FISPAN Blog

Why the Depth of Your ERP Offering is More Important Than Breadth

Posted by Clayton Weir on May 6, 2020 9:00:00 AM
Clayton Weir
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Introduction

Financial institutions have a new opportunity to drive transformation in the business banking space by offering products their commercial clients want and have come to expect. According to a Treasury Perspectives Services Report done in 2017 by TD, manual processes are currently the greatest operational challenge for corporations. Corporate clients want an easier way to connect to their bank. Corporates want to connect their ERP, payroll, purchase orders and invoicing systems to their bank in a streamlined process that is automated end-to-end. 

 

While the needs for advancement on this front may be obvious, the different approaches to solving these problems can seem overwhelming. In this post, we’ll dive into why the depth of your ERP offering is so much more important than the breadth, and how partnering with a Fintech can take the heavy burden to innovate off the bank’s shoulders- creating an extension of your channel program that provides immediate value and scalability.

 

Depth Vs Breadth of ERP Connections. 

There are hundreds, if not thousands of Enterprise Resource Planning (ERP) type systems currently in the market. If you were to count all of the versions and customizations you might literally be looking at hundreds of thousands of unique variants. As the market landscape for these types of systems is becoming increasingly crowded, the ERP itself is moving away from a model where it is merely a record of transactions to the main data repository for the organization. The incorporation of analytics and workflow management is becoming increasingly important, and larger organizations are rolling out advanced customization and UI improvements, by way of integrations with other systems, so that the need to log into multiple systems at once is diminished, and the ERP becomes a centralized system of record for many functions of the organization.

 

Long Tail Coverage

It is a long-tail market in principle, meaning that if your bank has 10,000 customers they might need 1,000 systems to have complete coverage across all clients. Analyzing the raw numbers alone, the  “Pareto Principle” dosen’t even exist this scenario (i.e. 20% of systems covering 80% of customers). Because of the low marginal gains in clients by adding marginal systems there is not a significant amount of lift that would be enough for banks to want to invest in the support of such a  wide range of systems. 

 

More is Less is Less.

If you think about providing universal coverage across the widest possible universe of systems, and your resources are fixed, you can now only spend 1/N as much IT/Product resources on each potential integration. Thus the depth of what can be built (and ultimately maintained) for each system has to be shallower, making any marginal ecosystem supported less valuable in terms of the way it could impact your relationship between the bank and the customer. It will cover less of the use cases and products a client uses and will tend to have very simple and brittle relationships with each ERP system. 

 

Using an aggregator such as Cloud Elements would work this way, whereby you are able to access a wide range of systems, but can essentially you are really only screen scraping data from those systems. This however does not tend to enable functional actions without heavy involvement from a development team at the bank. It also lends itself to read only use cases instead of write. 

 

Open Text file translation product is an entirely different form of functional aggregation. Essentially, it states that “whatever your ERP can push out, we can digest”. It however does not enable a two-way data feed, solve reconciliation issues, or make it easier for clients to use a broader range of value-added services. At its core, all that it does is take some of the complexity burden off of clients when they set up a new file product. (All of our clients already have OpenText licenses- it's a great tool to have).

 

In both of these approaches you are increasing breadth, but not depth. 

 

More is More is More.

The concept of FISPAN is that it is an extension to your channel program that can completely disrupt the way that you deliver a wide range of services to your clients. It works deeply with the quirks and work flows of the ERP to solve real business and operation flows, and can generate tangible value. This means that the bank can create an experience that brings in more and more profitable business at scale.

 

Go Where the Puck is Going. Not Where It Is. 

The number of ERPs (breadth) also makes the mistake of targeting legacy systems, whereas depth would mean actively going after the systems that clients are already adopting today and will adopt tomorrow. FISPAN’s promise is to offer a solution in each of the fastest growing ecosystems, so that when a client changes to one of these new ERPS (that you’d now offer) you are positioned as the best bank to work with, meaning you’ll have a strong chance of winning their new business. 

 

The same is true of segmenting your client base and systems, there may be high value pools of clients (perhaps in vertical segments) that use ERPs that you can create a strategic offering within allowing the bank to differentiate and completely eclipse the competition. Depth of integrations becomes a double entendres where you build the deepest products that target the deepest market opportunities, therefore generating the best value.     

 

About FISPAN

Banks want to focus on banking - not connectivity and accounting. Leveraging our platform-as-a-service is the best way to scale your offering cost effectively. We bring deep ERP technical expertise plus the know-how of client workflows needed to seamlessly mesh your banking services with the leading ERP and accounting software systems, and maintain those connections over time. If you’d like to chat to talk about how we can help create a bank-branded, fully integrated channel that provides instant value to your corporate clients, email us here, or download our Corporate Banking ERP Strategy Playbook to learn more about the various ways you can make the connection to your client’s ERP systems.