The case for consolidating your finance tech stack

As your finance and accounting team scales, it’s likely that the number of tools you rely on will grow as well. But, in today’s day and age, more tools don’t necessarily mean better outcomes.

In fact, we argue that a tech stack composed of point solutions will only lead to more inefficiencies, complexity, and unnecessary costs down the road.

The Great Rebundling of finance tools

Before we dive into why a fragmented finance tech stack can hurt your business, it’s worth exploring why so many SaaS companies use point solutions—specialized tools for a specific use case.

If you examine any industry, you’ll notice they all go through cycles of bundling and unbundling. Take a look at banking, for example.

Before 2010, most Americans relied on the bundled offerings of banks: credit cards, checking accounts, mortgages, and more, all in one place. But starting around 2015, a wave of innovation reshaped the banking tech stack. Point solutions like Robinhood for stock trading, Chime for checking accounts, and Chase’s user-friendly credit cards began to emerge, unbundling traditional services into specialized offerings.

The finance tech stack has followed a similar trajectory. Before the 2000s, most businesses relied on monolithic Enterprise Resource Planning (ERP) software to handle all their accounting and finance needs—companies like SAP and Oracle.  

However, these massive companies were poorly positioned to make the shift to cloud software. This created an opening for higher-tech competitors to target specific features and products of these incumbents and turn them into standalone, point-SaaS companies. 

Roughly 15 years later, we’ve reached yet another inflection point.

As the cloud software ecosystem matures, a new class of cloud-native platforms has emerged. These platforms have brought back the advantages of consolidation and are resolving the inefficiencies created by the use of disparate point solutions. Markets are now favoring the clear benefits of deeply integrated platforms, once again.

But what exactly are the benefits of this rebundled approach? 

Why consolidated tech stacks are superior

1. Streamlined data 

With a fragmented tech stack, your team either doesn't extract the full value of the tools you invested in, or they must build manual workarounds to connect the tools, creating more work. This makes it difficult to manage, sync, and export data across systems. The result is a time consuming, complex, and costly process.

On the other hand, a consolidated platform ensures that data flows seamlessly across systems—especially with the right ERP in place. This creates a single source of truth for financial data, significantly reducing manual effort and improving accuracy. The outcome? Higher-quality insights, better decision-making, and less time wasted reconciling mismatched information.

Example 

Nearly every startup begins their journey on QBO or a similar basic bookkeeping solution. As you scale, you need to purchase specialized invoicing software and point solutions for SaaS metrics. Now, to consolidate your financials, you need an additional tool or an intense, manual workaround in Excel. Rillet, a next-gen ERP, brings GL, invoicing, SaaS metrics and consolidation all together so you’re not reliant on third party integrations and multiple vendor relationships. 

2. Unified, granular functionality

Point solutions are great for unique scenarios, such as forecasting in a highly complex industry with unusual variables. But for 95% of businesses, relying on a collection of point solutions over an integrated platform does more harm than good.

Consolidated finance platforms offer a level of control and automation that goes beyond individual tools. Features like real-time reporting of company-wide spend, automatic GL syncing, and self-enforcing expense policies across bill pay, corporate cards, and reimbursements are only possible with all-in-one finance platforms. A unified finance tech stack eliminates data entry and Excel workarounds, giving your team more time to focus on strategic work. 

Example
Rippling Spend coupled with Rippling HCM is a great example of a compound solution. By pulling data from various modules like HR, payroll, and expenses, into the same platform, they can provide more sophisticated workflows based on employee data. For instance, without any code or queries, you can generate a consolidated, real-time view of company-wide spend that shows the all-in “cost of a department”. Simply select bills, expenses, corporate card transactions, and payroll split by job code.

3. Cost savings

At first glance, point solutions may seem like the budget-friendly option. But the hidden costs of fragmented tools quickly add up. Integration issues, manual workarounds, outsourced support, and external management are just a few examples of how these tools can balloon your expenses over time. 

Finance teams also have to consider the anticipated ROI of your investment. Even if a solution appears affordable, are you truly getting your money’s worth if it doesn’t deliver on promised functionality or integrate with your general ledger?

Consolidated platforms optimize pricing by bundling multiple capabilities into one offering and reducing the need for additional licenses, integrations, or external support. They also ensure that you get all the functionality you need.

Is a consolidated finance tech stack the right choice for your business? 

Unless your business has truly unique accounting or finance requirements, consolidating your tech stack is the smartest choice for most companies. And there’s never been a better time to make the transition. With more rebundled solutions entering the market, businesses can now enjoy the best of both worlds of cutting-edge functionality, plus the benefits of a unified platform.

If you want to put your spend management on autopilot and get granular control over approvals, corporate cards, and reimbursements, schedule a call with Rippling Spend here.

This blog is based on information available to Rippling as of December 26, 2024.

This post was written in collaboration with Stephen Hedlund, the head of finance at Rillet, a next-gen ERP software built specifically for SaaS and AI companies. Rillet natively integrates with your favorite softwares. Check them out here. 

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.