Where do ‘grown up’ companies turn to for a business system?

29th February 2016

As businesses grow and take on more employees, bigger premises and their first full-time finance and other professionals, many also find that they have to migrate from the basic bookkeeping systems designed to keep the books straight and the taxman happy, to a fully-fledged financial and business management system that supports the full range of their activities if they are to sustain a profitable trajectory.

In this Executive Briefing Gary Simon, CEO, FSN, explores how a business decides when it’s time to make the move? 






Rapidly growing businesses that have survived their first few years of trading deserve to pat themselves on the back.  After all, 50% of all start-ups fail within their first 5 years1 and even mature businesses are failing at a faster rate than ever before2.  

Setting aside some of the usual explanations for why early stage businesses fail, (lack of access to capital, poorly defined business model, too much red tape) much of the early concern can be ascribed to poor financial control, especially of costs and cash.

But even for businesses that have initially mastered financial management as they grow, signs of strain start to appear as they metamorphosise from start-up into an established player. What sufficed in terms of management structures, processes and supporting technology during the early years is left wanting as businesses embark on their next stage of growth. 

As they start to take on more employees, bigger premises and their first full-time finance and other professionals, many businesses find that they have to migrate from the basic bookkeeping systems designed to keep the books straight and the taxman happy, to a fully-fledged financial and business management system that supports the full range of their activities if they are to sustain a profitable trajectory.


So how does a business know it’s time to make the move?   

Outward signs that it’s time to migrate

The signs that a business is outgrowing its initial bookkeeping system tend to just creep up on management. There isn’t a single tell-tale sign but rather a collection of events that point to the need to migrate to a more comprehensive solution, for example;

  • The bookkeeping system can’t scale, cope with transaction complexity or the need for additional users.
  • Core processes are no longer dependable and errors are mounting.
  • Work-arounds and spreadsheets are mushrooming, leading to loss of control and delays.
  • Lack of integration is becoming costly and disruptive. Data is duplicated everywhere.
  • Information needs are more far-reaching and management no longer has its ‘finger on the pulse’. The lack of visibility is affecting profitability.
  • The auditors are asking more questions and the answers are getting increasingly difficult to provide.
  • Staff are burning the ‘midnight oil’ just to stand still, let alone cope with growth.

In effect, the accounting system is holding the business back. Just when the business is really taking off, going multi-site, bringing new products to market and expanding abroad, cracks are appearing in the organisation.  It is clearly time to upgrade to a fully-fledged business system and almost certainly in the cloud.

Taking advantage of the cloud

The majority of organisations planning a move to their first business system are probably migrating from one of the traditional on-premise bookeeping systems.  So a move to a new business system is a profoundly different proposition which confers all of the advantages of the cloud as well as benefits of a more comprehensive business solution.

At its simplest, Cloud computing, or more specifically, the Software as a Service (SaaS) model of computing provides applications that are delivered from the software vendor’s servers over the internet.  Usually, but not exclusively the applications are purchased on a subscription basis, rather than the perpetual software licence which is customary in the traditional ‘on-premises’ world. 

Many organizations consider the ability to offload business applications to a Cloud vendor to be liberating.  The cloud application supplier assumes all of the obligations of overseeing, managing, operating and supporting the computing environment as well as responsibility for securing the confidentiality and availability of the user’s data. 

In marked contrast to traditional on-premise solutions the user organization does not need to retain any dedicated IT infrastructure (server capacity, networks or the like) or the in-house IT resources that usually accompany it.  The user organization also ‘escapes’ responsibility for software upgrades, implementing software patches, IT security, introducing regulatory changes, or providing more server and network capacity.  For smaller businesses with limited IT budgets and resources, these benefits assume even greater importance.

The Cloud subscription model also removes a layer of cost uncertainty.  The business is no longer saddled with the unexpected costs of hardware upgrades or support costs and furthermore the subscription model makes it particularly easy to identify the cost of adding users as the application grows.  The ability to ‘pay only for what you need’ allows organizations to avoid the high upfront costs of on-premise solutions (which are fixed) and to align computing costs more sympathetically with the business as it grows.

There are also significant advantages from an operational view point.  Applications, such as Xledger hosted in the Cloud are usually available and supported 24/7 which is a major advantage for distributed businesses working in different time zones.  Furthermore, access to the applications requires no more than a browser on a PC, or more likely, a mobile device such as a laptop, iPad or mobile phone.  Such flexibility not only suits a mobile workforce but also empowers employees to work on a self-service basis as and when they like.

Stepping up to a business system

It is the breadth of the applications and the ability for it to support wider information requirements and processes that differentiates a basic bookkeeping system from a business system the most.

Flexible chart of account structures

Small businesses normally start trading with a relatively modest chart of accounts.  In fact, it is often expedient for early stage businesses to adopt the standard chart of accounts offered by an entry level package.  But the chart of accounts (the backbone of the general ledger) helps define the quality and depth of analysis in the business.  In broad terms, more established organizations need more detailed analysis to capture each nuance in the nature of their income and expenses, supported by additional analytical capability around individual transactions. More granular analysis often requires more complex multi-segment account codes (or analysis codes), so that results can be viewed by, for example, department, division, region, country and so on.  In addition, statutory accounts and regulatory requirements add to the complexity, for example, multi-GAAP reporting in companies with overseas subsidiaries.

Insightful business reporting

The fulsome integration, broader span of applications and more comprehensive coding structures in a modern business system brings the opportunity for far ‘richer’ reporting. Managers are able to review the business in different dimensions, for example, profitability by sales region, office, employee, project, product/service group and sales team. There is more support for multiple currencies and tracking of business statistics such as square feet, number of employees etc. for use in allocations and management reports. Performance can also be tracked against multiple budgets and re-forecasts which are important in more volatile trading conditions.

And finally, business systems provide a richer set of tools to build customized dashboards and reports suited to the exact needs of each role as well as the business as a whole. 

Unified model & ability to change

Rapid growth, re-organisations, divestments and acquisitions, new markets, products and business models, accounting regulation and compliance are just some of the everyday challenges that organisations face. In these circumstances, it is important that systems architectures are malleable, yet robust, so that business information and processes can be adapted on the fly, and delivered in real-time to decision makers, irrespective of the changes they face.

At the heart of modern business systems such as Xledger is a unified business model - an information warehouse that supports data throughout the system. The applications reside within a single shared environment in which metadata (for example, structural information about accounts, time periods, currencies, cost centres and dimensions) is defined once and made available immediately to financial, procurement, project costing, inventory and reporting applications. It is this ability to meld information systems and transactions systems together with virtually unlimited analytical capabilities tailored to specific roles which gives systems such as Xledger their ‘industrial strength’.  And because all this capability is supported in a single cloud, the platform lends itself directly to reporting, score-carding and dash-boarding across the entire business.




As businesses grow they face all kinds of organizational, technical and economic pressures, but in the pursuit of growth, systems often get left behind and neglected. Entry level systems that suit an early stage business tend to focus on the bookkeeping essentials and are not designed or equipped to support a company when it approaches its next stage of maturity.  Yet nobody wants to keep going through a major systems upgrade every 10 years and preferably not at all.

This is where modern business systems such as Xledger in the cloud score so convincingly. The scalability and agility of the cloud coupled with applications that leverage a unified but adaptable business model for all transactions and information provides a platform for growth, whilst insulating a business from change.

When it comes to embracing new technology rapidly growing businesses might take note of a comment from Alan Hughes, director of Whitechapel Bell Foundry, a manufacturer of church bells and the oldest manufacturing company in the UK (founded in 1570). It has successfully expanded all around the world.

Explaining the longevity of the business he says, “The secret to our longevity is that we’ve always moved with the times. While the way in which bells are cast hasn’t changed, we’re never afraid to use new technology.”3






Note1 Daily Telegraph, October 2014, October 2014 Half of UK start-ups fail within five years Elizabeth Anderson

Note2 BBC News 2012 Can a company live forever? by Kim Gittleson

Note3 The Independent, December 2014, Small Talk: The high failure rate for start-ups can be reduced by better support.



About the Author

Gary Simon, is rated by Linkedin as one of the UK’s top 10 business leaders in 2015 and is leader of the FSN Modern Finance Forum on Linkedin with more than 44,000 members.  He is a graduate of London University, a Fellow of the Institute of Chartered Accountants in England and Wales and a Fellow of the British Computer Society with more than 30 years’ experience of implementing management and financial reporting systems. He is the author of four books, many product reviews and whitepapers and as a leading authority on the financial systems market is a popular and independent speaker on market developments.  Formerly a partner in Deloitte for more than 16 years, he has led some of the most complex information management assignments for global enterprises in the private and public sector. 






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