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January 21, 2022

How enterprise-level software fails early-enterprise companies: Q&A with Dan DeVall, Airbase’s VP of Business Development.

Written by
Darragh Collins
Darragh Collins
How enterprise-level software fails early-enterprise companies: Q&A with Dan DeVall, Airbase’s VP of Business Development. How enterprise-level software fails early-enterprise companies: Q&A with Dan DeVall, Airbase’s VP of Business Development.

Q1. What finance and accounting challenges do enterprise-level companies face that they didn’t at earlier stages?

Fast-growing companies often outgrow the systems that they initially put in place. This is because the company’s operations become more complex and must support higher transaction flows and more employees. In addition, the structure of the company itself becomes more complex with multi-subsidiaries and multi-currencies. The demand for real-time data increases, and accounting practices become more sophisticated with purchase orders and amortization schedules. Enterprise-level companies will have shifted from a basic GL to a more comprehensive ERP. 

Ironically, the problems that accompany outgrowing software can become more significant than the original problems it sought to solve. Simply put, most early-stage software solutions are not scalable and ultimately fail these early-stage companies. The accounting and finance departments at early-stage companies may not yet have the experience or context needed to anticipate their future needs. Operations at this stage often focus on putting out fires and solving problems one at a time, which can be detrimental to the bigger picture. 

In any case, it’s an unsustainable, short-term approach. These companies need a strategic partner to help them think ahead, identify the cause of the fires, and prevent them from happening again. I believe decision-makers tend to follow trends instead of really examining their company’s workflows and needs. Everyone uses the same buzzwords to mean different things, but not all software is created the same. Early-enterprise software fails when it hides behind a blanket problem statement rather than offering unique functionality.

Q2. Which characteristics of enterprise-level software solutions make them suitable for these more complex organizations? 

“Agility” is the word that comes to mind.

It’s impossible to be all things to all people. You must focus on specific stakeholders. In this day and age, you have to be excellent at making a clean and easy user experience. This means simplifying engagement within the software.

Many companies mask a lot of the complexity behind their products. Efficient software solutions are flexible and agile to newer workflows and processes — whether that’s switching ERPs, expanding globally, or consolidating multiple legacy systems into one. Agility is essential to help your clients as they grow. Genuinely strategic, trusted enterprise software partners navigate all these circumstances without leaving anyone behind.

Q3. Which tools and software do companies need to replace once they get to early-enterprise? (ERP? AP software? AR software? Payroll software? Travel tools? P2P software?)

All of the above. Depending on how finance and accounting organizations decide who their partner is, their reasoning for choosing each of these different solutions hinges on whether or not the software can scale with them. 

If they decided based on price versus convenience but now need a more complex, feature-rich, customized software, they’re probably going to have to rip and replace the initial software. You need to think about where you want to go as an organization. Will the selection you’re making today need to be changed later? Are you purposely choosing a partner now, in each of these specific categories, that can get you beyond the specific inflection point of becoming an enterprise-level business?

Answers to these questions are relative to what your business does. Not every company and industry operates in the same workflow, the same model, or the same GL structure. Depending on your cash needs, you must decide whether you need a credit card, or if cash in the bank is sufficient. The vendor relationship is another critical factor. For example, you could have a long-term, strategic relationship or short relationships with multiple one-time vendors. A genuine inflection point is when you start segmenting your spending and spend profiles. Then you can analyze purchases and revenue streams and determine if they need optimization.

Q4. You’ve worked for both Coupa and Airbase, which are both spend management solutions. Coupa is an enterprise-only solution while Airbase is a mid-market to enterprise solution. At the early-enterprise stage, what do you think companies should consider regarding spend management solutions? 

If you’re implementing a new system, consider the degree of change management and transformation that’s required — both to make that software successful and make that workflow function within the entire company. 

Because Airbase serves a smaller community of agile and fast-growing companies, user experience is the most important factor in driving successful change management. You’re more likely to get buy-in from users if you’ve given them a straightforward way of doing their jobs everyday.

If you’re more of a giant cargo ship than a jet ski when it comes to your decision-making, then you’re not going to have a full customizable system. When you’re more agile, you can serve all your customers. 

Q5. How should companies think about evaluating software and its ability to scale? What are the consequences of getting it wrong? What are the benefits of getting it right? 

When it becomes clear that a specific software solution isn’t scaling with you efficiently, or requires additional components atop of what the original software was designed to do, you begin to see the cost versus the benefit. Genuinely measuring software impact is the first thing you should do. Many companies don’t truly understand the value of doing this.They think by solving the large, primary problems that the job is done.

Only when you run into issues and any resulting use cases that the software can’t solve do you realize you need to start thinking about adding additional software. Many companies buy into software without realizing it wasn’t designed to solve these outlier issues to begin with. Truly analyzing the cost benefit, in depth, will show you it’s worth making that change management exercise happen. Then you’re far more likely to get the value out of it that you were expecting.

Q6. Should companies err on the side of a more heavyweight solution or a more lightweight solution?

If you err on the side of a heavyweight solution, you typically compromise the user experience. If you err on the side of a lightweight solution, you compromise the customization capabilities, as well as the richness of the solution’s feature functionality. There’s a balance of prioritizing what’s most important to you now while also having a roadmap of 6–18 months down the line.

Some important things to consider are: Do those priorities change? Does the software you use now have the capabilities to scale with you as you continue to grow? Do you need a heavyweight solution or lightweight software to get you there?

Your answers could depend on the department that uses the software. For example, if you want to get sales people to engage with software, it needs to be lightweight. Otherwise, they’re just not going to use it. Perhaps you need a heavyweight solution in another area because your company is growing rapidly. Balance these considerations and ask yourself, Which solution solves the most of my problems?

Q7. What about the company that realizes that it has over-bought a solution (i.e., an enterprise solution when they’re not really ready for it)? Would you advise shifting to a more appropriate solution, even if it meant returning to the enterprise solution in the future? 

When you make an investment in software solutions and don’t get the anticipated value, it’s time to be brutally honest and ask: Do I rip the cord and move on to another vendor that I believe will deliver the value for me?

Insecurity that you made the wrong choice is understandable, but may not be totally justified. It’s possible that you need a different set of solutions because you’re now at a different stage. Doing an accurate cost of value means keeping into consideration the time at which you made that investment choice, and asking yourself if the solution you bought is solving the problems it should. Depending on your conclusions, ask yourself, Is the investment still justified?

It boils down to a specific choice: Are you willing to risk slowing down your business by living with bad software decisions, especially ones that are overly cumbersome and place undue demands on lean teams? Or, are you going to cut your losses and move fast to implement a better solution? It requires a level of self-awareness to make these assessments. Every day that goes by without the right solution is wasted time. For companies that are growing quickly, time is the most critical asset, one that decays every second you don't make change happen.

Darragh Collins
Darragh Collins

About Airbase

Airbase offers a one platform solution to manage all non-payroll spend. It provides oversight and control over spending with real-time reporting and automatic syncing directly to your general ledger. Control all paymentsphysical cards, virtual cards, ACH, and checks – from one place. Close faster. Empower employees. Control spend.

To learn more about Airbase, contact us for a product demo.
Darragh Collins
Darragh Collins
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