Robert Kugel's Analyst Perspectives

Modeling Revenue Recognition for Contracts to Meet New Regulations

Posted by Ventana Research on Jul 22, 2016 9:19:10 AM

I recently wrote about the challenge some companies will face in planning and budgeting when new revenue recognition rules go into effect in most countries in 2018. It’s important for companies that will be affected to be sure they have the appropriate systems, processes and training to handle the more difficult demands imposed by the new rules. With the change in accounting, the time lag between when a contract is signed and when a company recognizes revenue from it may be more variable and less predictable than in the past. In extreme cases, performance measured by financial accounting will diverge materially from the “real” economic performance of the organization. Consequently, executives – especially those leading publicly listed companies – will need the ability to look at their plans from both perspectives and be able to distinguish between the two in assessing their company’s performance. In companies where the timing of revenue recognition can diverge substantially from current methods, financial planning and analysis (FP&A) groups will need to be able plan using models that incorporate financial and managerial accounting methods in parallel. They will need to be able to identify actual-to-plan variances caused by differences in contract values booked in a period and differences between the expected and actual timing of revenue recognized from contracts signed in a period.

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Topics: Big Data, Uncategorized, Business Performance Management (BPM), Financial Performance Management (FPM), Sales Performance Management (SPM)

Big Data Drives Price and Revenue Optimization

Posted by Ventana Research on Jun 25, 2016 9:13:30 AM

Information technology enables a data-driven management style that was not feasible until powerful, affordable computers became generally available. There’s no bright line marking when this became possible; the process is ongoing. People were using financial analytics long before ENIAC, the first general-purpose computer, appeared, but the metrics available were not especially timely, broadly applicable to day-to-day situations or comprehensive enough to inform most management decision-making. Even today, there are many areas of business management where companies continue to operate much as they have in the past. One of those is pricing.

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Topics: Big Data, Operational Performance Management (OPM), price, pricing, optimization, revenue, customer, c, Business Analytics, Uncategorized, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Sales Performance Management (SPM)

Planning Is Necessary for Revenue Recognition Under ASC 606 and IFRS 15

Posted by Ventana Research on May 27, 2016 11:12:31 AM

New rules governing revenue recognition for contracts will go into effect for most companies in 2018. The Financial Accounting Standards Board (FASB), which administers Generally Accepted Accounting Principles in the U.S. (US-GAAP) has issued ASC 606, and the International Accounting Standards Board (IASB), which administers International Financial Reporting Standards (IFRS) used in most other countries, has issued IFRS 15. The two are very similar and will enforce fundamental changes in this area of accounting. The new rules will affect companies that use even moderately complex contracts in their dealings with customers. They include, for example, contracts that are structured using tiered pricing or volume discounts or ones that routinely involve modifications, such as adding or dropping users, or that allow seasonal changes to services. The changes necessitate an extensive review of an organization’s contracting and accounting policies and processes and are likely require changes to procedures and systems. Companies affected by the new rules also will need to examine their planning and budgeting processes. Those that currently use desktop spreadsheets for planning and budgeting should consider adopting dedicated planning and budgeting software in order to cope effectively with the increased complexity of planning in this new environment.

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Topics: Big Data, Uncategorized, Business Performance Management (BPM), Financial Performance Management (FPM)

Exploiting Cryptic Data for Securities Analysis

Posted by Ventana Research on Mar 25, 2016 12:10:00 AM

I coined the term “cryptic data” to mean information that isn’t easy to find or access by people who could make use of it. In one instance, cryptic data offers professional investors – portfolio managers and securities analysts – a source of proprietary information that can improve their ability to pick stocks and achieve superior performance relative to their benchmarks. Automation through technology now makes collecting cryptic data substantially more efficient than manual methods and thus makes accessing it practical. In particular, Web scraping tools (what I call “data drones”) can be programmed to retrieve specific information once or on an ongoing basis. Although this data is accessible to anyone, it requires insight and experience to understand how to use it for superior investment performance.

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Topics: Big Data, Business Analytics, Uncategorized, Business Performance Management (BPM), Financial Performance Management (FPM), Analytics, big data, Budgeting, Connotate, cryptic

Cryptic Data: Challenges and Rewards in Finding and Using It

Posted by Robert Kugel on Feb 18, 2016 7:18:11 PM

Using information technology to make data useful is as old as the Information Age. The difference today is that the volume and variety of  available data has grown enormously. Big data gets almost all of the attention, but there’s also cryptic data. Both are difficult to harness using basic tools and require new technology to help organizations glean actionable information from the large and chaotic mass of data. “Big data” refers to extremely large data sets that may be analyzed computationally to reveal patterns, trends and associations, especially those related to human behavior and interaction. The challenges in dealing with big data include having the computational power that can scale to the processing requirements for the volumes involved; analytical tools to work with the large data sets; and governance necessary to manage the large data sets to ensure that the results of the analysis are accurate and meaningful. But that’s not all organizations have to deal with now. I’ve coined the term “cryptic data” to focus on a different, less well known sort of data challenge that many companies and individuals face.

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Topics: Big Data, data science, Planning, Predictive Analytics, Social Media, forecasting, FP&A, Office of Finance, Operational Performance Management (OPM), Budgeting, Connotate, cryptic, equity research, Finance Analytics, Human Capital, Kofax, Statistics, Analytics, Business Analytics, Hadoop, Business Intelligence (BI), Customer Performance Management (CPM), Data, Datawatch, Financial Performance Management (FPM), Kapow, Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), import.io

The Office of Finance in 2016

Posted by Robert Kugel on Feb 14, 2016 11:40:09 AM

The imperative to transform the finance department to function in a more strategic, forward-looking and action-oriented fashion has been a consistent theme of practitioners, consultants and business journalists for two decades. In all that time, however, most finance and accounting departments have not changed much. In our benchmark research on the Office of Finance, nine out of 10 participants said that it’s important or very important for finance departments totake a strategic role in running their company. The research also shows a significant gap between this objective and how well most departments perform. A large majority (83%) said they perform the core finance functions of accounting, fiscal control, transaction management, financial reporting and internal auditing, but only 41 percent said they play an active role in their company’s management. Even fewer (25%) have implemented a high degree of automation in their core finance functions and actively promote process and analytical excellence.

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Topics: Big Data, Planning, Predictive Analytics, Social Media, forecasting, Governance, GRC, Mobile Technology, Budgeting, close, Continuous Accounting, Continuous Planning, end-to-end, Human Capital, quote-to-cash, Tax, tax data warehouse, Analytics, Business Analytics, Business Collaboration, CIO, Cloud Computing, In-memory, Uncategorized, Accounting, Business Performance Management (BPM), CFO, CPQ, Financial Performance Management (FPM), Risk, risk management, CEO, Financial Performance Management, FPM

Evolving to the Next Generation of ERP Systems

Posted by Robert Kugel on Nov 29, 2015 1:19:13 PM

The enterprise resource planning (ERP) system is a pillar of nearly every company’s record-keeping and management of business processes. It is essential to the smooth functioning of the accounting and finance functions. In manufacturing and distribution, ERP also can help plan and manage inventory and logistics. Some companies use it to handle human resources functions such as tracking employees, payroll and related costs. Yet despite their ubiquity, ERP systems have evolved little since their introduction a quarter of a century ago. The technologies shaping their design, functions and features had been largely unchanged. As a measure of this stability, our Office of Finance benchmark research found that in 2014 companies on average were keeping their ERP systems one year longer than they had in 2005.

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Topics: Big Data, Microsoft, SAP, Social Media, ERP, FP&A, Mobile Technology, NetSuite, Operational Performance Management (OPM), Reporting, close, closing, Controller, dashboard, Human Capital, Reconciliation, report, Analytics, Business Intelligence, Cloud, Cloud Computing, Collaboration, IBM, Oracle, Uncategorized, Accounting, Business Performance Management (BPM), CFO, Data, finance, Financial Performance Management (FPM), Supply Chain Performance Management (SCPM), BI, Financial Performance Management, FPM, Intacct, scorecard

Tagetik’s Solid Financial Performance Management Suite

Posted by Ventana Research on Aug 20, 2015 6:47:42 AM

Tagetik is a long-established vendor of financial performance management (FPM) software. Its full-featured suite includes planning, budgeting, consolidation, close management, disclosure management, analysis, dashboards and reporting. The software can be deployed on premises or in the cloud as multitenant software as a service or in a private cloud. Tagetik also offers pre-built integration with SAP and SAP HANA, Microsoft SharePoint and Qlik to best support a range of financial management needs.

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Topics: Big Data, Human Capital, Business Analytics, Business Collaboration, Accounting, Business Intelligence (BI), Business Performance Management (BPM), Financial Performance Management (FPM)

Optimization Analytics Comes to the Mass Market

Posted by Ventana Research on Aug 13, 2015 12:18:40 AM

Optimization is the application of algorithms to sets of data to guide executives and managers in making the best decisions. It’s a trending topic because using optimization technologies and techniques to better manage a variety of day-to-day business issues is becoming easier. I expect optimization, once the preserve of data scientists and operations research specialists will become mainstream in general purpose business analytics over the next five years.

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Topics: Big Data, Performance Management, Social Media, Operational Performance Management (OPM), Analytics, Business Analytics, Business Collaboration, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Information Management (IM), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), Price optimization

The Strategic Tax Department is a Priority for Longview

Posted by Ventana Research on Jul 29, 2015 8:43:54 AM

Longview’s recent Dialog user group meeting highlighted the company’s continued commitment to providing much needed automation tools for improving tax department performance – tools that enable the tax function to play a more strategic role in the management of a company. The sessions also covered the capabilities contained in the company’s latest release, Longview 7.2 Update 2 and gave customers a detailed product evolution roadmap following their merger with arcplan.

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Topics: Big Data, LongView, Analytics, Business Performance Management (BPM), Financial Performance Management (FPM)