Stories of financial services cloud transformation can be found everywhere today; moving to the cloud has become commonplace. But it’s not every day a firm with so many financial irons in the fire takes on the task—while continuing to do big business.financial services cloud transformation

Such is the case with one global private equity firm. With $82 billion in AUM the firm has raised over 20 private equity and real estate funds that have invested more than $100 billion in over 1,000 companies in 40 countries. The firm’s active portfolio contains more than 245 companies.

Transformation, part 1: Legacy systems to modern accounting and finance

This firm was a client of HSO’s from way back. Complex accounting requirements across both corporate and fund accounting groups were being handled by multiple disparate legacy systems and complicated Excel spreadsheets. Users were inhibited by the lack of ability to integrate data to and from their allocation/partnership accounting utility, CRM, and their payment platform.

The firm needed an ERP solution that would help them move into new markets by supporting an evolving fund structure, managing complex multi-entity processes, handling allocation of deal expenses across funds and entities, and automating its global consolidation process. The solution needed to track expenses across various entities and record and report in multi-currency in compliance with GAAP.

HSO implemented Dynamics AX in 2015 along with HSO’s DynamicsAdvantage for Multi-Entity Financial Management, built on Microsoft Dynamics 365 Finance, which provides everything the finance team needs to effectively and efficiently automate the processes involved in setup and maintenance of multiple entities. The firm was able to re-think and streamline business processes, automate key tasks previously being handled manually, and track expenses allocated across various entities. The firm was equipped to scale and efficiently handle a high volume of transactions and legal entities.

The firm was pleased with the implementation and has continued to use Dynamics AX since then, but we hadn’t heard much from them. This wasn’t because anything was wrong; on the contrary, this firm is highly independent with smart, skilled people on staff and simply did not need assistance. That’s the kind of story any implementation partner likes to hear.

But an even better story comes next.

Transformation, part 2: Moving to the cloud

The firm decided it was time for a financial services cloud transformation with a move to the cloud. AX was no longer being supported by Microsoft, and they wanted to take advantage of the benefits of running business in the cloud. We heard about this after the fact because they had engaged their accounting firm (one of the big ones) to do an evaluation of current systems and make recommendations for a ground-to-cloud strategy.

Happily for HSO, the accounting firm reported that HSO’s DynamicsAdvantage was “best in class” and that they should stick with it. That opened the door to working together again, where the firm was reminded why they chose us all those years ago. We know accounting, we know financial services, and we collaborate as an expert advisor. With that, the firm decided to go Microsoft-first.

On the surface, the implementation portion of this story seems pretty straightforward. The firm was very happy with AX and saw no reason to change any of the functionality with the implementation of Dynamics 365 Finance and Project Operations (we would also help them with integrations with AllocSystem, G-Treasury, Workday, and Concur). The engagement, then, would be nearly a textbook “lift and shift.” However, the firm wanted to stick with Dynamics 365 out of the box as much as possible, so our job was to reconcile those two expectations. Which we did.

financial services cloud transformation

Read about another financial services firm that digitally transformed with D365 and HSO

Dynamics 365 online smooths the financial services cloud transformation process by providing anytime, anywhere access and a minimized infrastructure but is handily pulling the weight of multiple entities living in a single global instance, able to handle unlimited legal entities in a single database and allowing setup of new legal entities in minutes instead of many, many hours. In addition, prebuilt localizations streamline local compliance and allow for common business processes across regional offices, and automation allows for one-click consolidation, providing insight into operations and real-time regional and division analysis.

The results:

  • Support for evolving fund structures and geo-specific entities
  • Real-time processing of transactions funds with automatic reimbursement
  • Allocation of expenses from a 30-day summary to a 2-hour timeframe
  • Fully automated consolidation with complete history tracking

This was only the first phase in a wholesale ground-to-cloud effort, which will also include a SharePoint migration—just the beginning of a mutually beneficial relationship that has defied the odds and spanned the years.

Following is an overview of this firm’s transformation:

Collaboration

Before

After

Visibility of  Information

Transaction details, reports, and schedules offline in Excel maintained by users

Insight into multi-entity transaction details with supporting schedules attached to transactions

Quality of Information

Allocation summaries processed with supporting details offline, manual requests and processing reimbursement between funds

Allocations done at transaction level with full details in each entity and automated reimbursement between funds

Approvals

Done via email

Workflow for master data and transactions with online and mobile approvals and history

User Experience

   

Ease of Use

Inconsistent user Experience and limited integration with Excel

Familiar look and feel, integration with Office, and client-specific help within the application

Capabilities

   

Use new technologies for
new capabilities or improve existing

Limited and time-consuming due to the outdated platform

Capabilities to re-engineer business processes to gain efficiencies and integration with other in-house solutions

 

Learn more about how HSO helps private equity and other financial services firms with digital transformation:

Read Blogs | Browse Private Equity Offerings | Browse Financial Services Offerings

Contributor:

A 20-year veteran of Microsoft, Pam is HSO's Vice President of Client Relations, focusing on existing customer strategy and she leading the team responsible for client account management for 250+ customers across the company's ERP, CRM, BI, and Azure cloud practices.

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