On February 10th, I led a workshop called “Leveraging Technology in the Finance Function” for Tipping Point Community. Tipping Point is a grant-making organization that fights poverty in the Bay Area by investing in 47 non-profits in the areas of education, employment, housing and wellness. The group was comprised of Tipping Point’s grantees, many of which also received financial management training and consulting from Fiscal Management Associates (FMA), which I partnered with to design the workshop. The interactive workshop was described as:
Tipping Point Community invites you to a peer learning session facilitated by FMA: Leveraging Technology in the Finance Function. Open to the CFOs/senior financial leaders of Tipping Point’s grantee organizations, this half-day session will include learning content from a topic expert, Donny Shimamoto, CPA.CITP, CGMA, as well as time for participants to share successes and challenges in their own efforts to optimize technology.
In a format designed to facilitate peer learning and exchange, the session will focus on the different components of IT strategy nonprofits should consider as they continue to improve financial and other “back office” operational functions. Topics covered will include the following:
- The role of CFO/senior financial leader in technology
- Selecting and optimizing the right accounting software
- Implementing paperless workflow
- Integrating technology systems across functions to maximize efficiency
- Moving to the cloud
Attendees were mostly from small to mid-sized organizations with a range of social service missions and models. The majority use QuickBooks (Desktop), but some organizations use Financial Edge. FundEZ, Intact, MIP, and QuickBooks Online.
We started the workshop by identifying the challenges that the organizations face with their accounting systems. Using a sticky note brainstorming technique, we had attendees explain their challenges and post them together with other like challenges. You can see the results of this in Figure 1 – Nonprofit Finance Technology Challenges.
Several themes emerged from the challenges. They included:
- Budgeting – the need to be able to manage and report on budgets by fund, grant, department, and programs. Many use Excel for budgeting, and cited limitations of the budgeting modules in their general ledger software.
- Import of Data – there were a variety of needs that attendees had getting data into their general ledgers from other systems, like accounts payable, expense reporting, and fundraising systems.
- Reporting – many attendees export their data and use Excel for reporting. Reporting needs included management reporting, grant reporting, and standard financial reporting.
Other challenges included: balancing the flexibility of the more “advanced” (configurable) systems with usability, understanding how to best use the functionality available in the systems, and problems with the actual software itself (crashing and lack of support).
In the second part of this segment, we asked attendees to share at least one challenge that they had already solved and how they solved it—so that others might be able to leverage the ideas or talk more about the solutions during the breaks or at a later time. Interestingly, through the discussion we also found that several organizations had already employed solutions for two other areas that we often see as challenges in the nonprofit sector:
- Expense Reporting – leveraging bank transaction feeds and automated routing via cloud-based expense reporting software. The commonly known vendors in this area came up during our discussion: Concur, Expensify, and Tallie. There was even one organization that was building its own custom expense reporting application in Salesforce (not necessarily recommended, but an option if you need it integrated with other data that you have in Salesforce).
- Bill Processing and Payments – using electronic routing and approvals for accounts payable transactions (“bills”), which may include the scheduling and processing of cash disbursements (checks or ACH payments) to pay for those bills. com was the solution mentioned here, and its built-in integration with Intacct and QuickBooks were touted as big pluses.
Another interesting success that was shared was getting a vendor that was doing a custom Salesforce project for them to build good accounting controls (e.g. cutoff and update posting controls) into the project. Lack of these types of controls is definitely a challenge when deciding to go with a custom solution and accountants should ensure that they get involved early in the solution design process to ensure that functionality for accounting controls are included in the design specification. It’s MUCH easier and less costly to have these included up front, rather than try and add them in later.
Understanding Your Enterprise
Through the rest of the workshop we led attendees through development of their “intraprise architectures”—diagrams that map out business processes, information flows, and supporting systems. (See sample nonprofit diagram in Figure 2. If you’d like a PDF or Visio template of this diagram, please email firstname.lastname@example.org.)
When helping clients through their needs analysis or system selection initiative, we always create these diagrams for whatever area they are trying to select a system to support. These diagrams can be used to analyze the end-to-end business processes that need to be addressed (rectangles), the system(s) that are supporting these processes (cylinders), and the information that needs to flow between these systems (arrows). In the middle of the diagram we also often put a performance management model, showing the mapping between the various information needed to support decision-making and overall organizational performance optimization. This way we can see where data or processes are inter-dependent, and may require integration or at least consideration of how the information that is needed will be addressed.
One of the organizations had recently gone through several major implementations and they said they wished they had known about this technique before they went through the implementation because a lot of the problems they are having now would have been able to be better anticipated and addressed as part of the implementation. This is exactly why we always create these diagrams as one of the first steps in any solution selection or optimization project. Remember identifying and addressing integration or business process issues up-front during design is always less costly and helps you to avoid a lot of pain and problems when the solution goes live.
Through the evaluation forms we asked organizations what they would explore or consider as a result of this workshop. It was interesting to see the different things that arose, including:
- Exploring Applications – Many attendees said that they planned to look at one or more of the applications that was mentioned during the workshop, with Bill.com, Adaptive Planning, and the expense reporting software mentioned specifically.
- Exploring Program Processes – Using the Intraprise architecture as a starting point, attendees cited the need to explore “more improvement in non-tech processes” and “conduct regular process reviews with program staff”. I was pleased to see this since I believe that finance has a huge opportunity to help the rest of the organization put more discipline and structure, and internal controls around its operational processes—and they can only do this by obtaining a good understanding of the organization’s end-to-end business processes.
- Integrating Program and Financial Data – As shown in the enterprise intraprise architecture, performance management should be a central consideration. Participants cited the need to “combine program and financial info to give more strategic direction” in their organization, and “rather than just reporting numbers to programs, [that they] will go further to provide insight” on what the numbers mean.
One participant mentioned what I hope all attendees would adopt as their mantra, to “start looking at how our finance team can move from efficient to transformational”. By looking the organization as a whole (“the intraprise”), its program and financial processes, and by integrating and correlating program and financial data into meaningful information and insights, finance can overcome its challenges and become a true strategic enabler for the organization.