Leadership Insights: Services-as-a-Business

Transcript

Mike Vizard: Hello, and welcome to the latest Digital CxO Leadership Insights video. I’m your host, Mike Vizard. Today we’re with Dan Brown. He’s the chief product and strategy officer for FinancialForce. And we’re talking about something known as “services-as-a-business” that they just launched. Dan, welcome to the show.

Dan Brown: Thank you. Thank you for having me, Michael. It’s a pleasure and I’m looking forward to talking about services-as-a-business.

Mike Vizard: People are familiar of course with software-as-a-service, and we have as a service just about everything in the world now. So, what exactly is services-as-a-business compared to what we’ve been doing before?

Dan Brown: Yeah, I think what we’re seeing in the industry is there’s – we took – well, maybe a history lesson is good. We took tangible – we took software; we sold it like tangibles. We took software and we turned it into an annuity. But that really had a ripple effect throughout the enterprise, the way that we market, the way that we sell, the way that we implement and subsequently engage, the way that we rev rec and bill, and the way these capabilities come together. And our perspective is that’s really transformed the enterprise, and so to speak about services is really to speak about how you run your business. And so, that element of services and how it pervades all of these capabilities, your processes, your tools, your technology, the skills of your people has really become a step function change. And that’s why we think about it as services-as-a-business, because it really puts a lens on how the organization has changed to deliver value props to your customers .

Let me add just one other thing because I realize that’s kind of a lot. The – typically, what we’re finding in our customer base is once you land with one offer that is an annuity basis – it might be technology; it might be a people service – you tend to build from there. And so, there’s a lot of nuance of going into a customer with multiple offers. And they may be different revenue types. They might be a technology-as-a-service and a people-mediated service, and bringing those things together to deliver value to the customer, that really requires a lot of connected capabilities in the enterprise, something that’s pretty different from what you would have seen, say, even five years ago.

Mike Vizard: Are we moving therefore to a model where – if you think back, ERP software was basically the codification of a process and there was these end-to-end processes. But are they now more modular and I get a little more flexibility on how I want to stitch different things together to customize those processes?

Dan Brown: Yeah. Yeah, I think it’s a – when you rewind to the heyday of – or to really the birth of ERP, just getting a business process digitized was kind of an innovation and really an operational advantage and then an operational necessity I think what you’re alluding to is when you’re running services-as-a-business, you really are forced to tune how you engage the customer in the life cycle, often in unique ways. It can be different based on the segment. It can be different based on the set of offers that you’re providing or entitling the customer to. It could be a geographical difference, an industry vertical or microvertical difference. And so, that’s really beyond what a process orientation can give you. It’s really more of a practice or even a playbook engagement. And so, that specificity is also putting a lot of strain on the enterprise when it’s bringing its services to market.

Mike Vizard: Is the way we view ERP software therefore starting to change? Because it used to be that at least the vendors said that they could package everything up that you needed to process and it would be standardized and it would be – you wouldn’t need to do anything; you’d just do it turnkey. And yet, people seemed to customize those the hard way over the years. And my question becomes have we reached a point where we realize that in order to provide some sort of differentiation in terms of business value we need to be able to customize those experiences, and legacy approaches don’t really lend themselves all that well for that.

Dan Brown: Yeah, it’s a great question. And I think it’s sort of a perennial one in the sense that we ask ourselves “Should we adapt technology or adapt to technology?” I think that question has been a part of IT and business functions for a while. It – as the plethora of technologies comes to us and offers capability for automation, we continue to ask ourselves, “Should we take it as is or does it need to be tuned to the way we do things?” And I think there are a couple of points here that are really important. The first is enterprises should always think about which things are giving them strategic advantage? Now, as somebody who has worked in accounting software for a long time, I can tell you general ledgers haven’t changed all that much in a long time. And generally speaking, the way that you do a general journal entry or the way that you post to your ledger or subledger is not going to be differentiating for your business. So, taking that off the shelf, digitizing and normalizing, I think, is a straightforward value proposition from an operational and a financial perspective.

But there are other areas where changing the way that you do things does matter a great deal, and that’s really up to each enterprise to figure out where they have strategic leverage and where they – and moreover, where they can get good return. That also means that your technology needs to have some adaptability built into it.

Now, there’s a second angle to this which is really important, which is as we’ve added greater and greater maturity and more process-oriented capabilities in the enterprise, more automation, things like RPA and PME and workflow tools to really tie things together well, where are the areas where you can tune and get micro-automation? And my point being, when we talk about service-as-a-business, now you’re talking about how collections of knowledge workers can bring value propositions to the market, either with – working with a prospect or further down with an existing customer.

And that’s a very different story. That’s where you do have to tune things very significantly to the way that you interact with your customers, and that’s where work and playbooks and project orientation really matters a great deal. And that specificity, in my opinion, has very, very high leverage.

Mike Vizard: Is that becoming more accessible to a broader number of people because we have low-coat tools, sometimes no-coat tools, and that’s the mechanism that we’re using to kind of tune these services?

Dan Brown: Yeah, I think that’s right. I think it’s a combination of technology that is operating at a level of abstraction that is higher, some of which is domain-specific. I also think that you’re seeing the – as each generation, as we get a new wave of employees coming into the market, their comfort level and expectation of using technology is higher. That’s not just “clicks, not code” automation; it’s also how you incorporate data and your expectation for incorporating data, as well as the channels: mobile, tablet, obviously via a browser. So, I think it’s all of those things coming together.

With regards to automation, just to go back to your original point of view, there are great platforms out there. The Salesforce platform, I think, is a really good example of where you can very, very quickly tie things together and then even, if you have changes in the way you do things, modify that accordingly. So, I think that “clicks, not code” and that abstraction of a platform that can automate with a business analyst’s perspective is very powerful and it lends itself in the way that you suggested.

Mike Vizard: Have we reached some sort of line in the sand now where ERP applications are being deployed in the cloud? It seems like it took a long time to get there in volume. We had a lot of CRM stuff. But has there been a shift and is that yet another one of those post-COVID bonuses that we’re seeing?

Dan Brown: I think it’s yes, yes, and yes. I mean, if you go back and you look at this industry – I’m just going to focus on financials in particular – and you look at the industry, when the early cloud vendors came out in the late ’90s, most of them were focused on the very low end of the market and then they matured and then you had bigger players coming in in the early 2000s. It definitely – there were headwinds. It’s a – changing your financials is – tends to be a conservative move and a conservative circle of business stakeholders. I think over the last five to eight years that inversion is complete. There isn’t an RFP – I think it’s – I say it with great confidence, there isn’t an RFP that goes out today for core financials or ERP that doesn’t include or completely – is completed by entirely cloud-based vendors. And there isn’t a major player out there that is being successful with a non-cloud solution. So, I think the inversion is complete. And I think, to your point about COVID, there were a number of companies that didn’t have certain capabilities digitized or not sufficiently digitized that learned, I think, the hard way that having great technology support the capabilities so that you can in this case have a remote workforce are now putting that investment in and recognizing just how important that is.

Mike Vizard: It seems like the business processes themselves are transitioning as well. We’re seeing more near real time; we’re seeing more things that are done in a less batch-oriented fashion. So, does the software need to adjust? Because it seems like a lot of the ERP software we had in place historically was all built for a different kind of process and architecture.

Dan Brown: Yeah, I think that’s entirely correct. The pressures on the business – and I think this is actually one of those things that you tease out from a service-as-a-business model. When you’re deploying services, your customer, that pressure requires you to adjust and tune accordingly. And so, you mentioned batch. So, a period-end close, or a budget cycle, those are things that are going from very punctuated activities that are periodic, maybe once a year or once a quarter. They’re becoming more and more continuous in so much as they can. And I think actually, Michael, in some cases the technology is actually pushing that into the function. Because the technology can handle that, the organization is picking that up as a part of the way that they do things. We’re seeing this in the maturation or the evolution of FP&A into XP&A or integrated business planning where now the finance department is really becoming much more strategic about how lead indicators and operational indicators are influencing financial indicators and vice-versa. And I think that process is much more connected across the enterprise. And that’s, I think, a big shift in capabilities.

Mike Vizard: Of course, we can’t shake a stick these days without somebody talking about AI. And I wonder if the shift to the cloud makes that easier because we can aggregate more data and you need that data to drive the models and the training, et cetera, et cetera. So, will we see bigger AI advances once we start putting everything up in the cloud?

Dan Brown: Yeah, absolutely. I think you’re starting to see that already. I think you’re seeing that – I’ll start with analytics and speak specifically towards machine learning and/or artificial intelligence. You’re seeing that with better access to connected data so that you can look at how your business is doing from a descriptive standpoint. There’s obviously a predictive and prescriptive where you have “I want to know – let’s look at something that is close to home, into financials, and we can talk about things that have to do with work and so on.” But in financials, something like days to pay. If you’re – you want to understand your cash flow, you certainly need to understand whether or not people are going to pay according to the terms that you’ve given them. Understanding signal in your customer engagement, what the history implies for that account can give you very good insight into whether or not you’re going to collect on time or you’re going to have certain delays or maybe even have bad debt accordingly.

So, getting all this data in the cloud and getting it connected gives you much better insight – again, this sort of descriptive, all the way through to more predictive and prescriptive models where, as I mentioned, there’s an orientation around collection. And there are a number of other places where I think this collection and connectedness of the data can help you with insight and also help further the business in an automated fashion. So, I think it’s transformational.

Mike Vizard: We of course have talked a lot over the years about systems of record versus systems of engagement. Is that a useful construct or is that starting to blur as well because we are converging more processes?

Dan Brown: Yeah, I think that’s 100 percent a great insight. I think if you rewind ten years ago, a CFO would sort of shudder if you talked about CRM or a customer support tool as being a system of record a la a financial system, but – and those things being systems of engagement with touch points with the customer. But I think that’s changed and I think that goes back to the statements that I made earlier about how do you connect the dots between the operational and the financial and the lead indicators and the financial, and the lag indicators as well? And I think that systems of engagement have become critical systems of record for running your business, and I think this also is very evident in the model that we’re purporting around services-as-a-business. It’s impossible to be a successful organization now if you’re going to divorce financial systems of record from everything else. They have to be connected. They are mission-critical, your customer engagement platform, and therefore has to be a system of record.

Mike Vizard: All right. Folks, you heard it here first: Start with the integration and work your way backwards instead of building applications and trying to integrate them later. Hey, Dan, thanks for being on the show.

Dan Brown: My pleasure, Michael. Great talking to you.

Mike Vizard: All right. Thank you all for watching the latest episode of the Digital Insights Leadership Series. You can find it and other videos just like it on the Digital CxO website. We invite you to check them all out. And in the meantime, thanks again for watching.