Finance cutbacks could prove false economy

System upgrade costs could be more than the equivalent of implementing a new finance system according to new research.

A survey by Financial Director magazine in partnership with Advanced Business Solutions reveals that UK financial professionals’ decision not to change their finance system could be costing them far more than they realise.

Out of the 101 UK finance professionals surveyed, 83% have no plans to change finance system in the next 12 months with 60% of these simply seeing “no need” to change systems. This is despite 57% admitting to using a finance system that was implemented between the years 2000 and 2007 and 21% using a system that was implemented pre-2000.

With nearly half of those surveyed spending more than 30 consultancy days upgrading their finance system, 28% of which are spending the equivalent of more than 100 consultancy days, the cost implications of remaining with an outdated finance system are significant, according to the report’s authors.

Managing director Dean Dickinson of Advanced Business Solutions (Public Sector and Enterprise Division), says: “As many public and private sector organisations are clamping down on their IT spend, it’s not surprising that the majority of finance professionals have no plans to change their finance system in the next 12 months. However as upgrading antiquated systems could be costing organisations the equivalent of implementing a new finance system, this decision is very short-sighted.”

He argues that with 82% of survey respondents looking to drive efficiencies by modifying their finance system, there is clearly a desire to improve efficiencies in the finance function through the use of IT. With a more functionally-rich finance system being sought, this raises the question of why 60% of respondents are not even considering a change of finance system at this time.

Dickinson adds: “It appears that finance professionals are not fully aware of the cost implications of maintaining and modifying an antiquated finance system. It may be surprising for them to learn that by sticking with a system that has been in place for a number of years, they are missing an opportunity to make substantial savings.”