Teampay attended the Sage Intacct 2018 Advantage conference last month, where they discussed trends in finance and automation--and what it all means for industry professionals moving forward. Below are our 3 biggest takeaways:
- Embracing technology will benefit employee recruitment and retention
- Every company will soon be a software company (at least partially)
- Subscription-based financials are in; product-based models are out
Embracing technology will benefit employee recruitment and retention
Reports show that technology adoption and integration have become driving factors in employee recruitment and retention. In addition to providing companies with the latest and greatest tools, technology offers a host of benefits, such as flexible scheduling, remote work opportunities, and higher salaries due to in-demand skill sets. These perks are especially appealing to millennials, who make up the largest percentage of mixed-generation workplaces. The younger generation workforce tends to bounce around a lot, often leaving positions after just two years. Considering the significant expenses associated with hiring new employees, leveraging technology to improve retention is necessary.
In addition to using technology to attract employees, it is also critical to hire finance professionals who are technologically savvy themselves. According to Intacct’s research, technology and data systems are now ranked as the most important skill for a successful accountant, followed by business strategy and understanding compliance regulations. What makes this interesting is that many modern technological solutions in finance are geared toward liberating accountants from repetitive tasks so that they can focus on achieving the overarching, strategic goals of the organization.
Every company will soon be a software company (at least partially)
Software as a Service (SaaS) spend continues to increase across most major industries, as emphasis on employee productivity grows. Research indicates that the US software industry supports nearly 10 million jobs, 2.5 percent of which belong exclusively to those who are direct industry employees. Interestingly, most software developers can expect to earn approximately double the US salary average, meaning the even the low end of these positions maintain competitive salaries
Intacct Advantage outlined five factors of software’s accelerating growth:
- Existing software markets are growing over time
- Software is infiltrating what were once niche markets
- Software is displacing hardware
- Software is displacing services and labor
- Every company is becoming a software company
Software engineering currently accounts for more than 1.2 million jobs, whereas hardware engineers are sit at approximately 73,000. The biggest reason for this lies in the advent of cloud-based infrastructure. With a projected 24% increase in job outlook (compared to a 5% regression for hardware engineers), these trends will only continue.
Source: Gartner Market Databook, 4Q17 Update; Forrester; PwC; IMFPerhaps the greatest transformation will take place among the rest of the workforce. Though only a small percentage of jobs are projected to become fully automated over the next several years, automation will reduce the need for repetitive manual labor. This will create opportunities for career evolutions, re-skilling, and role expansions. Automation will free employees to focus on strategic objectives, and technological training will become more prevalent.Lower distribution costs and the elimination of middlemen has invigorated the B2B market. Disruptive software companies are expected to sprout up across all major industries, and global software revenues are closing in on the $1 billion mark. According to many experts, this is only the beginning.
Subscription-based financials are in; individual product models are out
A KeyBanc capital market survey highlighted important factors that drive growth and increase profitability. Researchers found that top-performing companies grow at more than 50% while consuming less than the average rate of return (ARR). This growth vs. capital consumption ratio emerged as the definitive snapshot of an exceptionally healthy company.While sales and marketing are integral to remaining competitive, allocating more than 60% of revenues to S&M produced diminishing returns. This is largely due to a market space that has become increasingly crowded in recent years. Consequently, one-off product order business models have become obsolete. Instead, subscription-based modeling is the preferred structure. Focusing on upselling or expanding services to the existing customer base not only forecasts revenue streams more effectively, but significantly reduces customer acquisition costs (CAC). As more companies have entered the market space, the cost of sales to new acquisitions has increased greatly. A 2015 survey by Silota found that it cost on average $1.18 for every new dollar from a new customer, as opposed to $0.28 for every new dollar from an existing customer. Customer engagement is now about consistency, transparency, and building relationships over time. With so many options to choose from, consumers not only consider the value of a product or service, but also their individual interactions with a particular company.
The 5 steps to automation
Sage Intacct recommends five key steps to embrace and implement automation:
- Integrate systems for quote to cash to speed business processes by up to 30%
- Establish contract-based billing to increase cash flow up to 20%
- Build end-to-end revenue management to reduce financial close times by 50%
- Create real-time SaaS and GAAP dashboards, which can reduce gross revenue churn by 2%
- Forecast the future to increase revenue per transaction by as much as 15%
Understanding the current state of automation, its capabilities, and how it relates to both company growth and the workforce can help businesses successfully negotiate the inevitable changes to come.
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