Starting his career as a CPA at one of the big four public accounting firms – which included two years spent in auditing -- Jonathan Cochrane learned a simple truth.
“Rapidly growing businesses operating on spreadsheets for complex accounting issues are a nightmare to audit,” he said.
When Cochrane, now the assistant controller at Reston, Va.-based ScienceLogic, joined the Hybrid IT Infrastructure Management firm in 2015, he realized something immediately. Even though the company had managed their financials effectively to that point, the Excel-based system was poised to break. Managing more than eight currencies, five subsidiaries, and multiple sources of subscription-based revenue was beginning to wear the team down.
As the company eyed a potential IPO, “I knew we were going to run into some significant issues down the road,” he said. “We needed to implement a system that would scale with our business and hold up to the strict requirements of Sarbanes-Oxley (SOX).”
ScienceLogic built its wildly successful business on the premise of easing complexity for its customers across so-called hybrid infrastructures that span data centers to the cloud. It delivers services and technology that help its customers - enterprises, service providers, and government agencies – gain contextual insights from modern IT operations. These solutions are used by thousands of customers globally to manage their IT infrastructures. ScienceLogic grew out of bootstrapped beginnings and is currently backed by three private equity firms.
As it developed a business case and choose a vendor for its ERP implementation, ensuring that technology didn’t introduce complexity into its internal operations was top of mind. Simplicity that spanned the implementation, to day-to-day use, to ongoing maintenance and upgrades was paramount. But the software also had to provide robust functionality that would prepare ScienceLogic for life as a public company.
Cochrane said the breadth of the NetSuite platform was exactly what they needed. NetSuite offered unique functionality that aligned with ScienceLogic’s global business, and aspirations to go public, including Advanced Revenue Management and Multi-Book Accounting functionality.
In fact, as part of its vetting process, ScienceLogic looked at what companies like them who had launched IPOs were using.
“Based on our research, nine out of ten companies going public were doing so on the NetSuite platform,” Cochrane said. “System implementations are complicated, time-consuming, and we needed to do it once and do it right. Our worst-case scenario would be to implement a platform and repeat the process again three years later.”
The business went live with NetSuite OneWorld in April of 2017, leveraging a combination of the NetSuite SuiteSuccess industry solution and business consulting from McLean, Va.-based MorganFranklin to supplement NetSuite’s technical expertise.
ScienceLogic Streamlines Financial Processes, Increases Cash Flow
In just a few months, the business has already seen huge improvements in managing financial and accounting processes for a global business. Management of subsidiaries in the UK, Singapore, Australia, Canada and Ireland has been streamlined with NetSuite’s robust multicurrency functionality, which has been a “game changer” for the finance team, according to Cochrane. The business can easily conduct transactions in British Pounds, Euros and US, Singapore, Australian and Canadian Dollars. ScienceLogic completes its month-end close faster than it did before it implemented NetSuite – already shortening the time to five days.
“Because our team is able to close the books in five days we can spend the rest of the month helping our leaders be strategic,” he said. “When you don’t have to spend the entire month closing last month’s results, you can stop and think clearly. It takes a lot of pressure off our team.”
Additionally, days sales outstanding has been cut by 33 percent. “Our visibility into accounts receivable is the best it’s ever been. Our sales team doesn’t need to worry about having to chase customers for payments and can focus on closing the next sale.”
This year, the company is leveraging the NetSuite’s capabilities to roll out individual budgets 11 different departments. “We’ve had overwhelmingly positive feedback from our department heads. We’re able to deliver actionable insights to our leaders allowing them to make very impactful decisions for ScienceLogic.”
Everyone from Finance to Sales Empowered by Financials
In turn, for a business in which some 90 percent of the licenses are sold on a subscription basis, NetSuite’s Advanced Revenue Management (ARM) enables the finance team to more easily get a full picture of the customer contract, and forecast what the revenue is going to be and when it will be recognized.
“We know, with incredible accuracy, what our revenue from existing customers are going to be next year. This gives our finance team and executives incredible insight into the next 12 months.” Cochrane said.
By enabling real-time visibility into the impact, say, a potential contract win will have on revenue, ARM functionality could even empower sales representatives to close deals.
“We are able to show a clear cause-and-effect relationship to our sales team and leadership. If a sales rep offers a particular discount or extended payment terms, we can project the effect on company goals. This is powerful information at the fingertips of our executives.” Cochrane said.
In turn, the business has a strong foundation to meet current regulatory requirements that apply to private companies, such as the upcoming deadline for implementing new revenue recognition standards required through ASC 606. And it is poised for a potential IPO.
“Our entire finance team sleeps a bit easier at night following the Netsuite implementation,” he said.
Learn more about NetSuite’s solution for software companies.
Source of the blog: Netsuite blog