January 27, 2016

A Wake Up Call for Companies that Haven’t Yet Started Planning for the New Revenue Recognition Changes

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Almost everyone I know loves Chipotle. It is fast, affordable, and always hits the spot. The ordering is easy enough — you walk in and all of the options are laid out for you. Do you want a burrito? A bowl? Tacos? All you have to do is tell the person behind the counter what you want and soon enough, you are ready to eat. This is exactly how implementing a cloud finance system works.

At our firm, we like to refer to the multi-tenant cloud as the “real” cloud. In this model, you buy a subscription to a service and that same service (and software) is used by you and every other customer. All you are doing when implementing a true cloud system is configuring, not coding (see more here). Every capability that the system offers is available to you by default and simply needs to be turned on. There is no extra time (and money) spent on programming, coding, etc. This is very similar to ordering at Chipotle. When you walk in you see all of the options for your meal in front of you and all you have to do is ask for them. You may have to pay extra for some of the functions in the cloud (like guacamole at Chipotle), but they are still available for you.

I like to think of the different sections of Chipotle as the different modules in a cloud system. So, let’s walk through an order for a burrito and an ERP system:

The first thing you do when ordering is to specify the base of your  meal. For example, a burrito with brown rice. This can be viewed as  the general company set up in your cloud system. It serves as the  basis for your environment. Do you have multiple entities or multiple  currencies? Which people in your company will be using the system  and what permissions will they have within it? This is something that  will need to be addressed at the beginning of your implementation.

  • Next, comes the protein. Do you want chicken, steak, or maybe  sofritas? This is like the general ledger and reporting features of an  ERP system. It is the focal point and the main reason you came to  Chipotle (or the cloud vendor) in the first place. It serves as the core  component of your cloud system and all of the other modules will be tied to it.
  • Then, you get to the toppings like corn, lettuce, or cheese. These are  similar to accounts payable, accounts receivable, time & expense, etc.  Each of these extra toppings are unique but play an important role in  both your burrito and your ERP system. Your other modules  supplement your GL in the same way that cheese adds flavor to your  meal. This point also speaks to the value of having your AP, AR, cash  management, etc. integrated with your GL. Cheese and lettuce can  stand on their own – but I think we can all agree that they are better  when paired with steak – just like how it is better to have a fully  integrated accounting solution instead of separate solutions running  in parallel.
  • Where do chips and a drink come in? These are akin to third party  integrations. They do not come “out of the box” with your burrito (or  your ERP system), but they are available for you to purchase as an  add-on. ERP systems now have countless pre-built integrations for  commonly used services such as Salesforce, Host Analytics, Coupa,  and more. All you have to do is ask.

So, what does this all look like in the end? At Chipotle, you have a great meal. At the end of a cloud ERP implementation, you have a fully functioning and integrated accounting system. The best part about it is that, like Chipotle, cloud implementations are fast, affordable, and always hit the spot.

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