Leaders from Quicken, Nutanix, and KPMG took to the main stage at Oracle OpenWorld during this year’s SuiteConnect, offering some frontline perspective on upcoming changes to accounting standards.
The SuiteConnect event, held this month, did exactly what its name suggests, connect business leaders, innovators, athletes and musicians to discuss today’s trending topics all under one roof. Set in the Moscone Center in San Francisco, SuiteConnect brought together 1,200 of NetSuite customers, prospects and partners all learning what’s next for NetSuite and how to incorporate it into their own businesses. For many, particularly in the software and services sector, one of the things that’s next is ASC 606, changes to revenue recognition rules.
During his keynote address, NetSuite founder Evan Goldberg welcomed NetSuite customers Duston Williams, CFO of Nutanix and John Eichhorn, CFO of Quicken, who shared their stories of what their organizations looked like pre-NetSuite. Manual processes, wasted resources and disparate systems were just a few of the obstacles they faced before moving to a unified platform. Williams, who has taken three companies public, including Nutanix, explained the due diligence needed for an IPO.
“I think the first big learning event was to make sure you’ve got a pretty good team in place,” Williams said.
Good people and good processes are key for a successful IPO as well as the structure within the organization, according to Williams. He also noted that creating and staffing the right committees allowed his team to focus on the higher-level processes. That initial work went a long way toward preparing the company for the changes in ASC 606.
Nutanix was prepared for ASC 606 early on, initially managing revenue recognition in Excel and preparing for the changes there, before ultimately managing it in NetSuite’s advanced revenue recognition module. Being an early adopter is rare, however. Many companies are not prepared for ASC 606.
“Yeah, anybody that hasn't really thought through this well in advance, it's not going to end well,” Williams said. “And you've really got to spend some time with this. We spent very little outside consulting dollars. It was mostly internal work that was done, and done in a relatively seamless way.”
Eichhorn has also been through many changes, most recently the spinoff of Quicken from Intuit. That meant that the company needed to work from scratch to get a system up and running.
“We've been on our own a year and a half now, and again, we started with no accounting, no finance function at all,” Eichhorn said. “We rely heavily on NetSuite and the other tools, reporting tools to help get information out very quickly.”
Quicken successfully transitioned from an on-premise system to NetSuite in just six months and now operates with 100 employees, a third of which are international.
Goldberg’s third guest, Prasadh Cadambi, Partner at KPMG and no stranger to the NetSuite stage shared his perspective on ASC 606 both as an auditor and advisor. As the deadline for public companies is closing in, he reiterated the importance of getting a plan in place and although private companies have another year to transition, he shared the same sentiments for them and it could impact margins.
“The accounting change and ASC 606 is a pretty significant change,” he said. “What I'm seeing in terms of the financial statements generally for software, SaaS, you're going to see margin improvement as a result of adoption of ASC 606. But I would kind of highlight that, hey, just because you have a margin improvement as a result of accounting change, the investors may not give credit for these companies. “
Change remains a constant in the technology world and the best way to prepare is to embrace the change. Whether it’s going public, changing business models, or preparing for upcoming regulations, our customers continue to pave the way, embrace the change, and innovate