study, CFOs: •  40% drive decisions actions impacting tech investment •  45% play the top role in monitoring ROI •  23% are in charge of identifying tech to retire/replace •  2 of 5 anticipate increased investments in cloud and SaaS by at least 26%, with 11% saying increase >50% Source: CIO Insight coverage of Accenture 2014 High Performance Finance Study; http://www.cioinsight.com/it-management/it-budgets/slideshows/cfos-taking-lead-role-in-it-decisions.html
  5. 5. The Choice Chart for FinTech 5 Do  Nothing   Manual   Processes   3rd  Party   Solu7on   Homegrown     On-premise or hosted? On-premise, SaaS or hybrid? More Spreadsheets!
  6. 6. When Manual Processes Work 6 Ø  Start-up/early stage company Ø  New go-to-market strategy Ø  No/few business processes Ø  Opportunity cost to manage manually is less than the benefit of automation photo  by  Craig  Chew-­‐Moulding  on  flickr  
  7. 7. Benefits of Manual Processes 7 Quickly  adjust  to  market  changes   Tes7ng  of  processes   Evolving  business  model   90  Day  Rule   • Leadership     • Acquisi7ons   • Mergers   • Greenfield  product  offers  
  8. 8. When Manual Processes Fail 8 •  Have repeatable processes filled by an ever-increasing accounting or finance (or sales, marketing, etc.) team •  Can’t hire fast enough to satisfy demand •  Inability to forecast revenue and/or expenses Don't put off until tomorrow what you can do today. -Benjamin Franklin
  9. 9. When Homegrown Works 9 Ø  Light automation suffices Ø  Nothing in the market Ø  Increases valuation Ø  Skillset and experience available in IT / Engineering photo  by  Nata  Luna  on  flickr  
  10. 10. Benefits of Homegrown 10 Highly  customized  to  meet  your  specific  requirements   Control  over  the  budget,  7melines,  technology,  etc   Feature/func7onality  addi7ons  tailored  to  business   Poten7al  use  as  compe77ve  differen7ator  
  11. 11. When Homegrown Fails 11 •  Bubble Wrap Bob! •  Maintaining levels of compliance, service, and security •  Inability to shift resources to other projects Just  because  you  have  brilliant  engineers  doesn’t   mean  you  can  do  it  faster  or  cheaper.     photo  by  Andy  Smith  on  flickr  
  12. 12. When 3rd Party Software Works 12 Ø  It meets core business requirements Ø  Time-to-market is critical Ø  Current and future functionality useful in next 3-5 years Ø  Skillsets and experience in IT/ Engineering not available Ø  Not a competitive differentiator photo  by  ScoC  Maxwell  on  flickr  
  13. 13. Benefits of 3rd Party Software 13 Vendor  responsible  for  support,  defects,  product  updates   Vendor  incurs  costs  of  PCI,  HIPPA,  SSAE  16,  etc  compliance  and  security  of  solu7on   Vendor  responsible  for  up7me   Benefit  from  other  companies  using  the  system     Focus  internal  resources  on  products  you  sell   Time  to  value  can  be  much  faster  
  14. 14. When 3rd Party Software Fails 14 •  Product only meets 20-30% of your use cases •  Inability to modify functionality in any meaningful way •  Not compatible (or able to integrate) to other systems •  Fixes and enhancements on the vendor’s schedule •  Obsolesce or deprecation of versions or features     photo  by  Ed  Yourdon  on  flickr   Software/Technology may help with business processes but it can’t define it for you. Garbage in = Garbage out!
  15. 15. Best Practices for Build vs. Buy 15 1.  Validate need for technology – no tech just for tech sake –  Legit business need? –  Awed by product hype or success stories? –  Added business value? 2.  Identify core business requirements –  MUST be supported by the solution –  Ensure all business owners are included –  Business first, technology last
  16. 16. Best Practices for Build vs. Buy 16 3.  Identify architectural requirements –  Information security strategy –  System interfaces –  Existing corporate standards 4.  Examine existing solutions –  Include solutions already in-house across all departments –  External solutions to extend in-house or net new 5.  Evaluate in-house technical capabilities –  Do you have the right resources to support a custom solution? –  If not, willing to have OJT?
  17. 17. Build vs. Buy Considerations 17 Cost  Type   Build   Buy  –  OnPrem   Buy  –  SaaS/Cloud   Build  Out   Cost  of  FTE's  required   to  build  out  the   solu7on     Generally  SoZware   and  Hardware  costs   No  Upfront,  part  of  the   service   Implementa7on   Cost  to  implement*   Cost  to  implement*   Cost  to  implement*   *  Do  not  overlook  the  cost  for  business  users  to  support  implementa7on  and  ongoing  training   Administra7ve     Cost  of  service  post   produc7on.    Password   resets,  technical   support,  etc.   Cost  of  service  post   produc7on.  Password   resets,  technical   support,  etc.   Most  vendors  include   in  offerings,  but   beware  of  hidden  costs   Change  Management/   Upgrade/  Maintenance   Cost  of  FTE's  to   maintain  the  solu7on   Generally  a  %  of  total   license  fees  paid   Most  vendors  include   in  offerings,  but   beware  of  hidden  costs   Compliance   Maintain  compliance   and  adhere  to  audit   requirements  for   PCI,  SSAE16,  HIPAA,   etc.  if  applicable.     Maintain  compliance   and  adhere  to  audit   requirements  for   PCI,  SSAE16,  HIPAA,   etc.  if  applicable.     Vendors  maintain   compliance.  Ask  to  see   cer7fica7ons.    
  18. 18. Cumulative Spend – Build vs Buy 18  -­‐          1,000,000      2,000,000      3,000,000      4,000,000      5,000,000      6,000,000      7,000,000      8,000,000     Year  1   Year  2   Year  3   Year  4   Year  5   Buy   Build  
  19. 19. In Summary 19 •  Build vs. Buy decisions are scenario dependent, even within companies. •  Technology cannot fix poor business processes – beware of shiny red ball syndrome! •  Remember to factor in person hours and opportunity cost of resources no matter the choice. •  If you can’t make money on the IP, seriously consider vendor software. Spend valuable tech resources on your core competencies.
  20. 20. Additional Reading 20 •  http://news.dice.com/2013/07/11/build-versus-buy-the-7- most-important-questions-to-ask/ •  http://www.3csoftware.com/to-build-or-to-buy-comparing- custom-and-off-the-shelf-software-applications/ •  http://www.lexicon-systems.com/pubs/white-papers/ Lexicon_BuildVsBuyTenLessons.pdf •  http://www.cincom.com/pdf/CM071218-1.pdf
  21. 21. Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals Thank you!

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