Robert Kugel's Analyst Perspectives

All Analyst Perspectives

Workiva Chains Liberates FP&A

Posted by Robert Kugel on Jul 4, 2020 7:30:00 AM

Workiva recently introduced Chains, a visual workflow tool for the Workiva platform. Individuals use Chains to create and manage linear sequences of tasks that they otherwise would have to execute manually, for example, automatically updating a report with the most current dataset. Chains is like old-style Excel macros in its simplicity; users configure sequences with a drag-and-drop visual interface. There’s nothing to code and it’s easy to follow the sequence and the logic that drives the process. Organizations can take a modular approach to building chains, enabling users to string together a sequence of them. Such an approach makes it possible to standardize process execution and maintaining shorter chains is usually simpler than longer ones.

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2020 Reporting: Improving Visibility, Transparency and Perspective

Posted by Robert Kugel on Jun 26, 2020 6:00:00 AM

FP&A and business analysts can make reporting more effective by reimagining how, what and when their company does its reporting. They should provide the users of their reports the information they want in a form they want it. They should be thinking about how they can make reporting more effective by rethinking how data is presented, how interactive it is, and what visualizations are used. Rethinking how to combine narratives, data, charts and graphics to everyday communications. How to add audio and video where it’s appropriate. Reimagine reporting to make it a more effective form of communications designed to improve a company’s performance.

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The Corporate Tax Management Software Imperative

Posted by Robert Kugel on Jun 19, 2020 6:00:00 AM

Recent events are forcing corporations to adopt dedicated software for tax provision, transfer pricing and tax analysis. The fiscal damage that the global pandemic is inflicting on countries is likely to result in a more aggressive tax enforcement environment. This will further pressure organizations to establish centralized control and oversight in managing income taxes in corporations. This will also require visibility into tax processes by senior executives, especially for the CFO. Dedicated software for managing tax processes provides greater control and visibility compared to desktop spreadsheets. Our Office of Finance benchmark research finds that 62% of organizations that use a dedicated tax provision application say they can effectively control tax risks compared to 33% of those that use spreadsheets.

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Move Finance to the Cloud

Posted by Robert Kugel on May 29, 2020 10:29:36 AM

In a recent note on virtualizing the close, I observed that finance and accounting organizations that can operate in a virtual mode are better able to adapt to changing circumstances and overcome obstacles. Having systems that people can readily access remotely to collaborate and execute processes virtually makes it easier for departments to meet their commitments with confidence. The core technology underpinning the ability to work in a virtual mode is the cloud. That’s because the cloud eliminates the constraints of having to be in a specific place at a specific time; work gets done when it needs to be done.

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The Central Ledger: Restructuring Accounting with Technology

Posted by Robert Kugel on May 22, 2020 3:00:00 AM

Sometimes it takes a while for technology to fundamentally change how work is done. That’s because several innovations usually have to come together before a transformation can occur. For instance, Karl Benz created the first practical motorcar in 1885, but consumers would have to wait until the 1920s for the modern automobile. Computerized accounting systems originated in the 1950s but it’s only now that technologies have evolved and come together to fundamentally change how work is done.

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Virtualizing the Close

Posted by Robert Kugel on Apr 24, 2020 4:31:30 PM

The global pandemic crisis was, in effect, an unrehearsed stress test measuring the resiliency of the department. The crisis highlighted the importance of sustaining confidence in the accuracy and control of accounting processes, not just efficiency. Virtualizing the close means using technology to substantially reduce the amount of manual processing and paper involved needed to complete the accounting close. Finance and accounting organizations that can operate in a virtual mode are better able to adapt to circumstances and overcome obstacles. Having systems that can be readily accessed remotely and having the ability to collaborate and execute processes virtually makes it easier for departments to meet their commitments with confidence.

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The Bottom Line is the Bottom Line

Posted by Robert Kugel on Apr 17, 2020 5:29:20 PM

The Chief Financial Officer can enable her or his finance department play a more strategic role in company operations by adopting what I call profitability management. In the interest of time I’ve made this a very high-level description that’s intended to be just an introduction to the topic. Profitability management is a cross-functional effort. It integrates finance and sales to achieve an optimal balance of revenue and margin objectives. It’s an analytics-based approach designed achieve higher sales and fatter margins. Why should the CFO drive a profitability management initiative? The main reason is that it will improve the company’s profitability and competitiveness. The bottom line is the bottom line.

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Rating CFO Performance in Audit Costs

Posted by Robert Kugel on Apr 14, 2020 10:30:00 AM

For decades I’ve heard people talk about cutting audit costs to reduce administrative overhead but based on my observations, I was skeptical — mostly because, until recently, the documented success stories haven’t been about going from good to great so much as going from awful to average. That’s changing. I recently wrote about a company that had set out to cut its external auditor’s fees. The benefits it had accrued are significant, including a reduction in staff time devoted to the audit. I also explained why cutting audit fees wouldn’t be easily duplicated in every company.

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Fortune Favors the Prepared (Video)

Posted by Robert Kugel on Apr 7, 2020 5:14:50 PM

I like Louis Pasteur’s observation that “fortune favors the prepared mind.” So-called black swan events happen regularly and can have a very negative effect on a business. Of course, risk is inherent in any commercial undertaking; organizations don’t succeed by being overly cautious and reckless ones usually fail after awhile. Those that are consistently successful are ones that manage risk intelligently. That is, they correctly identify vulnerabilities, avoid the decisions and situations where risks outweigh the benefits, insure the risks that are economically insurable and quickly mitigate the impact of negative events. They are resilient in the face of change because they are adaptable.

Ventana Research Analyst Perspective Video Fortune Favors the Prepared 2020

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Fortune Favors the Prepared

Posted by Robert Kugel on Apr 2, 2020 1:36:26 PM

I like Louis Pasteur’s observation that “fortune favors the prepared mind.” So-called black swan events happen regularly and can have a very negative effect on a business. Of course, risk is inherent in any commercial undertaking; organizations don’t succeed by being overly cautious and reckless ones usually fail after awhile. Those that are consistently successful are ones that manage risk intelligently. That is, they correctly identify vulnerabilities, avoid the decisions and situations where risks outweigh the benefits, insure the risks that are economically insurable and quickly mitigate the impact of negative events. They are resilient in the face of change because they are adaptable.

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Make Automating Finance and Accounting a Priority

Posted by Robert Kugel on Apr 1, 2020 11:15:00 AM

We find in our recent Change in the Office of Finance benchmark research an indication of the value of using automation to execute finance department functions. Our findings reveal an increase in the use of automation by finance organizations over the past five years and a concomitant improvement in performance. For example, 46 percent of companies close their monthly books within four business days compared to 29 percent in our earlier research. Yet the glass is only half full. Finance organizations continue to be laggards in adopting technology that measurably improves effectiveness.

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Workday Does Source-to-Pay

Posted by Robert Kugel on Mar 19, 2020 12:15:00 PM

In late February I attended Spark, the Scout annual user group meeting. This was the third and likely the last such meeting, as Scout was recently acquired by Workday. Scout’s users represent a new breed of purchasing managers and executives looking to change the role of the purchasing department. This change is critical for businesses. Saving money is the essential job of sourcing and purchasing departments. But departments can go far beyond that, helping support product and go-to-market strategies that are more complex and innovative. To empower this change, the bulk of conference content included experience-driven advice from practitioners who are pioneering the evolution of sourcing and procurement.

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Three Essentials for a Digital Office of Finance

Posted by Robert Kugel on Mar 3, 2020 6:00:00 AM

One of the objectives of our recent Change in the Office of Finance benchmark research was to assess the technological capabilities of finance and accounting departments. The research confirms that today we are on the verge of a major technology-led shift. Technology that’s already available can have a greater impact on how the finance department operates over the next 10 years than it has over the past 50. Advances in columnar databases, in-memory processing and artificial intelligence and machine learning, as well as a relentless reduction in the cost of computing resources, will make it possible to substantially redefine how work gets done in the department.

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The Next-Generation CFO

Posted by Robert Kugel on Feb 24, 2020 6:00:00 AM

I was invited to sit on a panel at CFO 3.0 events held in San Francisco and New York hosted by Sage Intacct. This event is about the evolution of the role that started with the archetypal CFO 1.0, the green-eye-shade-wearing bean counter. Lacking usable technology, he or she was limited to keeping the books in good order and simply reporting what just happened. Today’s CFO 2.0 relies on technology developed over the past two decades as well as the broader perception of the role, catalyzed by technology that provides deeper analysis to explain what happened and why. At the next 3.0 level, CFOs will lead an organization that can provide guidance to executives and managers so they can better shape the company’s future, providing insights through rich scenario planning.

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The Office of Finance in 2020: Ventana Research Agenda

Posted by Robert Kugel on Feb 14, 2020 6:00:00 AM

Ventana Research recently announced its 2020 research agenda for the Office of Finance, continuing the guidance we’ve offered for nearly two decades on the practical use of technology for the finance and accounting department to help these organizations derive greater value and improve their performance. For decades organizations have discussed transforming Finance from a backward-looking “bean counter” to a more strategic advisory role — yet little has changed. One important reason is that the department is a technology laggard. Our recent Office of Finance benchmark research finds that half (49%) of organizations are at the lowest level of performance in utilizing technology. We also find a meaningful correlation between that level of performance and how well a department performs core processes.

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The Office of Finance is a Numbers Factory

Posted by Robert Kugel on Feb 4, 2020 6:00:00 AM

Yes, it’s an easy metaphor, but a worthwhile one to consider. For the Office of Finance, figures are its raw material. They are transformed and assembled into financial statements, forecasts and reports. Like a factory, there are blueprints (accounting standards, models and forms) that show how the parts are to be pieced together. There’s quality control in the form of internal audit. And there are final inspections — external audits — to ensure the end product has been assembled properly.

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Host Analytics Becomes Planful

Posted by Robert Kugel on Jan 29, 2020 6:00:00 AM

Host Analytics recently announced it will now go by the name Planful. The change formally signifies a new chapter in an evolution that began with the company’s acquisition by Vector Capital a year ago and the accession of a new CEO, Grant Halloran. Planful executives say the new name better represents its focus, which is on what Ventana Research calls continuous planning, as well as its focus on the associated processes of forecasting, analysis, consolidation and reporting. 

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Blockchains Pose Problems of Persistence and Trust

Posted by Robert Kugel on Jan 15, 2020 6:00:00 AM

I’ve written before about blockchain’s significant potential. A lot of the current discussion on the topic centers on cryptocurrencies and financial trading platforms, both of which are already in operation. However, my focus is on its applicability to business generally, especially in B2B commerce, where I believe there is significant potential for it to serve as a universal data connector. There’s also a great deal of potential for blockchain to provide individuals with greater power in managing their identity and greasing the wheels of trade. That noted, those designing and planning to implement commerce-related blockchains must address fundamental issues if blockchain technology is to achieve its potential.

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Price Optimization: Cover Your Bases

Posted by Robert Kugel on Jan 13, 2020 6:00:00 AM

Pricing is an eternally vexing issue in business. Over the years, organizations have used different strategies to establish prices for their products, depending on custom, the nature of the business and the degree of competitiveness in the market. The most straightforward approaches to price setting are a cost-plus calculation (cost plus some mark-up) and follow-the-leader (charge what competitors are charging). More recently, demand-based pricing has achieved a following as technology has made this approach more workable. It’s a method that uses buyer demand, based on an estimate of the good’s or service’s perceived value to the buyer, as the central element in setting price.

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Kinaxis Opens Its Concurrent Planning Platform

Posted by Robert Kugel on Dec 27, 2019 6:00:00 AM

Kinaxis recently held its annual user conference, Kinexions, which focuses on helping the company’s customers improve their execution of supply chain and sales and operations planning (S&OP). Its RapidResponse software handles S&OP, demand, supply, inventory and capacity planning. S&OP is a function sorely in need of improvement: Our research finds that only 22 percent of companies perform it well or very well.

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Sage Intacct Looks to the Future of Finance

Posted by Robert Kugel on Dec 23, 2019 12:00:00 PM

Sage Intacct recently hosted its annual user group meeting, Advantage, and earlier this year met with industry analysts. Both meetings shed light on how the company is addressing two key opportunities. One is building a robust offering to address rapidly evolving technology requirements for the Office of Finance. The other is broadening the scope of its offering to address the financial management and administration needs of its customers.

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Cutting Audit Costs Significantly? It’s Actually Possible

Posted by Robert Kugel on Dec 3, 2019 7:00:00 AM

For years I’ve viewed with skepticism the claim that one technology or another will reduce audit costs. For one, there’s rarely a silver bullet. An array of moving parts drive audit fees. For example, the complexity of the corporation, accounting data management and the audit staff’s familiarity with the industry and the company all affect the time auditors must spend. Also, most of the time I’ve found that achieving significant savings was not the result of going from good to great, but from fixing deep-seated issues. If a company’s books and accounting practices are a mess, it can achieve considerable savings simply by cleaning up its act. In this circumstance, technology can play a part of a broader initiative that addresses the people, process and data management elements that are behind the mess.

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CFOs in Midsize Companies Face Challenges

Posted by Robert Kugel on Nov 25, 2019 7:00:00 AM

Ventana Research recently published benchmark research findings on the Office of Finance, many of which show a trend in the right direction. Organizations are closing the books sooner; financial planning and analysis has improved; and companies are more frequently establishing Finance IT groups to manage the increasingly technological requirements for effectiveness.

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FP&A Performance Is Improving, But …

Posted by Robert Kugel on Nov 6, 2019 7:00:00 AM

The financial planning and analysis (FP&A) group is the linchpin of any transformation effort in the Office of Finance. Our recently completed Office of Finance benchmark research was conducted against the backdrop of the idea that finance organizations must play a more strategic role in the management of the modern organization. This transformation envisions a finance department that’s more of a partner to the rest of the company — one that is less focused on “bean counting,” instead directing its resources and energy to providing more insightful analytics, facilitating transactions of value and communicating actionable data analyses that enable managers to make better decisions more consistently. The research uncovered advances in how corporations handle analytics as well as budgeting and planning. Yet the research also indicates that there is much left to be done in most companies.

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Achieve Fatter Margins with Dynamic CPQ

Posted by Robert Kugel on Oct 30, 2019 7:00:00 AM

Configure, price and quote (CPQ) software has been around for decades. Lately, I’ve been using the term “Dynamic CPQ” to apply to a variant of this software category that explicitly aims to produce a quote that optimizes the trade-off between the profitability of a deal and the probability of closing a sale. Dynamic CPQ software is a hybrid of price and revenue optimization (PRO) software and CPQ, providing companies with the ability to better execute their market share and pricing strategies. It’s designed especially for business-to-business (B2B) relationships that involve sales agents in the pricing process.

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Be FIT: Modern Finance Needs Finance IT

Posted by Robert Kugel on Oct 17, 2019 7:00:00 AM

The traditional office of finance has five main organs: accounting keeps the books; financial planning and analysis (FP&A) analyzes performance and manages the forward-looking activities of the company such as planning, budgeting and forecasting; corporate finance raises outside money; treasury takes care of the cash and bank accounts, and tax. The modern office of finance requires a sixth: Finance IT (FIT).

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Finally, a Faster Close

Posted by Robert Kugel on Oct 7, 2019 7:00:00 AM

A quarter century ago the “fast, clean close” became a key measure of a finance and accounting department’s effectiveness. Since then there has been general agreement that companies should be able to close their books within a business week. Our research on the accounting close has consistently shown that companies with very similar characteristics (measured in terms of revenue, number of employees, location and industry) vary considerably in the number of days it takes them to complete their accounting cycle. The lack of connection between the structural conditions of a corporation and the time it takes to close the books suggests that the obstacles to a faster close are not innate, but the result of poor process design and execution, insufficient automation of the process as well as choices made by finance executives. One of those choices is deciding — for whatever reason — not to close sooner.

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Dynamic Insights from Research on Finance Analytics

Posted by Robert Kugel on Sep 19, 2019 8:30:00 AM

By itself, data isn’t useful for business; the application of analytics is necessary to transform data into actionable information. Data analysis of one sort or another has long been a core competence of finance departments, applied to balance sheets, income statements or cash flow statements. Today, however, Finance must go beyond these basics by expanding the scope of the data being examined to include all financial and operational information that can yield actionable insights. Analysis thus should include, for example, data from the systems that manage sales operations, human resources and field service and that data must be available to all departments and applications that need it.

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TradeLens Emerges in a New Era of Trade

Posted by Robert Kugel on Sep 17, 2019 8:30:00 AM

What’s the easiest way to completely immobilize a 500,000-ton ship?

Lose a sheet of paper.

The paperwork that accompanies international trade is a serious source of friction, inefficiency — and therefore cost — in supply chain execution. Trade documentation requires massive amounts of paper that today can be replaced by digital data. In 2018, Maersk, the world’s largest shipping company, teamed up with IBM to create TradeLens, a digital platform that utilizes blockchain technology as a secure, unified source of trade transaction data used by businesses, financial institutions and government authorities. TradeLens is designed to enable all participants to connect, share information and collaborate, providing them with a comprehensive view of the data they need to transact trade. The system makes it possible to digitally collaborate in handling their global supply chains.

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News from the 2019 Infor Innovation Summit

Posted by Robert Kugel on Aug 14, 2019 7:00:00 AM

Infor recently held their Innovation Summit at Infor corporate headquarters in New York. At this annual event, they spend a good deal of time talking about progress on current initiatives and the exciting parts of the development roadmap.  A key focus this year was AI and machine learning with Infor Coleman.

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IBM Blockchain Earns Our Innovation Award

Posted by Robert Kugel on Aug 8, 2019 7:00:00 AM

Ventana Research has awarded IBM its 2019 Digital Innovation Award. This award recognizes the vendor’s support for identity management using blockchain technology through IBM Verify Credentials. The application is a first, small step in establishing a blockchain-enabled system for decentralized identity management, a technology that ultimately will enable point-to-point exchange of information about people, organizations or things. This form of identity management has considerable potential in the following areas:

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The Promise and Perils of a Platform Strategy

Posted by Robert Kugel on Aug 6, 2019 7:00:00 AM

“Platform,” as used in the world of technology, originally referred to an operating system on which one could construct software applications. More recently, its usage has been expanded to apply to two types of business models. One enables third parties to create products and services that are complementary to a company’s core technology. For instance, both Apple and Salesforce have attracted a wide array of third-party software developers whose offerings greatly increase the value of each software vendor’s platform to its customers. The second, such as Amazon’s marketplace, Facebook, Twitter and Uber, facilitates transactions and interactions. This latter type adds value by reducing transaction frictions and increasing efficiency and, in attracting large numbers of people to the platform, enables innovative business offerings to take advantage of Metcalf’s law — the “network effect.”

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How to Prove You Aren’t a Dog: Blockchains For Identity Management and Certification

Posted by Robert Kugel on May 22, 2019 6:00:00 AM

Identity management is an old problem that has taken on new dimensions in the digital world. In 1993, at the dawn of the World Wide Web (WWW), The New Yorker ran a cartoon featuring two dogs talking, one perched in front of a computer. The caption reads: “On the Internet, nobody knows you’re a dog.” The phrase quickly evolved into a meme highlighting the issue of identity uncertainty in the new digital environment.

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Business Planning: Establish a Continuous and More Effective Path to Planning

Posted by Robert Kugel on May 17, 2019 6:00:00 AM

Business planning in most companies is a relic, a process hemmed in by obsolete conceptions of what it can be. “Business planning” encompasses all of the forward-looking activities in which companies routinely engage, including marketing, sales, customer, supply chain and workforce planning as well as budgeting. In our view companies today can fundamentally change how they plan thanks to the maturation of information technology. Current systems can support better business planning as well as traditional budgeting. Dedicated software can increase the business value of the time spent planning and budgeting by enabling all parts of the business to share their plans. It can substantially cut the time spent creating and updating plans. And it can allow senior executives to see a consolidated view of the plan and quickly explore alternatives and contingencies.

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Oracle NetSuite: Steady as She Goes

Posted by Robert Kugel on May 10, 2019 6:00:00 AM

From my perspective there were two significant takeaways from this year’s SuiteWorld. The first is that, almost two years on from the announced acquisition of NetSuite by Oracle, the combination has achieved its immediate objectives in growing NetSuite’s business, especially in Europe and Asia, and accelerating product development efforts. The second takeaway is that, at least for now, the unit appears to continue to operate as if the combination were a private equity investment by a public company.

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Prophix Supports the Strategic Midsize CFO

Posted by Robert Kugel on Apr 26, 2019 7:00:00 AM

Prophix is a financial performance management (FPM) suite from Prophix Software offering statutory financial consolidation, planning, budgeting and reporting capabilities designed expressly for midsize companies and divisions of larger corporations. The chief financial officer of a midsize company faces a different set of challenges than those in larger corporations or small businesses. A midsize company typically has grown to the point where it must have capabilities similar to those of a large corporation but lacks the staff or financial resources that larger companies can afford. And when experiencing rapid growth, midsize companies typically will make investments in information technology that will allow them to scale without having to add administrative or support headcount.

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Scout RFP is Reimagining Sourcing and Procurement

Posted by Robert Kugel on Mar 13, 2019 8:30:00 AM

Last week, Scout RFP held their 2nd annual user conference, Spark 2019. Scout’s software is designed to manage sourcing and procurement processes in companies. Even with a very targeted focus, there was one key aspect that stood out compared to all the other conferences I usually attend; Spark 2019 mainly focused on customer success with little time devoted to promoting the software itself. Strategically, this fits in with Scout RFP's customers and target audiences. Scout’s users represent a new breed of purchasing managers and executives. They’re looking to change the role of the purchasing department.

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Blockchain's Presence at IBM THINK 2019

Posted by Robert Kugel on Feb 25, 2019 6:00:00 AM

IBM’s THINK conference, just held this February in San Francisco, is IBM's annual user conference. THINK is designed to showcase upcoming product updates and releases from IBM, along with provide best practices on a wide range of topics. While many technologies were on display, there is one topic in particular I wanted to cover this year: Blockchain.

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Supply Chain Management and Sourcing in a New Era of Trade

Posted by Robert Kugel on Feb 22, 2019 6:00:00 AM

We’re in a new era of trade, the result of converging issues that have been building for at least a decade. Structurally and politically, the liberal ethos that drove the trade environment through the second half of the 20th century and into the 21st has changed. There will be a new equilibrium in the future; getting there, though, will be a bumpy ride. Adding to the challenges posed by a shifting trade environment are commodity and currency market volatility and the impacts of ongoing legal, regulatory and taxation changes.

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Revenue Recognition Standards Pose Planning Challenges

Posted by Robert Kugel on Feb 18, 2019 6:00:00 AM

New rules governing revenue recognition for contracts have gone into effect for larger companies and are about to go into effect for smaller ones. 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 standards are very similar and will require fundamental changes in revenue recognition for companies that use even moderately complex contracts in their dealings with customers. These include, for example, contracts that are structured using tiered pricing or volume discounts or ones that routinely involve modifications, such as subscriptions that add or drop users and services or allow seasonal changes or promotional discounts.

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Straight-Through Processing for Business and Commerce

Posted by Robert Kugel on Jan 31, 2019 6:00:00 AM

“Straight-through processing” (STP) is a business process and data architecture methodology. Technology advances have made STP increasingly feasible for any business process, allowing companies to design and execute them from inception to completion in a more automated fashion, minimizing or eliminating human intervention in the process. The associated data also progresses automatically end-to-end through the process, preserving its integrity. Because there is no human intervention, data is more accurate and less prone to manipulation.

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BlackLine Exorcises Accounting Details

Posted by Robert Kugel on Jan 10, 2019 6:00:00 AM

I recently attended BlackLine’s annual user conference. The company aims to automate time-consuming repetitive tasks and substantially reduce the amount of detail that individuals must handle in the department. The phrase “the devil is in the details” certainly applies to accounting, especially managing the details in the close-to-report phase of the accounting cycle, which is where BlackLine plays its role. This phase spans from all the pre-close activities to the publication of the financial statements. The non-practitioner is likely unaware of the hair-curling amount of essential detail that the finance and accounting organization must handle in the close-to-report. Beyond its toll on efficiency, the time and attention involved in performing this work manually bedevils departments’ attempts to become a more strategic partner to the rest of the business.

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Wdata Puts the “A” back in FP&A

Posted by Robert Kugel on Dec 13, 2018 6:00:00 AM

Workiva recently introduced Wdata, a cloud facility for centralizing financial and non-financial information from multiple sources. It frees up time for finance organizations, especially financial planning and analysis (FP&A) groups, to explore conditions and trends in their business because they need to spend less of it gathering data and preparing it for analysis and reporting. Ventana Research recently awarded Workiva our Digital Innovation award for Wdata because of its transformative potential.

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FinancialForce Serves the Modern Service Business

Posted by Robert Kugel on Dec 10, 2018 6:00:00 AM

FinancialForce offers cloud-based ERP and professional services automation (PSA) software. The company targets midsize and larger services companies, especially those that provide professional services (such as consultants or field service organizations), subscription-based or recurring revenue services. FinancialForce’s key point of differentiation is that it is built natively on the Salesforce platform. Thus, CRM data is already located on the same platform as accounting and back-office data so organizations can orchestrate end-to-end front-office to back-office processes without having to integrate different systems.

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Kinaxis Assists in the Planning of Supply Chains for the New Era of Trade

Posted by Robert Kugel on Dec 6, 2018 6:00:00 AM

Kinaxis recently held its annual user conference, Kinexions, which focuses on helping the company’s customers improve their execution of supply chain and sales and operations planning (S&OP). This year’s event took place against a backdrop of what is beginning to look like a new and more challenging era of world trade. This will have a significant impact on most product companies with international operations. (I also reviewed last year’s event, which can be found here.)

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Workday Supports the Finance Department of the Future

Posted by Robert Kugel on Nov 29, 2018 6:00:00 AM

This year’s Workday Rising, the company’s annual user group meeting, offered details of the company’s latest release, Workday 31, and provided a roadmap for the next several semiannual releases. To put these plans into a broader context, I’ve commented before that information technology is on the verge of delivering capabilities that will enable finance and accounting organizations to transform how they work. Technology will have a more profound impact on accounting and finance over the coming decade than it has over the past 50 years. Workday Financial Management, along with the company’s Prism Analytics and recently acquired Adaptive Insights, is evolving to provide to finance and accounting departments the technology underpinnings that can help them redefine how they do their work.

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Sales and Operations Planning: Just Mediocre

Posted by Robert Kugel on Nov 15, 2018 6:00:00 AM

A recent analysis of our sales and operations planning (S&OP) dynamic insight research provides perspective on the current state of this core business process. Using concise web-based surveys, Ventana Research’s Dynamic Insights provide research participants with an immediate assessment of their company’s efforts as well as research- and experience-based advice on potential next steps to improve. For those who wish to do a quick assessment of their own company’s sales and operations planning, the Dynamic Insight can be found here.

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Real Estate Isn’t Just a Fixed Cost

Posted by Robert Kugel on Oct 12, 2018 6:00:00 AM

Financial analysts typically classify real estate as a fixed cost. Strictly speaking, that’s correct, but looking at it this way leads many organizations to overlook opportunities to more carefully manage their real estate and other occupancy expenses. The changes in lease accounting that are going into effect have caused some organizations to reexamine their leasing policies and how they organize their lease accounting processes. They should take an even broader approach and consider ways to improve how they manage those leases.

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PROS Enables Modern Commerce with Dynamic CPQ

Posted by Robert Kugel on Sep 16, 2018 11:29:47 PM

PROS Holdings is a software vendor with two distinct but related sets of products. The company began in 1985 offering revenue management software to airlines, hospitality and rental car companies. More recently it added price and revenue management software focusing on B2B services, chemicals and energy, consumer goods manufacturers, food and beverage, healthcare, insurance and technology. This note focuses on the B2B portion of the business.

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Make Accounting Cool (Again)

Posted by Robert Kugel on Sep 12, 2018 8:18:32 AM

Was accounting ever cool? Well, yes, in a nerdy sort of way. Double-entry bookkeeping, codified in the 15th century by Fra Luca Pacioli, a Franciscan friar and pal of Leonardo Da Vinci, was essential for the expansion of trade and the creation of the modern corporation. Bookkeeping and accounting were as important to economic development as two other financial inventions – insurance and fractional reserve banking. Double-entry bookkeeping is an elegant system, simple yet powerful. It supports the accurate recording of transactions and the economic condition of a business as well as analyses of its performance. That’s cool.

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FloQast Facilitates a Fast Close

Posted by Robert Kugel on Aug 27, 2018 9:06:06 AM

A quarter century after a “fast, clean close” became a key measure of a finance and accounting department’s effectiveness, companies continue to take too long to close their books. Our Office of Finance research finds that 60 percent of companies take more than six business days to complete their close despite widespread agreement that it should be done within a business week. Closing sooner provides executives with financial and management accounting data sooner. A faster close also promotes agility in responding to markets and competitors, frees up departmental resources to enable CFOs to fix process issues that hamper the effectiveness of the department and allows extra time to concentrate on more valuable analytical tasks. Moreover, it’s likely that by focusing on issues that are delaying the close, the department will uncover the root cause of other issues that diminish its performance. “We’re too busy to figure out how to save time” is a common problem in these finance organizations.

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OneStream XF: A Finance Department Platform

Posted by Robert Kugel on Aug 27, 2018 8:42:32 AM

OneStream XF from OneStream is a financial performance management (FPM) platform offering planning, budgeting and forecasting, statutory consolidations and reporting. The company was founded in 2010 and has been self-funded, which means that until recently its marketing and brand recognition efforts have been limited. I reviewed the company’s statutory consolidation capabilities earlier this year.

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Longview Supports More Effective Tax Management

Posted by Robert Kugel on Aug 12, 2018 11:07:46 PM

Longview Solutions provides tax departments with a full suite of tax software to manage direct (income) taxes. This includes tax provision and reporting, tax analysis and planning as well as operational transfer pricing and country-by-country (CbC) reporting. A dedicated tax application suite speeds the tax process, enhances control, reduces the chance of errors and ensures consistency in provision, reporting, analysis and planning.

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Make Budgeting Easier for the Budget Owner

Posted by Robert Kugel on Jul 18, 2018 9:07:54 AM

Budget season is about to begin for many companies. I’ve spent a few decades doing research into – as well as thinking and writing about – the planning and budgeting processes in corporations. I’ve closely examined the role of the Financial Planning and Analysis (FP&A) group, which is usually charged with managing the corporate budget process. About seven years ago, I published a research note, Putting the ‘A’ Back in FP&A. In it I made the point that the time saved by using dedicated planning and budgeting software and therefore not having to deal with spreadsheet machinations would enable people working in FP&A to do what they were hired to do: Analysis.

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Workday to Acquire Adaptive Insights

Posted by Robert Kugel on Jul 1, 2018 11:08:41 PM

Workday will acquire Adaptive Insights for $1.55 billion in cash, with the transaction scheduled to close in the third quarter of this year. The combination adds Adaptive Insight’s well-developed cloud-based financial performance management software to Workday’s workforce and financial management suite. Workday says Adaptive will operate as a standalone business and continue with its current product strategy.

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Blockchains Come in Different Shapes and Sizes

Posted by Robert Kugel on May 27, 2018 11:23:51 PM

Blockchains are attractive because their built-in security and trust factors make them useful for almost all business interactions involving organizations and individuals. Blockchains have two basic functions. One is as a method for handling transactions involving property such as land deeds, trademarks or other assets. The second involves exchanges of data such as identities of individuals or businesses, the location of an object at a point in time or weather conditions. All interactions involving property or assets include the transfer of data as well, of course, but some blockchain use cases are informational only.

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Workday Advances Technology Roadmap for Finance

Posted by Robert Kugel on May 21, 2018 6:38:29 AM

Workday recently presented a technology summit for industry analysts. The presentations focused on Workday’s ongoing product advancements as well as its approach to employing emerging technologies. These technologies include artificial intelligence (AI) and machine learning (ML), robotic process automation (RPA) and bots utilizing natural language processing. Ventana Research uses the term robotic finance to refer to these technologies when used in the office of finance. In our view, they will have a profound impact on the nature of white-collar work over the coming decade. Financial management and ERP software vendors are focusing on these technologies because they will disproportionately affect finance and accounting departments: I estimate that their adoption has the potential to eliminate one-third of the accounting department’s workload within a decade.

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OneStream Delivers Financial Performance Management

Posted by Robert Kugel on May 4, 2018 9:35:31 AM

OneStream XF from OneStream Software is a financial performance management (FPM) platform available on-premises or in the cloud. The company is a relative newcomer (it started in 2010) but its founders are industry veterans and it has a long list of referenceable customers. Being self-financed, it only recently began to raise its market profile. Its SmartCPM system consists of software for statutory financial consolidation, planning, forecasting, budgeting and reporting that’s used primarily by midsize and larger corporations, including large multinationals with complex ownership structures. Designed as a platform, OneStream XF fits into the company’s strategy to offer an array of financial applications developed by itself or third-parties that use a single authoritative source of data.

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Oracle’s Modern Finance Experience is Robotic

Posted by Robert Kugel on May 2, 2018 7:39:48 AM

After more than a decade of steady development, ERP systems today are changing fundamentally, facilitated by the availability of advances such as cloud computing, advanced database architecture, collaboration, improved user-interface design, mobility, analytics and planning. This was evident when Oracle recently held its third analysts-only ERP Cloud Summit in New York to coincide with its Modern Finance Experience event. Oracle now has an increasingly robust set of business applications that reside in the cloud and a growing list of live customers – large and midsize – from a range of industries across the world, both of which were offered as part of the here-and-now technology theme at the event.

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Warning: Software Now Mandatory for Lease Accounting

Posted by Robert Kugel on Apr 16, 2018 1:00:00 PM

Accountants love electronic spreadsheets – and for good reason. They’re a powerful and versatile personal productivity tool and just about everyone knows how to use them. Spreadsheets are the default software tool for accountants because they enable autonomy (you don’t need to ask IT for anything) and they’re free (so you don’t have to make a business case to authorize buying something). Some accountants humorously (but earnestly) invoke the line “you’ll have to pry this spreadsheet from my cold, dead hands” whenever somebody suggests eliminating them.

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Pricing Software and the CFO

Posted by Robert Kugel on Apr 13, 2018 9:53:21 AM

Pricing is an issue that almost every for-profit company confronts – and usually agonizes over. Organizations’ approach to pricing can range from centralized to decentralized and from highly disciplined to lax. Whether pricing is best handled in a centralized or decentralized fashion depends a great deal on the markets the company is serving as well as its organizational structure and culture. However specific pricing policies are established, though, a disciplined approach to price setting and negotiation is always superior to an ad-hoc process. Discipline is key to preventing margin “leakage” caused by unnecessary price concessions. Configure, price and quote (CPQ) software is a critical component in any leakage-prevention strategy.

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SAP Highlights Its Blockchain Efforts

Posted by Robert Kugel on Mar 26, 2018 12:07:03 PM

SAP recently held a teleconference to highlight its blockchain strategy. Lately, the major business software vendors have been calling attention to their blockchain initiatives. While the focus on this technology might seem premature to those who still equate it with cryptocurrencies, evidence is pointing to a future pace of adoption similar to the rapid take-up of the internet in the 1990s. That blockchain is useful for a wide range of business functions isn’t news – just google “blockchain use cases.” Payment, provenance, testament and efficiency are four main themes driving a multitude of applications of the technology. That said, blockchain isn’t technology in search of a mission but is something more like the internet, both in its broad utility and in value multiplication through network effects.

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The Modern Finance Organization is a Technology Fast Follower

Posted by Robert Kugel on Mar 15, 2018 10:08:14 AM

Robots of the physical sort are not about to take over finance and accounting but we have arrived at the age of “Robotic Finance”. I coined this term to focus on four key technologies with transformative capabilities: artificial intelligence and machine learning, robotic process automation, bots and natural language processing and blockchain distributed ledger technology. Embracing these technologies will enable any department to redefine itself as a forward-looking strategic partner to the rest of the company.

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Self-Describing Data Powers B2B Blockchain Distributed Ledgers

Posted by Robert Kugel on Feb 15, 2018 7:23:11 AM

The use of blockchain distributed ledgers in business processes is now a common theme in many business software vendors’ presentations. The technology has a multitude of potential uses. However, presentations about the opportunities for digital transformation always leave me wondering: How is this magic going to happen? I wonder this because the details about how data flows from point A to point B via a blockchain are critically important to blockchain utility and therefore the pace of its adoption.

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Predictive Finance Organizations Are More Valuable

Posted by Robert Kugel on Feb 12, 2018 4:32:47 AM

Ventana Research uses the term “predictive finance” to describe a forward-looking, action-oriented finance organization that places emphasis on advising its company rather than fulfilling the traditional roles of a transactions processor and reporter. Technology is driving the shift away from the traditional bean-counting role. The cumulative evolution of software advances will substantially reduce finance and accounting workloads by automating most of the mechanical, rote functions in accounting, data preparation and reporting. (I recently summarized these in a “Robotic Finance”)

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Welcome to the Age of Robotic Finance

Posted by Robert Kugel on Dec 29, 2017 5:24:49 AM

For several years, I’ve commented on a range of emerging technologies that will have a profound impact on white-collar work in the coming decade. I’ve now coined the term “Robotic finance” to describe this emerging focus, which includes four key areas of technology: Artificial intelligence (AI) and machine learning (ML), robotic process automation (RPA), bots utilizing natural language processing, and blockchain distributed ledger technology (DLT), each of which I describe below. Robotic finance will have a disproportionate impact on finance and accounting departments: I estimate that adoption of these technologies potentially will eliminate one-third of the accounting department’s workload within a decade.

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Robotic Process Automation is a Cornerstone of Digital Finance

Posted by Robert Kugel on Dec 25, 2017 7:52:13 AM

Robotic process automation (RPA) relies on programming or the application of analytical algorithms to execute the most appropriate action in an automated workflow. RPA enables business users to configure a “robot” (actually, computer software) to interact with applications or data sources to process a transaction, move or manipulate data, communicate with other digital systems and manage machine-to-machine and man-to-machine interactions. This technology is gaining increasing notice by finance departments, with good reason: RPA represents an important step beyond simple process automation in that it uses software to execute routine but complex workflows that require judgment. Rather than making an individual check-off a step in a routine approval, a robotic system applies an algorithm that decides the next step. The system thus does what people spend an awful lot of their time doing every day: making judgments that most of the time could be done by a machine.

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Prophix – Financial Performance Management for Midsize Organizations

Posted by Robert Kugel on Dec 12, 2017 5:47:01 AM

Prophix is an established provider of financial performance management (FPM) software for planning and budgeting, forecasting, analysis and reporting, and managing the financial close and consolidation process. Its eponymous software is designed specifically for midsize companies or midsize divisions of larger corporations. These organizations are a distinctive segment of the market in that they have almost all the functional requirements of large enterprises but have fewer resources to apply to these critical tasks. Fortunately, the evolution of information technology over the past decade has been especially beneficial to midsize customers, bringing them expanded capabilities, substantially better performance and greater automation of routine tasks at an affordable total cost of ownership.

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Oracle Demonstrates ERP Cloud Progress at OpenWorld

Posted by Robert Kugel on Nov 30, 2017 6:27:07 AM

Oracle OpenWorld is a fall event that sprawls over a lot of territory – figuratively in terms of the IT landscape and, if you’re in San Francisco, literally. My focus here is on the ERP portion of the company’s software portfolio.

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Kinaxis Kinexions Advances Supply Chain Value for Customers

Posted by Robert Kugel on Nov 23, 2017 8:52:34 AM

From my perspective, supply chain management (SCM) and sales and operations planning (S&OP) are two of the most underappreciated disciplines of modern corporate management. Properly applied, they can improve performance and competitiveness by increasing customer satisfaction and reducing costs. A combination of more capable information technology with advances in operations research and analytics has made managing supply and demand chains potentially more impactful by making them more flexible and adaptable to market conditions. Consequently, companies can enhance profitability, reduce working capital and improve customer satisfaction by providing more reliable service.

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Intacct is a Sage Investment

Posted by Robert Kugel on Nov 14, 2017 8:54:36 AM

Sage Intacct recently held its annual user group meeting. The cloud financial management software service provider targets rapidly growing small- and midsize services companies. Within this broad category, Sage Intacct focuses on verticals including software, financial services, healthcare, nonprofits, wholesale and franchisers.

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Country-by-Country Reporting Challenges Tax Departments

Posted by Robert Kugel on Nov 6, 2017 11:14:06 PM

In 2013, the Organization for Economic Cooperation and Development (OECD) published a report titled “Action Plan on Base Erosion and Profit Shifting” (commonly referred to as “BEPS”), which describes the challenges national governments face in enforcing taxation in an increasingly global environment with a growing share of digital commerce. Country-by-country (CbC) Reporting has developed in response to the concerns raised in the report. To date, 65 countries (including all members of the European Union but not the United States) are signatories of the multilateral competent authority agreement establishing CbC reporting.

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Artificial Intelligence and Machine Learning in Business Applications

Posted by Robert Kugel on Oct 26, 2017 7:18:56 AM

The application of artificial intelligence (AI) and machine learning (ML) to business computing will have a profound impact on white collar professions. This is especially true in heavily rules-based functions such as accounting. Companies recognize the transformational potential of AI and ML, but the progression and pace of the adoption of these technologies is unclear. Some applications of AI and ML are already in use but others are a decade or more away from replacing human tasks.

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Continuous Planning Promotes Action, Accuracy and Agility

Posted by Robert Kugel on Oct 12, 2017 8:11:29 AM

Continuous planning is a term Ventana Research uses for a high participation, collaborative, action-oriented approach to planning built on frequent, short planning sprints. This enables organizations to enhance the accuracy of their plans because refinements are made at shorter intervals. Short planning cycles enable companies to achieve greater agility in responding to market or competitive changes. “Continuous” also means continuous across the entire organization – planning as an ongoing collaborative dialogue that brings together finance, line-of-business managers and executives. And because it’s high-participation planning and not silo-based, companies can plan with greater accountability and coordination in their operations. This ongoing dialog tracks current conditions as well as changes in objectives and priorities that are driven by markets and the business climate. Continuous planning promotes a forward-looking mindset in planning and reviewing that’s focused on performance improvement.

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SAP Leonardo for Finance: When AI Ain’t Enough

Posted by Robert Kugel on Oct 1, 2017 10:20:34 AM

Fra Luca Pacioli, a 15th-century Franciscan friar living in what’s now Italy, is credited with codifying double-entry bookkeeping, which is the foundation of accounting. Pacioli, a polymath, was well acquainted with his contemporary and fellow polymath Leonardo Da Vinci. So, given they were at times collaborators, it’s fitting that one of the most important applications of SAP’s Leonardo technology will be in helping to disrupt finance and accounting organizations in corporations.

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Unit4 Prevero Provides a Practical Alternative to Spreadsheets

Posted by Robert Kugel on Sep 22, 2017 8:15:20 AM

In 2016 Unit4 acquired Prevero, a financial performance management software company. The acquisition reflects a trend toward the convergence of transactional and analytical business applications. ERP and financial management software vendors increasingly are adding analytic capabilities – especially in financial performance management (FPM) – to the core functions of transaction processing and accounting in order to broaden the scope of their offerings. The integration of transaction processing and analytical software is especially valuable to Unit4’s core customer base of midsize organizations, which we define as those with 100 to 1,000 employees. Midsize entities have almost the same systems requirements as larger ones but lack the resources the latter enjoy.

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Workiva’s Wdesk Supports Expanded ASC 606 Disclosures

Posted by Robert Kugel on Sep 6, 2017 1:23:24 AM

Workiva’s Wdesk, a cloud-based productivity application for handling composite documents, will have a larger role to play as companies adopt new revenue recognition standards governing accounting for contracts. 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 both will enforce fundamental changes in accounting for contracts.

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Centage’s Budget Maestro Version 9 is a Big Step Forward

Posted by Robert Kugel on Sep 3, 2017 9:43:09 AM

Centage recently released Budget Maestro Version 9, a complete revamping of its longstanding budgeting application designed for midsize companies. The software, now offered as a multitenant cloud-based offering, delivers several structural improvements that can enhance the effectiveness of a company’s planning processes and at the same time is easier to use. Budget Maestro Version 9 is designed to support what Centage is calling a “Smart Budgets” approach to replace traditional budgeting. This approach is consistent with what we have been calling integrated business planning.

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Zuora RevPro Addresses Revenue Recognition Compliance

Posted by Robert Kugel on Aug 24, 2017 3:26:41 AM

Earlier this year Zuora acquired revenue recognition software vendor Leeyo. Zuora, which initially focused on taming the complexities of subscription billing, has been broadening its software offerings to handle a wider set of the operational and financial requirements of a subscription business. Leeyo held a Revenue Recognition Summit in 2016 and the event was recently repeated. The need for the Summit reflects the impact new standards for accounting for contracts will have on subscription businesses. Compliance with these standards is proving to be a major challenge for companies that have subscription or recurring-revenue business models.

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Longview Solidifies Tidemark for Cloud-Based Planning

Posted by Robert Kugel on Jul 10, 2017 6:43:35 AM

Longview recently completed the acquisition of Tidemark Systems, a planning software vendor. Longview Plan powered by Tidemark is a suite of cloud-based applications that enable corporations to plan, assess performance and communicate results more effectively. The software facilitates what Ventana Research calls “continuous planning.” This is a highly collaborative, action-oriented approach to planning that relies on frequent, short cycles to rapidly create and update integrated company-wide operational and financial plans. This structural approach makes it easy for individual business functions to create their own plans while enabling headquarters to connect those plans to create a unified view. Viewed in the long term, this acquisition provides Longview with a platform that will enable it to apply its existing on-premises intellectual property to a broader suite of web-based performance management and tax applications.

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NetSuite Presents New Suites at SuiteWorld

Posted by Robert Kugel on Jun 8, 2017 7:20:24 AM

I recently attended SuiteWorld, NetSuite’s annual user conference. In the opening keynotes and throughout the event speakers emphasized benefits for NetSuite users resulting from the merger of NetSuite and Oracle, completed last fall. I wrote about this at the time. NetSuite users are likely to benefit from Oracle’s sales and core technology infrastructure. Before the merger, NetSuite’s R&D spending was constrained by being a public company. The amounts needed to rebuild and extend its software on an accelerated timetable likely would not have been acceptable to stock market investors.

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Host Analytics Empowers Office of Finance

Posted by Robert Kugel on May 27, 2017 12:44:16 AM

Ventana Research defines financial performance management (FPM) as the process of addressing the often overlapping people, process, information and technology issues that affect how well finance departments operate and support the activities of the rest of their organization. FPM deals with the full cycle of finance department activities, which include planning and budgeting, analysis, assessment and review, closing and consolidation, internal financial reporting and external financial reporting, as well as the underlying information technology systems that support them.

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Zuora Acquires Leeyo for Revenue Recognition

Posted by Robert Kugel on May 22, 2017 9:17:57 AM

Zuora, a subscription commerce and billing software company, recently acquired Leeyo, a company that provides software that automates the revenue recognition and forecasting processes. The terms were not disclosed. The acquisition is relevant to subscription-based businesses because of changes to accounting standards about to go into effect that will have a significant impact on how they account for their revenue. Leeyo and Zuora already have been deployed together with multiple ERP systems. The combined company plans to tighten integration between the two going forward.

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Vendavo Brings Intelligence to Pricing and Profitability

Posted by Robert Kugel on May 9, 2017 9:54:23 AM

Vendavo recently held its annual Profit Summit, a combination of a user group conference and a forum for covering evolving trends and techniques in business-to-business (B2B) pricing. Especially in emerging categories like pricing and revenue management, this sort of event provides an opportunity to assess the state of the market and the maturity of the applications. As I’ve noted, adoption of price and revenue management software has been slow in the B2B segment of commerce due to multiple obstacles. The challenges include change management, as well as data and process issues.

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Anaplan Enables Connected Planning across Business

Posted by Robert Kugel on Apr 27, 2017 11:04:56 AM

Anaplan recently held Anaplan Hub, its annual user group meeting. The company offers a cloud-based business planning platform that incorporates a modeling and calculation engine. The tool makes it relatively easy to add or expand the scope of plans that can be connected and monitored as a central source. Companies typically use Anaplan software for financial planning or budgeting, sales, workforce, marketing and IT planning. These are the types of plans in which companies often need to create models that incorporate their specific requirements, their strategy and their business systems.

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CFOs and Finance Should Take Leadership Role in Pricing

Posted by Robert Kugel on Apr 21, 2017 9:18:05 AM

Pricing is an issue that affects almost every for-profit company that doesn’t sell purely commodity products. A corporation’s approach to pricing can range from highly disciplined to ad hoc and from fully centralized to decentralized. The issue of centralized or decentralized depends a great deal on the markets the company serves, its organizational structure and its culture. However, a disciplined approach to price setting and negotiation is always superior to an ad hoc approach. This is especially true for non-commodity B2B businesses, which I believe have lagged other types of business in managing their pricing strategically. (Some would argue that there is no such thing as a pure commodity business, but that’s another issue.) Increasing pricing discipline in the company is one way for the CFO to engage more strategically in managing the business.

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Oracle Growing ERP in Cloud

Posted by Robert Kugel on Apr 17, 2017 7:26:10 AM

Oracle recently held its second ERP Cloud Summit with industry analysts. The all-day event wasn’t just about ERP. The company covered a range of its business applications, including financial performance management as well as its Adaptive Intelligent Applications. And it wasn’t just about the cloud. After more than a decade of steady developments, ERP systems have begun to change fundamentally, facilitated by the growing availability of new technologies including cloud computing, advanced database architecture, collaboration, user interface design, mobility, analytics and planning. Here are my key takeaways from the event:

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ERP on the Brink of Change

Posted by Robert Kugel on Apr 7, 2017 10:26:56 AM

Ventana Research recently announced the results of its latest Benchmark Research, Next-Generation ERP. The enterprise resource planning (ERP) system is at the core of nearly every company’s record-keeping and management of business processes. Its smooth and uninterrupted functioning is essential to an organization’s accounting and finance functions. In manufacturing and distribution, ERP manages inventory and logistics. Some companies use it to handle human resources functions like tracking employees, payroll and related costs.

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Digital Process Reengineering Drives Business Change

Posted by Robert Kugel on Mar 23, 2017 9:28:13 AM

Business process reengineering was a consulting fashion in the early 1990s that spurred many companies to purchase their first ERP systems. BPR proposes a fundamental redesign of core business processes to achieve substantial improvements in market and customer responsiveness, productivity, cycle times and quality. ERP systems support business process reengineering by guiding the step-by-step execution of the redesigned process to ensure that it is performed consistently. They also automate the handoffs between individuals and departments to accelerate completion of that process.

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B2B Pricing Management Can Strengthen Bottom Line

Posted by Robert Kugel on Mar 20, 2017 8:45:28 AM

More businesses are using software to implement and support a strategic pricing strategy designed to optimize revenue and margins in business-to-business (B2B) transactions because it can help improve results at the bottom line. “Optimize” in this instance means managing the trade-off that usually exists between revenue and profitability objectives in order to support a company’s strategy and capabilities in a given market. Business-to-business pricing management is Ventana Research’s term for such processes and applications. Software built for this purpose centralizes control and enforces consistency in pricing while assisting sales agents in negotiating prices that achieve desired business objectives. It enables agents to use techniques that can increase the revenue from a transaction, the margin on the sale or the probability of closing the sale.

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The Office of Finance Research Agenda for 2017

Posted by Robert Kugel on Feb 16, 2017 6:33:18 AM

Senior finance executives and finance organizations that want to improve their performance must recognize the value of technology as a key tool for doing high-quality work. Consider how poorly your organization would perform if it had to operate using 25-year-old software and hardware. Having the latest technology isn’t always necessary, but it’s important for executives to understand that technology shapes a finance organization’s ability to improve its overall effectiveness.

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Vertex Enterprise Addresses Today’s Tax Challenges

Posted by Robert Kugel on Feb 7, 2017 12:14:58 AM

I’ve long advocated the use of effective technology in the tax function, especially for organizations that operate in multiple jurisdictions or have complex legal structures manage direct tax provision and analysis using outdated or inappropriate tools. Our Office of Finance benchmark research reveals that most organizations use spreadsheets to manage their tax provision and analysis: Half (52%) rely solely on spreadsheets, and another 38 percent mainly use them. I recommend to corporations that operate in multiple countries and that have even a moderately complex legal entity structure that they consider establishing what I call a tax data warehouse of record.

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B2B Price and Revenue Optimization Goes Mainstream

Posted by Robert Kugel on Jan 24, 2017 12:16:39 AM

Price and revenue optimization (PRO) is a business discipline used to produce demand-based pricing; it applies market segmentation techniques to achieve strategic objectives such as increased profitability or greater market share. In essence, PRO enables companies to surf the demand curve using dynamic rather than fixed pricing to achieve the most desirable trade-offs between revenue volume and profit margins. The trade-off is defined by strategic factors such as the company’s market position, product and service portfolio, and marketing strategy.

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Kofax Kapow 10 Advances Robotic Process Automation

Posted by Robert Kugel on Jan 20, 2017 8:15:38 AM

Kofax offers Kapow, robotic process automation (RPA) software used to acquire information from a range of sources without human intervention and without having to write code. These sources include websites, applications, unstructured documents, data stores and desktop spreadsheets. RPA software does repetitive, low-value work that otherwise may be performed by person. It saves time in these tasks, completing them sooner and freeing skilled individuals to concentrate on work that utilizes their skills to the fullest. One of the earliest uses of software robots was “Web crawling,” which automated rapid collection of data posted on websites, for example, prices and locations. This was the Kofax Kapow’s original purpose, but its scope has expanded. When used to gather information from multiple applications, the software precludes the need for setting up and maintaining a separate data store. This saves time and money while ensuring that the information has come from the authoritative source and that there is no latency in the data. Rather than taking the time to write a program with broad applicability, a robot can be quickly configured to perform a specific task in a way that mimics how an individual does the job.

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Financial Performance Management Software Vendors Face Challenges

Posted by Robert Kugel on Jan 13, 2017 12:05:19 AM

Ventana Research defines financial performance management (FPM) as the process of addressing often overlapping issues involving people, process, information and technology that affect how well finance organizations operate and support the activities of the rest of their organization. FPM software supports and automates the full cycle of finance department activities, which include planning and budgeting, analysis, assessment and review, closing and consolidation, internal financial reporting and external financial reporting, as well as the underlying information technology systems that support them.

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Treasury is More Effective with Technology

Posted by Robert Kugel on Jan 2, 2017 11:09:38 PM

The treasury function in finance departments doesn’t get a lot of attention, but it’s a fundamentally important one: to ensure that all funds are accounted for and that there is sufficient cash on hand each day to meet operating requirements. Keeping track of and managing cash, especially in larger organizations, can be complicated because of multiple bank accounts, complex financing requirements and various methods of receiving and making payments; the complexity deepens when more than one currency is used across multiple jurisdictions, which also can pose regulatory issues.

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IBM Watson and Cognitive Compliance

Posted by Robert Kugel on Jan 2, 2017 10:30:56 PM

Ventana Research awarded our Governance, Risk and Compliance (GRC) Business Innovation Award for 2016 to IBM for IBM Regulatory Compliance Analytics, powered by Watson (IRCA). This application of cognitive analytics is designed to streamline the identification of potential regulatory requirements and suggest methods for compliance. In so doing the cloud-based system can cut the time and cost of compliance while creating an effective means of ongoing management and control of compliance processes.

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Oracle Plus NetSuite Equals More

Posted by Robert Kugel on Dec 16, 2016 11:17:28 PM

Oracle and NetSuite have completed their merger. The combination is likely to be positive for customers because NetSuite will have access to “more,” a word repeated many times over the course of Oracle’s post-acquisition webcast. Existing NetSuite customers will benefit from increased investment as well as economies of scale that Oracle can bring to R&D and sales and marketing. Oracle has stated that there’s little overlap between its target customer base and NetSuite’s. However, there is substantial overlap with NetSuite’s application partner network because of Oracle’s own broad application portfolio. As such, many of these partners are likely to shift their attention to NetSuite’s cloud-only competitors (for example, FinancialForce and Intacct), which will benefit those rivals’ sales and marketing efforts.

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Taking Blockchain Beyond Bitcoin and Payments

Posted by Robert Kugel on Dec 10, 2016 5:13:26 AM

To the extent that they know anything about blockchain distributed ledgers, people associate it with bitcoin, banking or payment systems in general. However, as I mentioned in an earlier research note, blockchains have a range of potential use cases. Indeed, blockchain distributed ledgers can look like just another technology in search of a mission. However, that’s because there are many ways of putting the technology to practical use that complement and enhance established patterns of doing business. For example, Walmart recently announced it will be using blockchains to establish authentication and traceability in its food supply chain; a French financial services company started a project to facilitate compliance with know-your-customer rules; and there is an anticounterfeiting service that can be used for authenticating diamonds and luxury goods. Technology that conforms to how an organization operates and provides immediate, clear benefits usually is adopted broadly and quickly.

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Workday Planning Improves Control and Visibility

Posted by Robert Kugel on Nov 21, 2016 8:58:54 AM

Ventana Research recently awarded Workday a 2016 Technology Innovation Award for its newly released application, Workday Planning, because it simplifies and streamlines the budgeting and planning processes while facilitating collaboration, deepening visibility into spending and enabling tight fiscal control. These capabilities can help a variety of user organizations in several ways.

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SYSPRO Advances with Collaboration and CRM

Posted by Robert Kugel on Nov 10, 2016 7:21:58 AM

SYSPRO is a 35-year-old software vendor that focuses on selling enterprise resource planning (ERP) systems to midsize companies, particularly those in manufacturing and distribution. In manufacturing, SYSPRO supports make, configure and assemble, engineer to order, make to stock and job shop environments. The company attempts to differentiate itself through vertical specialization and its years of ongoing development, which can reduce the need for customization and cut the cost of initial and ongoing configurations to suit the needs of companies in these industries, thereby reducing the total cost of ownership. Worldwide its targeted verticals include electronics, food, machinery and equipment and medical devices; in the United States, SYSPRO adds automotive parts (original equipment and after-market) and energy. The company’s development efforts follow a design philosophy that balances its target customers’ need for software capabilities that are on par with larger enterprises with their resource constraints (chiefly limited financial resources and technical staffs).  Its software can be deployed on-premises or in the cloud.

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Intacct Advances Subscription Billing and Reporting

Posted by Robert Kugel on Nov 9, 2016 7:32:13 AM

Intacct, a cloud-based ERP vendor focused on midsize companies, recently held its annual user group meeting. Two of its products that were covered in the keynote are worth noting. One, already available, enables companies to manage their order-to-cash process in a continuous fashion, from the time a salesperson begins to engage with a prospect to the time funds are collected. The other is a custom report writer, to be available in the first quarter of 2017, that will provide business users with the ability to create even complex reports from any data that resides within Intacct in a straightforward, interactive fashion that is similar to building reports in a desktop spreadsheet. The company also presented modules that will facilitate compliance with the new revenue recognition standards.

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Oracle Adapts Business Applications Intelligently in the Cloud

Posted by Robert Kugel on Oct 31, 2016 9:30:19 AM

The annual Oracle OpenWorld user group meeting provides an opportunity to step back and take a longer view of business, industry and technology trends affecting the company. Last year, after listening to Larry Ellison’s and Mark Hurd’s vision for the future of IT, I wrote that Oracle had to continue shifting its focus to business applications because the accelerating shift to cloud computing would lead corporations to outsource their IT infrastructures, services and security to third parties. Eventually, this would substantially shrink the market for corporate IT departments, which has been Oracle’s strength. At this year’s conference the company demonstrated how it is applying its technology strengths to create a competitive advantage that it can apply to its broad business applications portfolio.

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Ditch Presentations to Improve Corporate Governance

Posted by Robert Kugel on Oct 25, 2016 4:41:29 AM

The topic of corporate governance received renewed attention recently after the publication of an open letter signed by 13 prominent business leaders, including Warren Buffett of Berkshire Hathaway and Jamie Dimon of JPMorgan Chase. The first principle the group advocated in the letter is the need for a truly independent board of directors. To achieve that aim, the letter suggests having the board meet regularly without the CEO and that the members of the board should have “active and direct engagement with executives below the CEO level.” From my perspective, translating this idea into reality would be helped by a change in the dynamics of most board meetings. I would eliminate the standard presentation of results and begin the meeting with questions and observations from the board members directed to company executives related to its financial and operating results and any other matters on the agenda. This could take place with or without the CEO.

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Processes and Software Make Long-Term Planning and Investing More Effective

Posted by Robert Kugel on Oct 14, 2016 8:58:30 AM

Effective capital planning and capital investment are vital to a company’s long-term success. The choices a company makes in this regard – how much to invest and in which facilities or projects – almost always have a profound impact on its competitiveness and performance. Because they have limited financial resources, well-managed companies take pains to ensure that these decisions support their long-term strategies and are made as rationally as possible. To do this they must have a disciplined approach to assigning priorities to capital investments within the context of the company’s specific strategy and objectives, as well as the ability to easily identify and eliminate unnecessary projects or excessive spending. And since business environments are dynamic, companies must also continually review their investment portfolios to assess their performance to plan and their strategic value while they also consider new investments to support and expand the existing long-term portfolio.

Some aspects of planning are easier to handle than others. For example, large majorities of companies in our Office of Finance benchmark research said that they handle the basic functions of accounting (83%) and external financial reporting (78%) well or very well. In contrast only half (49%) said that they perform strategic and long-range planning well or very well. One reason for the discrepancy may be the tools that they use. Almost all (91%) companies said they use spreadsheets to manage their long-term planning and investment processes. Spreadsheets are the wrong choice for any repetitive, collaborative company-wide processes such as strategic and long-term planning. For example, tracking and revising projects and major company initiatives over time in desktop spreadsheets is time-consuming because they lack capabilities designed for these purposes, such as the ability to manage projects as a set of resources and activities along a time dimension. With such capabilities planners are able to see quickly the financial and operational impact of delaying or accelerating a capital project. Unlike spreadsheets, software dedicated to planning often includes built-in analytics and visualizations that help executives formulate plans and assess performance. Spreadsheets don’t make it impossible for companies to plan and manage strategic and long-range projects and investments, but doing that is so time-consuming organizations may not have time to do more valuable work – for example, comparing the impacts of different economic or business scenarios on a set of investment alternatives, or performing side-by-side assessments of existing project portfolios. Dedicated software can enable a company to gain agility in adapting its portfolio of projects and investments. By shortening planning and review cycles and being able to examine the impact of different scenarios on the fly, decision-makers can do more frequent in-depth reviews and reassessments of investment performance or priorities.

Dedicated planning software also can improve executives’ ability to do long-range planning to ensure they have the right strategy to succeed in the markets they serve and the right assets to support their strategic objectives. To achieve those goals they must allocate investments in those assets as optimally as feasible and possess sufficient resources (both financial and other, such as personnel with the appropriate skills) to support those investments. These are the key activities in the long-range planning process:

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ERP Can Help Transform Finance

Posted by Ventana Research on Sep 25, 2016 1:04:12 AM

Like many other industry observers I’ve heard overblown claims for information technology for decades. However, I’ve also observed that – eventually – reality catches up with vision. Finance and accounting departments are particularly resistant to change, yet because almost no corporations use adding machines or typewriters any more, it’s clear that transformative change can happen. Nonetheless, because users of business computing systems are inundated with “it’s better than ever” promotions by vendors, journalists and industry analysts, may have grown jaded and disbelieving. In the case of ERP systems that help run many organizations, that is too bad because we are finally at the point of a fundamental change in this business-critical software category.

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Get to Know Enterprise Spreadsheets to Improve Business Effectiveness

Posted by Ventana Research on Sep 25, 2016 12:14:45 AM

Ventana Research coined the term “enterprise spreadsheet” in 2004 to describe a variety of software applications that add a desktop spreadsheet’s user interface (usually that of Microsoft Excel) to components that address the issues that arise when desktop spreadsheets are used in repetitive, collaborative enterprise processes. Enterprise spreadsheets are designed to provide the best of both worlds in that they offer the ease of use and flexibility of desktop spreadsheets while overcoming their defects – chiefly inability to maintain data integrity, lack of referential integrity and dimensionality, absence of workflow and process controls, limited security and access controls as well as poor auditability. All of these issues can cause serious problems for business use, which I’ll discuss below.

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Corporate Controllers: Always Be Closing!

Posted by Ventana Research on Sep 9, 2016 9:51:30 AM

It strikes me that the motto of successful salespeople – “ABC: Always Be Closing!” – could apply equally to corporate controllers, albeit in the accounting sense. For a while now I’ve been advocating continuous accounting, a holistic approach to managing the finance and accounting function that, in part, emphasizes using technology to distribute workloads more evenly over an accounting period – in effect to always be closing rather than waiting until the end of the month or quarter. Continuous accounting also stresses improving efficiency by automating repetitive processes and enhancing organizational effectiveness by improving data integrity in finance processes.

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Vendavo Builds Price and Revenue Optimization into Business Processes

Posted by Ventana Research on Sep 1, 2016 9:02:00 AM

Vendavo is a vendor of business-to-business (B2B) price and revenue optimization software, which I have written about. A major focus of the conference sessions this year at the company’s annual user group meeting was on practical approaches to successful price optimization initiatives. While this category of software has been achieving increasing acceptance, penetration is still limited in the B2B segment, which includes, for example, industrial goods and services.

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Unit4 Adds Financial Performance Management with Prevero Acquisition

Posted by Ventana Research on Aug 23, 2016 8:12:56 AM

Unit4, a Netherlands-based vendor of financial management software focused mainly on midsize companies, recently acquired prevero, a German vendor of performance management and business intelligence software. The acquisition reflects a convergence of transactional and analytic business applications, which I have written about. ERP and financial management software vendors increasingly are adding analytic capabilities – especially in financial performance management (FPM) – to the core functions of transaction processing and accounting to broaden the scope of their offerings.

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Recurring Revenue Billing: Where Back Office Meets Front Office

Posted by Ventana Research on Aug 18, 2016 9:42:26 AM

Invoicing and billing are mundane business activities that hardly anyone outside of the accounting department cares about, but they are where the back office meets the front office. How well a company handles the process of getting paid by its customers can have an impact on its relationships with them. Like most of the details of business process execution, the impact of substandard invoicing and billing is rarely obvious or even of interest to senior management. That said, like trimming scrap rates or increasing sales pipeline conversion rates by a couple of percentage points, achieving consistent incremental gains in the “little stuff” of business usually translates into greater competitiveness and better financial performance.

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IBM Watson and Cognitive Computing to Streamline Compliance

Posted by Ventana Research on Aug 5, 2016 9:45:34 AM

Today’s proponents of artificial intelligence (AI) tend to focus on its spectacular uses such as self-driving cars and uplifting ones such as medical treatment. AI also has the potential to aid humanity in more modest ways such as eliminating the need for individuals to do tedious repetitive work in white-collar areas. Along these lines, at its recent Vision users conference, IBM displayed an application of its Watson cognitive computing technology designed to automate important aspects of regulatory and legal compliance. Should it prove workable, the application of cognitive computing to compliance could be the first step in achieving what various “Paperwork Reduction Act” legislation has failed to do: substantially cutting the time needed to comply with rules imposed by government entities.

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Distributed Ledgers Have Business Value beyond Bitcoin

Posted by Ventana Research on Jul 28, 2016 2:59:13 AM

The blockchain distributed database was invented to create the peer-to-peer digital cash called bitcoin in 2008. Although the future potential of bitcoin and other cryptocurrencies has been debated, the distributed ledger structure using a blockchain database that supports bitcoin is likely to be adopted for a range of commercial and governmental purposes. Distributed ledgers are a secure and transparent way to digitally track the ownership of assets while enabling faster transaction speeds and reducing potential for fraud. How quickly companies, governments and individuals start using distributed ledgers and for what specific purposes remain to be seen, but their use will be independent of cryptocurrencies’ fortunes. Expansion in the use of distributed ledgers will depend heavily on the success of the initial applications and whether there are major hiccups in their use.

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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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Accounting for Sales Compensation Faces Challenges under ASC 606 and IFRS 15

Posted by Ventana Research on Jul 13, 2016 9:43:58 AM

New standards governing accounting 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 both will enforce fundamental changes in this area of accounting. Under the new approach to accounting for contracts, revenue (and some corresponding expense) is recognized only when customers are satisfied. In contrast, until now revenue was recognized when internally measurable events occurred, such as on delivery to the customer, the completion of milestones or the passage of time. In addition to dealing with an impact on accounting and planning, which I have discussed, companies may need to examine how the rules will affect how they account for commissions and other contract acquisition expenses.

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Workiva Automates Composite Documents with Wdesk

Posted by Ventana Research on Jul 1, 2016 11:35:49 AM

Workiva offers Wdesk, a cloud-based productivity application for handling composite documents. I use the term “composite document” to refer to those in which text is created and edited collaboratively by multiple contributors and which incorporates tabular and numerical data from multiple sources in a controlled process. Composite documents often have formats defined by law, regulation or contract and must be created at periodic intervals. To comply with the requirement by the United States Securities and Exchange Commission (SEC) that companies “tag” their financial filings using eXtensible Business Reporting Language (XBRL), many companies acquired software to automate the creation and tagging of these composite documents.

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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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SAP Faces Challenges with Customer Assurance and Digital Boardroom

Posted by Ventana Research on Jun 18, 2016 5:39:25 AM

There were two noteworthy themes in SAP CEO Bill McDermott’s keynote at this year’s Sapphire conference. One was customer assurance; that is, placing greater emphasis on making the implementation of even complex business software more predictable and less of an effort. This theme reflects the maturing of the enterprise applications business as it transitions from producing highly customized software to providing configurable, off-the-rack purchases. Implementing ERP will never be simple, as I have noted, but as companies increasingly adopt multitenant software as a service (SaaS), vendors will need to make their implementations as repeatable as possible and enable flexible configuration of parameters and processes that substantially reduce the billable hours required to complete a deployment. “Customer assurance” is an important stake in the ground, but it will be an empty concept unless there is complete overhaul of the entire value chain to take it beyond good intentions. Otherwise, customer assurance will be an ongoing rearguard action to overcome technology-driven challenges and disincentives for improvement. Business applications must be re-engineered to facilitate implementation, substantially reduce the likelihood of implementation errors and facilitate subsequent changes to adapt to changing business conditions. Moreover, software vendors’ partners will need to demonstrate that they can reliably cut a substantial number of billable hours per implementation engagement. This will require partners to restructure their business models. Neither of these changes will be easy to accomplish. To its credit SAP has set a course for increasing the simplicity of using its core ERP and financial management software. Getting there soon would greatly enhance its ability to retain if not gain customers in these mature markets.

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Accelerating the Close Can Fix Other Problems

Posted by Ventana Research on Jun 15, 2016 8:33:01 AM

In our Office of Finance benchmark research 60 percent of participants said it takes their companies six or more business days to complete their quarterly close; that exceeds the best practice benchmark of five days. Consultants, academics and vendors have stressed the importance of shortening the close for almost a quarter of a century. The main reason for doing so is to provide executives and managers with timely information about the company’s performance. Yet our research shows that it’s taking longer for companies to complete their close than it did a decade ago: On average they now finish the monthly process in 6.8 days, compared to 6.5 days, and complete the quarterly close in 8.0 days vs. 7.5 days. The research suggests that the main reason for this increase is that companies use outdated manual close processes, which often are poorly executed and rely heavily on spreadsheets.

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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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Infor Pursues Innovation for Business Applications

Posted by Ventana Research on May 23, 2016 7:56:24 AM

Infor recently held its annual Innovation Summit at its New York City headquarters. The company has shown leadership and creativity in business applications on two fronts: focusing its development efforts on enhancing the user experience and collaboration and building an application architecture that will deliver a rich set of functionality for ERP, financial management, CRM and HRMS and business analytics in a multitenant cloud environment. All of these advances were necessary to remake a disparate portfolio of aging software into an up-to-date set of applications. The Innovation Summits have been useful indicators of Infor’s future product and market direction. And while there has been a lag between what’s demonstrated and what’s actually available in the software, it’s not clear that this really matters. Any negative impact is limited by the slow replacement cycle for ERP (our research shows that on average companies replace their systems every 6.4 years – longer than they used to take) and conservative attitudes when it comes to core enterprise systems. Innovation doesn’t seem to be a big factor yet in selling business software to mainstream buyers, but it is likely to become more important within a few years. Changes in buyer preferences will come about as technology puts more of the design and operation of these systems in the hands of business users rather than their IT departments and outside consultants. Increasing the configurability and reducing the need for customization will cut costs, reduce the time to value in purchasing replacement applications and increase the flexibility of these notoriously inflexible systems.

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SAP Releases Transformative Universal Journal

Posted by Ventana Research on Apr 23, 2016 9:43:19 AM

I recently attended the SAPinsider Financials 2016 conference, a regular event that focuses on the interests and practical needs of people in the finance function of corporations. In several sessions SAP presenters continued to stress its theme of “Simple Finance” as well as making the wry observation that in finance, simple is hard to achieve. To support its theme, the company highlighted ongoing refinement and enrichment of its S/4HANA Finance offering.

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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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FinancialForce Springs Forward with Latest Release

Posted by Ventana Research on Mar 18, 2016 8:12:11 AM

The evolutionary pace of technologies that shape the design of ERP systems has been accelerating over the last couple of years. In addition to cloud computing there is the increasing availability of analytics and reporting integrated into transaction processing systems, which I have noted; support for mobile users; in-context collaboration; and more intuitive user interface (UI) design. Each of these features enhances productivity and the usefulness of ERP software in managing a business. The latest release of FinancialForce, a cloud-based ERP system, offers significant enhancements to its user interface and collaboration capabilities.

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Centage’s Budget Maestro Enables More Effective Budgeting and Planning

Posted by Ventana Research on Mar 10, 2016 8:56:51 AM

Financial planning and analysis (FP&A) is one of the core functions of any finance department. Preparing a budget, measuring performance to financial objectives and forecasting the company’s financial position are three of the main tasks for the FP&A organization within Finance. A key challenge for today’s FP&A organization is increasing the business value and relevance of budgeting and planning. To do so, FP&A must transform the processes from a static, rear-view mirror approach to a forward-looking, action-oriented one. A continuous planning approach can achieve this objective. Continuous planning uses short, frequent planning or budgeting cycles to promote agility, coordination and accountability in operations. It includes establishing an ongoing dialogue among finance and line-of-business managers and executives to track current conditions as well as changes in objectives and priorities driven by markets and the business climate.

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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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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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Aria Enables Effective Recurring Revenue Management

Posted by Robert Kugel on Feb 7, 2016 8:36:14 PM

Aria Systems provides companies with software for managing subscription or recurring revenue business models. A recurring revenue business models includes three types of selling and billing structures: a one-time transaction plus a periodic service charge; subscription-based services involving periodic charges; or a contractual relationship that charges periodically for goods and services. Aria’s cloud-based software addresses key requirements of users in the marketing, sales, operations and accounting functions in this type of business.

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Transforming Tax Departments into Strategic Entities

Posted by Robert Kugel on Feb 1, 2016 8:26:11 AM

The steady march of technology’s ability to handle ever more complicated tasks has been a constant since the beginning of the information age in the 1950s. Initially, computers in business were used to automate simple clerical functions, but as systems have become more capable, information technology has been able to substitute for increasingly higher levels of human skill and experience. A turning point of sorts was reached in the 1990s when ERP, business intelligence and business process automation software reduced the need for middle managers. Increasingly, organizations used software to coordinate activities as well as communicate results and requirements up and down the organizational chart. Both were once the exclusive role of the middle manager. Consequently, almost every for-profit organization eliminated management layers so that today corporate structures are flatter than they once were. Technology automation also eliminated the need for administrative staff to perform routine reporting and analysis. Meanwhile, over the course of the 1990s, the cost of running the finance department measured as a percentage of sales was cut almost in half as a result of eliminating staff and because automation enabled companies to scale without adding headcount. During the last recession, companies in North America and Europe once again made deep reductions to their administrative staffs, relying on information technology to pick up the slack.

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ERP and Financial Performance Management Begin to Overlap

Posted by Robert Kugel on Dec 20, 2015 8:00:55 PM

The ERP market is set to undergo a significant transformation over the next five years. At the heart of this transformation is the decade-long evolution of a set of technologies that are enabling a major shift in the design of ERP systems – the most significant change since the introduction of client/server systems in the 1990s. Some ERP software vendors increasingly are utilizing in-memory computing, mobility, in-context collaboration and user interface design to differentiate their applications from rivals and potentially accelerate replacement of existing systems (as I noted in an earlier analyst perspective). ERP vendors with software-as-a-service (SaaS) subscription offerings are investing to make their software suitable for a broader variety of users in multitenant clouds. And some vendors will be able to develop lower-cost business systems to broaden the appeal of single-tenant hosted cloud deployments for companies that cannot adapt their businesses to share with other tenants or prefer not to.

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Steelwedge Enables Actionable and Continuous Planning

Posted by Ventana Research on Dec 16, 2015 10:30:30 PM

Supply and demand chain planning and execution have grown in importance over the past decade as companies have recognized that software can meaningfully enhance their competitiveness and improve their financial performance. Sales and operations planning (S&OP) is an integrated business management process first developed in the 1980s aimed at achieving better alignment and synchronization between the supply chain, production and sales functions. A properly implemented S&OP process routinely reviews customer demand and supply resources and “replans” quantitatively across an agreed rolling horizon. The replanning process focuses on changes from the previously agreed sales and operations plan; while it helps the management team understand how the company achieved its current level of performance, its primary focus is on future actions and anticipated results. Adoption of S&OP has increased as software to support the process has become more powerful and affordable and as a growing list of companies demonstrated its value in producing meaningfully improved business results. Even without adopting a full-scale S&OP management approach, companies can benefit from better coordination and collaboration between their supply and demand functions. Software plays an important role here, too, in facilitating this coordination and collaboration.

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Workday Financial Management Gains Momentum

Posted by Robert Kugel on Dec 2, 2015 11:37:53 PM

Workday Financial Management (which belongs in the broader ERP software category) appears to be gaining traction in the market, having matured sufficiently to be attractive to a large audience of buyers. It was built from the ground up as a cloud application. While that gives it the advantage of a fresh approach to structuring its data and process models for the cloud, the product has had to catch up to its rivals in functionality. The company’s ERP offering has matured considerably over the past three years and now is better positioned to grow its installed base. Workday recently added Aon, the insurance and professional services company, to its customer list (becoming its largest customer to date) and reported that its annual contract value (ACV – the annualized aggregate revenue value of all subscription contracts as of the end of a quarter) has doubled since the second quarter of this year, albeit from a low base. This is an important milestone because for years the company’s growth has come from the human capital management (HCM) portion of the business, not financials. Workday has around 160 customers for its financials (more than 90 of which are live) compared to more than 1,000 customers for HCM.

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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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Tidemark Enables More Effective Business Planning

Posted by Robert Kugel on Nov 12, 2015 10:22:49 AM

Tidemark Systems offers a suite of business planning applications that enable corporations to plan more effectively. The software facilitates rapid creation and frequent updating of integrated company plans by making it easy for individual business functions to create their own plans while allowing headquarters to connect them to create a unified view. I coined the term “integrated business planning” a decade ago to highlight the potential for technology to substantially improve the effectiveness of planning and budgeting in corporations, and it remains true that integrating business planning can produce superior results. Companies that maintain direct links between functional or departmental plans more often have a planning process that works well than others. Our next-generation business planning benchmark research shows that two-thirds (66%) of those that maintain such links have a planning process that works well or very well, compared to 40 percent that copy information from individual plans into an overall plan and just 25 percent in which plans have little or no connection.

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Oracle Must Pivot to Business Applications

Posted by Ventana Research on Nov 5, 2015 10:26:32 PM

Whatever Oracle’s cloud strategy had been the past, this year’s OpenWorld conference and trade show made it clear that the company is now all in. In his keynote address, co-CEO Mark Hurd presented predictions for the world of information technology in 2025, when the cloud will be central to companies’ IT environments. While his forecast that two (unnamed) companies will account for 80 percent of the cloud software market 10 years from now is highly improbable, it’s likely that there will be relentless consolidation, marginalization and extinction within the IT industry sector driven by cloud disruptions and the maturing of the software business. In practice, though, we expect the transition to the cloud to be slow and uneven.

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Continuous Accounting Enables a Strategic Finance Department

Posted by Ventana Research on Oct 29, 2015 9:51:54 PM

Many senior finance executives say they want their department to play a more strategic role in the management and operations of their company. They want Finance to shift its focus from processing transactions to higher-value functions in order to make more substantial contributions to the success of the organization. I use the term “continuous accounting” to represent an approach to managing the accounting cycle that can facilitate the shift by improving the performance of the accounting function. Continuous accounting embraces three main principles:

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Finance Transformation Requires Strong Leadership

Posted by Ventana Research on Sep 3, 2015 8:34:11 AM

The theme of transforming the finance organization is hot again. The term “finance transformation” refers to the longstanding objective of shifting the focus of finance departments from transaction processing to more strategic activities such as providing the rest of the organization with forward-looking analysis. I focus on the technology and data aspects of this type of business issue in these analyst perspectives because they are usually essential to achieving some business objective. However, technology rarely fixes a problem by itself. If it were a simple matter of just buying software or having better data stewardship, it would be relatively easy to achieve finance transformation. But it’s not simple at all. When it comes to changing how the finance and accounting organization operates, there’s no substitute for leadership. Doing that requires changes in the habits of the department, which include the CFO changing how the department works with the rest of the company.

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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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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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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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Host Analytics Modeling Cloud Simplifies Planning and Reporting

Posted by Ventana Research on Jul 10, 2015 6:04:34 AM

Our benchmark research on next-generation business planning finds that a large majority of companies rely on spreadsheets to manage planning processes. For example, four out of five use them for supply chain planning, and about two-thirds for budgeting and sales forecasting. Spreadsheets are the default choice for modeling and planning because they are flexible. They adapt to the needs of different parts of any type of business. Unfortunately, they have inherent defects that make them problematic when used in collaborative, repetitive enterprise processes such as planning and budgeting. While it’s easy to create a model, it can quickly become a barrier to more integrated planning across the business units in an enterprise. As I’ve noted before, software vendors and IT departments have been trying – mainly in vain – to get users to switch from spreadsheets to a variety of dedicated applications. They’ve failed to make much of a dent because although these applications have substantial advantages over spreadsheets when used in repetitive, collaborative enterprise tasks, these advantages are mainly realized after the model, process or report is put to use in the “production” phase (to borrow an IT term).

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Unit4 Defines Strategy to Disrupt ERP Market

Posted by Ventana Research on Jun 29, 2015 8:18:36 AM

Unit4 is a global business software vendor focused on business and professional services, the public sector and higher education. Recently company executives met with industry analysts to provide an update of its strategic roadmap and to recap its accomplishments since being acquired by a private equity firm in 2014. Unit4 is the result of successive mergers of ERP and business software companies, notably CODA and Agresso. The company is also a part-owner (with salesforce.com and others) of independently run FinancialForce, which sells a cloud-based ERP system built on the Force.com platform.

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IBM’s Vision Features Analytics

Posted by Ventana Research on Jun 12, 2015 3:58:42 AM

IBM’s Vision user conference brings together customers who use its software for financial and sales performance management (FPM and SPM, respectively) as well as governance, risk management and compliance (GRC). Analytics is a technology that can enhance each of these activities. The recent conference and many of its sessions highlighted IBM’s growing emphasis on making more sophisticated analytics easier to use by – and therefore more useful to – general business users and their organizations. The shift is important because the IT industry has spent a quarter of a century trying to make enterprise reporting (that is, descriptive analytics) suitable for an average individual to use with limited training. Today the market for reporting, dashboards and performance management software is saturated and largely a commodity, so the software industry – and IBM in particular – is turning its attention to the next frontier: predictive and prescriptive analytics. Prescriptive analytics holds particular promise for IBM’s analytics portfolio.

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Vertex Enterprise Supports Tax Department’s Effectiveness

Posted by Ventana Research on Jun 4, 2015 7:50:46 PM

Companies trust their tax departments with a highly sensitive and essential task. Direct (income) taxes usually are the second largest corporate expense, after salaries and wages. Failure to understand and manage this liability is expensive, whether because taxes are overpaid or because of fines and interest levied for underpayment. Moreover, taxes are a political issue, and corporations – especially larger ones – must be mindful of the reputational implications of their tax liabilities.

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Order-to-Cash Cycle for Revenue Recognition

Posted by Ventana Research on May 27, 2015 3:27:04 AM

Revenue recognition standards for companies that use contracts are in the process of changing, as I covered in an earlier perspective. As part of managing their transition to these standards, CFOs and controllers should initiate a full-scale review of their order-to-cash cycle. This should include examination of their company’s sales contracts and their contracting process. They also should examine how well their contracting processes are integrated with invoicing and billing and any other elements of their order-to-cash cycle, especially as these relate to revenue recognition. They must recognize that how their company structures, writes and modifies these contracts and handles the full order-to-cash cycle will have a direct impact on workloads in the finance and accounting department as well as on external audit costs. Companies that will be affected by the new standards also should investigate whether they can benefit from using software to automate contract management or in some cases an application that supports their configure, price and quote (CPQ) function by facilitating standardization and automation of their contracting processes.

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New Revenue Recognition Rules Require Software

Posted by Ventana Research on May 12, 2015 9:33:06 PM

For most of the past decade businesses that decided not to pay attention to proposed changes in revenue recognition rules have saved themselves time and frustration as the proponents’ timetables have slipped and roadmaps have changed. The new rules are the result of a convergence of US-GAAP (Generally Accepted Accounting Principles – the accounting standard used by U.S.-based companies) and IFRS (International Financial Reporting Standards – the system used in much of the rest of the world). Now, however, it’s time for everyone to pay close attention. Last year the U.S.-based Financial Accounting Standards Board (FASB, which manages US-GAAP) and the Brussels-based International Accounting Standards Board (IASB, which manages IFRS) issued “Topic 606” and “IFRS 15,” respectively, which express their harmonized approach to governing revenue recognition. A major objective of the new standards is to provide investors and other stakeholders with more accurate and consistent depictions of companies’ revenue across multiple types of business as well as make the standard consistent between the major accounting regimes.

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Infor Makes User Experience A Reason for New Business Applications

Posted by Ventana Research on May 8, 2015 9:46:22 AM

Recently, Infor held its second innovation conference with industry analysts at its New York City headquarters. Infor’s products include the major categories of ERP, human capital management and financial performance management applications. Behind the marketing aspects of its use of “innovation” is a business strategy for retaining existing customers, migrating a sizable percentage of those customers to the cloud and gaining new customers. (Because of the relative size of the installed base, renewals and migrating customers to the cloud are likely to be more important to Infor’s future revenues than adding new customers.) I think it’s useful to assess the content of the event in the context of the company’s business strategy.

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Adaptive Insights Highlights Importance of Strategic Finance

Posted by Ventana Research on Apr 30, 2015 10:24:45 AM

Adaptive Insights held its annual user group meeting recently. A theme sounded in several keynote sessions was the importance of finance departments playing a more strategic role in their companies. Some participating customers described how they have evolved their planning process from being designed mainly to meet the needs of the finance department into a useful tool for managing the entire business. Their path took them from doing basic financial budgeting to planning focused on improving the company’s performance. This is one of the more important ways in which finance organizations can play a more strategic role in corporate management, an objective that more finance organizations are pursuing. Half of the companies participating in our Office of Finance benchmark research said that their finance organization has undertaken initiatives to enhance its strategic value to the company within the last 18 months.

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Nomis Solutions Targets Price and Revenue Optimization in Financial Services

Posted by Ventana Research on Apr 29, 2015 8:27:16 AM

Price and revenue optimization (PRO) software uses analytics to help companies maximize profitability for any targeted level of revenues. PRO utilizes data about buyer behavior to gauge individual customers’ price sensitivity and predict how they will react to prices. It enables users to charge buyers who appear to be less sensitive more than those who appear more price-sensitive.  PRO is a significant departure from inward-focused, single-factor pricing strategies such as cost-plus pricing or, in the case of financial services, risk-based pricing (using a borrower’s credit score, for example). Instead it offers a multifaceted customer-centric analytic approach to pricing built on analysis of large sets of data.

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SaaS Buyers and Customers Beware: Data Issues are Cloudy

Posted by Ventana Research on Apr 27, 2015 9:12:12 PM

There’s a long history of companies not paying close enough attention to the contractual elements of acquiring software. Today, this extends into the world of cloud computing. Many companies are choosing to acquire software services through cloud-based providers and increasingly rely on access to cloud-based data, as is shown by our forthcoming benchmark research, in which a large majority of participating companies said that having access to data in the cloud is important or very important. As they say, I’m not a lawyer and I don’t play one on television, so what follows is intended to be nothing more than a conversation starter with legal counsel. But I do advise companies on how to use software to improve their business performance and provide guidance on what software they need to achieve their objectives. From that perspective, let me offer this blanket recommendation: Your company should examine the terms and conditions of its contracts carefully to be certain that it has the ability to control, access and retain its data in single or multitenant cloud-based systems. It should be prepared to add terms and conditions to any software-as-a-service (SaaS) contract to preserve ownership of and access to the data as well as other proprietary elements of that business relationship.

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Effective Process Management Ensures a Fast Close

Posted by Ventana Research on Apr 8, 2015 7:21:41 AM

Because my research practice is centered on important business issues where technology is a key part of a solution, my written perspectives tend to focus on technology. However, it’s almost never the case that a company can just implement some application and fully resolve a business issue. Some progress may be achieved by using more effective tools, but in most cases results will fall short of what’s possible unless people, process and information issues are addressed as well. This is especially true for the accounting close.

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Does Pricing and Revenue Optimization Make My Bottom Line Look Fatter?

Posted by Ventana Research on Mar 31, 2015 10:00:38 AM

Managing prices has always been an activity of keen interest to businesses, but it has become even more critical to do it well. Over the past decade many companies have found their ability to raise prices has been constrained by intense competition resulting from Internet commerce, global competition and other factors. One tool for dealing with this pressure is price and revenue optimization (PRO), an analytic methodology that calculates how demand varies at different price levels and then uses that algorithm to recommend prices that should optimally balance revenue and profit objectives. Computer-supported PRO began in earnest in the 1980s as the airline and hospitality industries adopted revenue management practices in efforts to maximize returns from less flexible travelers (such as people on business trips) while minimizing the unsold inventory by selling incremental seats on flights or nights in hotel rooms at discounted prices to more discretionary buyers (typically vacationers). Price and revenue optimization algorithms are designed to enable a company to achieve fatter profit margins than are possible with a monolithic pricing strategy. Using PRO, airlines and hotels catering mainly to less price-sensitive business travelers found they could match discounters’ fares and rates to fill available seats and rooms without having to forgo profits from their high-margin customers.

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The Importance of Well-Managed Processes for Planning

Posted by Ventana Research on Mar 20, 2015 10:48:03 AM

It’s stating the obvious to say that how well executives manage planning processes has a big impact on how well a business unit or company plans. However, one significant source of the value of our benchmark research is that it establishes hard evidence – the numbers – that transforms mere assertions into proof points. This is particularly important when people within an organization want to improve a process. Change management is facilitated by providing senior executives with facts to back up assertions related to solving a business issue. Our recently completed next-generation business planning research provides insight into the importance of managing the planning process well and identifies some components of good management.

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Recurring Revenue Challenges Finance Departments

Posted by Ventana Research on Mar 13, 2015 8:44:05 AM

As I noted in a recent analyst perspective note the recurring revenue business model is gaining increasing use worldwide. Our recently completed recurring revenue benchmark research shows that companies are using this business approach because they find that it can convey a strategic advantage in creating additional sales opportunities, making future revenues more predictable, enhancing their customers’ experience  and increasing customer loyalty. However, recurring revenue businesses have unique challenges, especially in finance and accounting departments because most ERP systems (the ones that handle the accounting function) are not designed to manage the specific requirements of a recurring revenue businesses.

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How to Get Business Users to Switch from Spreadsheets

Posted by Ventana Research on Feb 26, 2015 3:52:24 AM

In our benchmark research at least half of participants that use spreadsheets to support a business process routinely say that these tools make it difficult for them to do their job. Yet spreadsheets continue to dominate in a range of business functions and processes. For example, our recent next-generation business planning research finds that this is the most common software used for performing 11 of the most common types of planning. At the heart of the problem is a disconnect between what spreadsheets were originally designed to do and how they are actually used today in corporations. Desktop spreadsheets were intended to be a personal productivity tool used, for example, for prototyping models, creating ad hoc reports and performing one-off analyses using simple models and storing small amounts of data. They were not built for collaborative, repetitive enterprise-wide tasks, and this is the root cause of most of the issues that organizations encounter when they use them in such business processes. Software vendors and IT departments have been trying – mainly in vain – to get users to switch from spreadsheets to a variety of dedicated applications. They’ve failed to make much of a dent because, although these applications have substantial advantages over spreadsheets when used in repetitive collaborative enterprise tasks, these advantages are mainly realized after the model, process or report is put to use in the “production” phase (to borrow an IT term). To date most dedicated applications have been far more difficult than spreadsheets for the average business user to use in the design and test phases. To convince people to switch to their dedicated application, a vendor must offer an alternative that lets users model, create reports, collect data and create dedicated data stores as easily as they can do it in a desktop spreadsheet. Spreadsheets are seductive for most business users because, even with a minimum amount of training and experience, it’s possible to create a useful model, do analysis and create reports. Individuals can immediately translate what they know about their business or how to present their ideas into a form and format that makes sense to them. They can update and modify it whenever they wish, and the change will occur instantly. For these business users ease of use and control trump putting up with the issues that routinely occur when spreadsheets are used in collaborative enterprise processes. Moreover, it’s hard to persuade “spreadsheet jockeys” who have strong command of spreadsheet features and functions that they should start over and learn how to use a new application. Those who have spent their careers working with spreadsheets often find it difficult to work with formal applications because those applications work in ways that aren’t intuitive. Personally these diehards may resist because not having control over analyses and data would diminish their standing in the organization. Nevertheless, there are compelling reasons for vendors to keep trying to devise dedicated software that an average business user would find as easy and intuitive as a desktop spreadsheet in the design, test and update phases. Such an application would eliminate the single most important obstacle that keeps organizations from switching. The disadvantages of using spreadsheets are clear and measurable. One of the most significant is that spreadsheets can waste large amounts of time when used inappropriately. After more than a few people become involved and a file is used and reused, issues begin to mount such as errors in data or formulas, broken links and inconsistencies. Changes to even moderately complex models are time-consuming. Soon, much of the time spent with the file is devoted to finding the sources of errors and discrepancies and fixing the mistakes. Our research confirms this. When it comes to important spreadsheets that people use over and over again to collaborate with colleagues, on average people spend about 12 hours per month consolidating, modifying and correcting the spreadsheets. That’s about a day and a half per month – or five to 10 percent of their time – just maintaining these spreadsheets. Business applications vendors started to address business users’ reluctance to use their software more than a decade ago when they began to use Microsoft Excel as the user interface (UI). This provides a familiar environment for those who mainly need to enter data or want to do some “sandbox” modeling and analysis. Since the software behind the UI is a program that uses some sort of database, companies avoid the issues that almost arise when spreadsheets are used in enterprise applications. There also are products that address some of the inherent issues with such as the difficulty of consolidating data from multiple individual spreadsheets as well as keeping data consistent. Visualization software, a relatively new category, greatly simplifies the process of collecting data from one or more enterprise data sources and creating reports and dashboards. As the enterprise software applications business evolves to meet the needs of a new generation of users, as I mentioned recently, it’s imperative that vendors find a way to provide users with software that is a real alternative to desktop spreadsheets. By this I mean enterprise software that provides business users with the same ability to model, create reports and work with data the way they do in a desktop spreadsheet as well as update and modify these by themselves without any IT resources. At the same time, this software has to eliminate all of the problems that are inevitable when spreadsheets are used. Only at that point will a dedicated application become a real alternative to using a spreadsheet for a key business process. Regards, Robert Kugel – SVP Research

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Integrated Business Planning Is More Effective

Posted by Ventana Research on Feb 24, 2015 8:03:03 PM

Ventana Research recently released the results of our Next-Generation Business Planning benchmark research. Business planning encompasses all of the forward-looking activities in which companies routinely engage. The research examined 11 of the most common types of enterprise planning: capital, demand, marketing, project, sales and operations, strategic, supply chain and workforce planning, as well as sales forecasting and corporate and IT budgeting. We also aggregated the results to draw general conclusions.

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Recurring Revenue: An Increasingly Important Business Model

Posted by Ventana Research on Feb 19, 2015 4:47:53 AM

Recurring revenue is a term applied to business models that involve three types of selling and billing structures: a one-time transaction plus a periodic service charge; subscription-based services involving periodic charges; or a contractual relationship that charges periodically for goods and services. Telecommunications was the first major industry to use it, but recently the model has gained popularity in others. It is a major trend in information technology as an increasing number of companies offer software and hardware technology accessed as a service through cloud computing. Recurring revenue also has been transforming the entertainment business, as customers subscribe to rent movies, music and other creative digital products instead of owning them; this is part of the so-called “sharing economy” whose social impacts are wide-ranging.

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Giving Tax Departments More Corporate Clout

Posted by Ventana Research on Feb 17, 2015 8:03:45 PM

One of the issues in handling the tax function in business, especially where it involves direct (income) taxes, is the technical expertise required. At the more senior levels, practitioners must be knowledgeable about accounting and tax law. In multinational corporations, understanding differences between accounting and legal structures in various localities and their effects on tax liabilities requires more knowledge. Yet when I began to study the structures of corporate tax departments, I was struck by the scarcity of senior-level titles in them. This may reflect the low profile of the department in most companies and the tactical nature of the work it has performed. Advances in information technology have the potential to automate most of the manual tasks tax professionals perform. This increase in efficiency will enable tax departments to fill a more strategic, important role in the companies they serve.

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Giving Tax Departments More Corporate Clout

Posted by Ventana Research on Feb 17, 2015 7:58:00 PM

One of the issues in handling the tax function in business, especially where it involves direct (income) taxes, is the technical expertise required. At the more senior levels, practitioners must be knowledgeable about accounting and tax law. In multinational corporations, understanding differences between accounting and legal structures in various localities and their effects on tax liabilities requires more knowledge. Yet when I began to study the structures of corporate tax departments, I was struck by the scarcity of senior-level titles in them. This may reflect the low profile of the department in most companies and the tactical nature of the work it has performed. Advances in information technology have the potential to automate most of the manual tasks tax professionals perform. This increase in efficiency will enable tax departments to fill a more strategic, important role in the companies they serve.

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Making Business Planning More Accurate, Effective and Useful

Posted by Robert Kugel on Feb 5, 2015 8:36:27 PM

Business planning includes all of the forward-looking activities in which companies routinely engage. Companies do a great deal of planning. They plan sales and determine what and how they will produce products or deliver services. They plan the head count they’ll need and how to organize distribution and their supply chain. They also produce a budget, which is a financial plan. The purpose of planning is to be successful. Planning is defined as the process of creating a detailed formulation of a program of action to achieve some overall objective. But it’s more than that. The process of planning involves discussions about objectives and the resources and tactics that people need to achieve them. When it’s done right, planning is the best way to get everyone onto the same page to ensure that the company is well organized in executing strategy. Setting and to a greater degree changing the company’s course require coordination. Being well coordinated in this case means being able to understanding the impact of the policies and actions in your part of the company on the rest of the company.

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Research Agenda: The Office of Finance in 2015

Posted by Robert Kugel on Feb 3, 2015 9:37:28 PM

Last year Ventana Research released our Office of Finance benchmark research. One of the objectives of the project was to assess organizations’ progress in achieving “finance transformation.” This term denotes shifting the focus of CFOs and finance departments from transaction processing toward more strategic, higher-value functions. In the research nine out of 10 participants said that it’s important or very important for the department to take a more strategic role. This objective is both longstanding and elusive. It has been part of the conversation in financial management circles since the 1990s and has been a primary focus of my research practice since its inception 12 years ago. Yet our recent research shows that most finance organizations struggle with the basics and few companies are even close to achieving this desired transformation.

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Office of Finance Research Demonstrates Importance of Using Effective Financial Software

Posted by Ventana Research on Feb 2, 2015 8:27:23 AM

Our recently published Office of Finance benchmark research assesses a broad set of functions and capabilities of finance organizations. We asked research participants to identify the most important issues for a finance department to address in a dozen functional areas: accounting, budgeting, cost accounting, customer profitability management, external financial reporting, financial analysis, financial governance and internal audit, management accounting, product profitability management, strategic and long-range planning, tax management and treasury and cash management. Among the key findings is this: Not using the most capable software is an underlying cause, often unrecognized, of process, analytics and data issues.

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Make Automating the Office of Finance and Accounting a Priority

Posted by Ventana Research on Jan 27, 2015 7:50:29 AM

Our recent Office of Finance benchmark research demonstrates the importance of using automation to execute finance department functions. Information technology systems do at least two things very well that make better use of people’s time, and both of them can substantially improve organizational performance. First, they eliminate the need for people to do repetitive tasks, which frees them to spend time on more valuable work that requires judgment and skill. IT systems also can be programmed to focus only on relevant information while eliminating the need to get immersed in detail. The latter capability supports a “management by exception” approach, which enables executives and managers to better allocate how and where they spend their time.

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Deciding When to Replace ERP Is Complicated

Posted by Ventana Research on Dec 19, 2014 9:09:36 AM

A company’s enterprise resource planning (ERP) system is one of the pillars of its record-keeping and process management architecture and is central to many of its critical functions. It is the heart of its accounting and financial record-keeping processes. In manufacturing and distribution, ERP manages inventory and some elements of logistics. Companies also may use it to handle core human resources record-keeping and to store product and customer master data. Often, companies bolt other functionality onto the core ERP system or extensively modify it to address limitations in the system. Because of the breadth of its functionality, those unfamiliar with the details of information technology may perceive ERP as a black box that controls just about everything. So it’s not surprising that when a company’s information technology becomes more of an issue than a solution, many assume that the ERP system needs replacing. This may or may not be true, so it’s important for a company to assess its existing ERP system in the context of its business requirements (as they are now and will be in the immediate future) and evaluate options for it.

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SYSPRO Offers Supply Chain Visibility for Midsize Companies

Posted by Ventana Research on Dec 16, 2014 10:06:47 PM

SYSPRO is a 35-year-old ERP vendor that focuses on products for midsize companies, particularly those in manufacturing and distribution. In manufacturing, SYSPRO supports make, configure and assemble, engineer to order, make to stock and job shop environments. The company attempts to differentiate itself through vertical specialization and its years of ongoing development, which can reduce the need for customization and cut the cost of initial and ongoing configuration to suit the needs of companies in these industries, thereby cutting the total cost of ownership. Worldwide its targeted verticals include electronics, food, machinery and equipment and medical devices; in the United States, it adds automotive parts (original equipment and after-market) and energy.

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Intacct Improves Cloud of Collaboration, Payments and Reporting

Posted by Ventana Research on Nov 18, 2014 8:34:48 AM

Financial management software provider Intacct recently held its seventh annual user conference. In addition to a long list of enhancements in current and upcoming product releases, the company used the occasion to announce Intacct Collaborate, a capability built into its software that enables finance and accounting organizations to work together to answer questions or resolve issues while performing a process. Our benchmark research shows that collaboration ranks second in importance behind analytics as a technology innovation priority. Collaborative capabilities in software will multiply over the next several years as software transitions from the rigid constructs established in the client/server days, which force users to adapt to the limitations of the software, to fluid and dynamic designs that mold themselves around the needs of the user. A while back, I noted that finance and accounting organizations need collaborative capabilities although they might not realize it. At the same time, finance departments have their own requirements for these systems that reflect the character and constraints of the work they do. This means narrowcast, not broadcast, feeds (Finance doesn’t want a Facebook or Twitter experience because it considers much of what it does to be confidential) and in-context collaborative capabilities to simplify the working environment.

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Intacct Improves Cloud of Collaboration, Payments and Reporting

Posted by Ventana Research on Nov 18, 2014 8:25:27 AM

Financial management software provider Intacct recently held its fourth annual user conference. In addition to a long list of enhancements in current and upcoming product releases, the company used the occasion to announce Intacct Collaborate, a capability built into its software that enables finance and accounting organizations to work together to answer questions or resolve issues while performing a process. Our benchmark research shows that collaboration ranks second in importance behind analytics as a technology innovation priority. Collaborative capabilities in software will multiply over the next several years as software transitions from the rigid constructs established in the client/server days, which force users to adapt to the limitations of the software, to fluid and dynamic designs that mold themselves around the needs of the user. A while back, I noted that finance and accounting organizations need collaborative capabilities although they might not realize it. At the same time, finance departments have their own requirements for these systems that reflect the character and constraints of the work they do. This means narrowcast, not broadcast, feeds (Finance doesn’t want a Facebook or Twitter experience because it considers much of what it does to be confidential) and in-context collaborative capabilities to simplify the working environment.

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Technology Can Enhance Performance in Finance Departments

Posted by Ventana Research on Oct 29, 2014 9:40:42 AM

Finance transformation” refers to a longstanding objective: shifting the focus of CFOs and finance departments from transaction processing to more strategic, higher-value functions. Our upcoming Office of Finance benchmark research confirms that most of organizations want their finance department to take a more strategic role in management of the company: nine in 10 participants said that it’s important or very important. (We are using “finance” in its broadest sense, including, for example, accounting, corporate finance, financial planning and analysis, treasury and tax functions.) Finance departments have the ability and at least an implicit mandate to improve business performance and enable a corporation to execute strategy more effectively. Yet the research shows that becoming strategic is a work in progress. Most departments handle the basics well, but half fall short in areas that can contribute significantly to the performance of their company. More than three-fourths of participants said they perform accounting, external financial reporting, financial analysis, budgeting and management accounting well or very well. But only half said that about their ability to do product and customer profitability management, strategic and long-range planning and business development.

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Data-Driven Business Processes Essential for Optimization

Posted by Ventana Research on Oct 16, 2014 10:30:56 AM

When applying information technology to drive better business performance, companies and the systems integrators that assist them often underestimate the importance of organizing data management around processes. For example, companies that do not execute their quote-to-cash cycle as an end-to-end process often experience a related set of issues in their sales, marketing, operations, accounting and finance functions that stem from entering the same data into multiple systems. The inability to automate passing of data from one functional group to the next forces people to spend time re-entering data and leads to fragmented and disconnected data stores. The absence of a single authoritative data source also creates conflicts about whose numbers are “right.” Even when the actual figures recorded are identical, discrepancies can crop up because of issues in synchronization and data definition. Lacking an authoritative source, organizations may need to check for and resolve errors and inconsistencies between systems to ensure, for example, that what customers purchased was what they received and were billed for. The negative impact of this lack of automation is multiplied when transactions are complex or involve contracts for recurring services.

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Finance Needs Better Analytics and Analytic Skills

Posted by Ventana Research on Oct 13, 2014 11:58:44 PM

Finance and accounting departments are staffed with numbers-oriented, naturally analytical people. Strong analytic skills are essential if a finance department is to deliver deep insights into performance and visibility into emerging opportunities and challenges. The conclusions of analyses enable fast, fully informed business decisions by executives and managers. Conversely, flawed analyses undermine the performance of a company. So it was good news that in our Office of Finance benchmark research 62 percent of participants rated the analytical skills of their finance organization as above average or excellent.

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Infor Advances Business Computing

Posted by Ventana Research on Sep 29, 2014 6:16:03 AM

Infor recently held its annual Inforum user group meeting, along with a series of sessions with analysts. The $2 billion business software company has products in the major categories of ERP (including enterprise financial management), human capital management, customer relationship management and performance management among others.

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Oracle Financials is in the Cloud

Posted by Ventana Research on Sep 22, 2014 9:31:43 AM

Like most vendors of on-premises ERP and financial management software, in moving to the cloud Oracle has focused on developing for existing and potential customers the option of multitenant software as a service (SaaS). (I’m using the term “ERP” in its most expansive sense, to include such systems employed by all types of companies for accounting and financial management rather than only systems that are used by manufacturing and distribution companies.) Oracle’s ERP Cloud Service includes Fusion Financials as well as planning and budgeting, risk and controls management, procurement and sourcing, inventory and cost management, product master data management, and project portfolio management. Although to date our benchmark research has consistently found that a large majority of finance departments do not prefer to deploy software in the cloud, we also observe the balance shifting in this direction. SaaS vendors that address finance department requirements have demonstrated faster revenue growth than those that offer products only on-premises. Like other vendors Oracle must establish itself as a credible vendor of cloud ERP and financial management services to be well positioned as market demand shifts further in that direction. The company made sizable investments in acquiring ERP and financial management software in the 2000s (notably PeopleSoft – which included JD Edwards – and Hyperion), and the investments have paid off as many companies have opted to keep their existing systems (and continue to pay maintenance) rather than replace them. Our Office of Finance benchmark research finds that over the past decade the average age of ERP systems in use has increased to 6.4 years from 5.1 years. The longevity of these systems is partly the result of the slow pace of innovation in underlying technologies used for business computing. Even so, modest year-by-year changes are adding up to make replacement a more attractive option while negative attitudes toward the cloud are dissipating. To retain its installed base, it’s important for any established vendor to have solid customer references and the ability to make sales of cloud products as demand for ERP and financial management software in the cloud increases.

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FinancialForce Brings More Mobile, Social and Planning Technology to Market

Posted by Ventana Research on Sep 17, 2014 9:26:25 AM

FinancialForce’s 2014 summer release incorporates improvements in mobile and collaboration features and provides enhancements to the planning dimension of its professional services automation (PSA) suite. In the last couple of releases the company emphasized expansion in the functional capabilities of its ERP suite, as I noted, focusing on human capital management and professional services automation as well as some supply chain automation capabilities.

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What’s Next?: The Interplay of Software and Hardware with Business and Consumers

Posted by Ventana Research on Sep 11, 2014 9:49:01 AM

“What’s next?” is the perennially insistent question in information technology. One common observation about the industry holds that cycles of innovation alternate between hardware and software. New types and forms of hardware enable innovations in software that utilize the power of that hardware. These innovations create new markets, alter consumer behavior and change how work is performed. This, in turn, sets the stage for new types and forms of hardware that complement these emerging product and service markets as well as the new ways of performing work, creating products and fashioning services that they engender. For example, the emerging collection of wearable computing devices seems likely to generate a new wave of software/hardware innovation, as my colleague Mark Smith has noted. This said, I think that the idea of alternating cycles no longer applies. It would be convenient if we could assign discrete time periods to hardware dominance and software dominance, but like echoes as they fade, the reverberations are no longer as neatly synchronized as they once were. Moreover, adoption and adaptation of technology by consumers reflected in the design of work, products and services always lags – and lags in different ways, further blurring the timing of cycles.

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Tax Data Warehouses Become Essential as Governments Raise the Ante

Posted by Ventana Research on Sep 3, 2014 9:20:18 PM

I’ve written before about the increasing importance of having a solid technology base for a company’s tax function, and it’s important enough for me to revisit the topic. Tax departments are entrusted with a highly sensitive and essential task in their companies. Taxes usually are the second largest corporate expense, after salaries and wages. Failure to understand this liability is expensive – either because taxes are overpaid or because of fines and interest levied for underpayment. Moreover, taxes remain a political issue, and corporations – especially larger ones – must be mindful of the reputational implications of their tax liabilities.

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Businesses Must Make Self-Service Reporting a Priority

Posted by Robert Kugel on Aug 3, 2014 9:12:30 AM

One of the charitable causes to which I devote time puts on an annual vintage car show. The Concours d’Élegance dates back to 17th century France, when wealthy aristocrats gathered with judges on a field to determine who had the best carriages and the most beautiful horsepower. Our event serves as the centerpiece of a broader mission to raise money for several charitable organizations. One of my roles is to keep track of the cars entered in the show, and in that capacity I designed an online registration system. I’ve been struck by how my experiences with a simple IT system have been a microcosm of the issues that people encounter in designing, administering and using far more sophisticated  ones. My most important take-away from this year’s event is the importance of self-service reporting. I suspect that most senior corporate executives – especially those in Finance – fail to appreciate the value of self-service reporting. It frees up the considerable resources organizations collectively waste on unproductive work, and it increases responsiveness and agility of the company as a whole.

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NetSuite Rides Wave of Cloud ERP Adoption

Posted by Robert Kugel on Jul 29, 2014 11:52:54 PM

Like other vendors of cloud-based ERP software, NetSuite offers the key benefits of software as a service (SaaS): a smaller upfront investment, faster time to value and potentially lower operating costs. Beyond that NetSuite’s essential point of competitive differentiation from is broad functionality beyond financial management, including capabilities for customer relationship management (CRM), professional services automation (PSA) and human capital management (HCM). These components make it easier for businesses to manage processes from end to end (such as quote- or order-to-cash) as well as to have transactions and business data available in a single system in consistent forms and synchronized. This in turn facilitates real-time reporting, dashboards and the use of analytics that integrate a wider set of functional data. Midsize companies are most likely to benefit from this integration because typically they have smaller, less sophisticated IT staffs than larger ones. A side benefit of having a single, integrated data source is improvement of situational awareness and visibility for executives and managers. It also enables organizations to reduce their use of spreadsheets for stitching together processes, doing routine analyses and reporting. These sorts of activities waste valuable time and reduce an organization’s agility.

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Tagetik Advances Disclosure Management for Office of Finance

Posted by Robert Kugel on Jul 16, 2014 9:05:58 AM

Tagetik provides financial performance management software. One particularly useful aspect of its suite is the Collaborative Disclosure Management (CDM). CDM addresses an important need in finance departments, which routinely generate highly formatted documents that combine words and numbers. Often these documents are assembled by contributors outside of the finance department; human resources, facilities, legal and corporate groups are the most common. The data used in these reports almost always come from multiple sources – not just enterprise systems such as ERP and financial consolidation software but also individual spreadsheets and databases that collect and store nonfinancial data (such as information about leased facilities, executive compensation, fixed assets, acquisitions and corporate actions). Until recently, these reports were almost always cobbled together manually – a painstaking process made even more time-consuming by the need to double-check the documents for accuracy and consistency. The adoption of a more automated approach was driven by the requirement imposed several years ago by United States Securities and Exchange Commission (SEC) that companies tag their required periodic disclosure filings using eXtensible Business Reporting Language (XBRL), which I have written about. This mandate created a tipping point in the workload, making the manual approach infeasible for a large number of companies and motivating them to adopt tools to automate the process. Although disclosure filings were the initial impetus to acquire collaborative disclosure management software, companies have found it useful for generating a range of formatted periodic reports that combine text and data, including board books (internal documents for senior executives and members of the board of directors), highly formatted periodic internal reports and filings with nonfinancial regulators or lien holders.

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IBM Advances Business Experience in Using Advanced Analytics

Posted by Robert Kugel on Jul 3, 2014 9:13:32 PM

The developed world has an embarrassment of riches when it comes to information technology. Individuals walk around with far more computing power and data storage in their pockets than was required to send men to the moon. People routinely hold on their laps what would have been considered a supercomputer a generation ago. There is a wealth of information available on the Web. And the costs of these information assets are a tiny fraction of what they were decades ago. Consumer products have been at the forefront in utilizing information technology capabilities. The list of innovations is staggering. The “smart” phone is positively brilliant. Games are now a far bigger business than motion pictures.

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Longview Tax Software Helps Tax Departments Be More Strategic

Posted by Robert Kugel on Jun 22, 2014 10:40:32 PM

Longview Solutions has a longstanding presence in the financial performance management (FPM) software market and was rated a Hot vendor in our most recent FPM Value Index. Several years ago it began offering a tax provision and planning application. I think it’s worthwhile to focus on the tax category because it’s less well known than others in finance and is an engine of growth for Longview. We expect larger corporations increasingly to adopt software to manage direct (income) taxes to improve the quality and efficiency of what today in most companies is an inefficient, spreadsheet-driven process.

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SAP Sets Course for Simple ERP

Posted by Robert Kugel on Jun 9, 2014 10:35:37 AM

The keynote theme at this year’s Sapphire conference in Orlando was Simple. Top executives from SAP, a software company associated with complexity, stated and restated that its future direction is to simplify all aspects of its products and the ways customers interact with them and the company itself. SAP’s longstanding and commendable aspiration to thoroughness in its software will be giving way to an emphasis on elegance in its engineering. This objective is more than admirable – SAP’s future competitiveness depends on it. Changing the fundamental architecture of SAP’s offerings – already well under way with HANA – is absolutely necessary. The design underpinnings in SAP’s ERP applications, for example, have been shaped by technology limitations that have disappeared, as Dr. Hasso Plattner, one of the company’s founders, pointed out in his keynote. However, the relevant issue facing SAP and the software market is how far the company can progress toward this goal  and how fast.

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Finance Analytics Require Training to Improve

Posted by Robert Kugel on Jun 3, 2014 9:35:25 AM

Analytics has long been a core discipline of Finance, applied to analysis of balance sheets, income statements and cash-flow statements. However, as I’ve noted, most finance departments have not kept up with recent advances. Our recent research in finance analytics shows that few organizations are realizing the potential of more advanced analytic methods and tools such as predictive analytics and driver-based modeling. One reason for this sluggishness is that they have not looked past yesterday’s requirements to see what possible. Another is that they are distracted by the difficulties they face in simply doing tried-and-true analysis, which is the result of difficulties in accessing the necessary data and inadequate tools. A third reason is that people receive too little training in the application of analytics to business and the use of more advanced analytic tools and methods.

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Epicor Faces a Challenging Future

Posted by Robert Kugel on Jun 2, 2014 9:46:32 AM

Epicor used its recent user group conference to explain its strategic direction and product roadmap. The company is the result of multiple mergers of business software corporations over the past 15 years; its target customers are midsize companies and midsize divisions of larger organizations. Its most significant products are Epicor (ERP software aimed mainly at manufacturing and distribution companies) and Activant Solutions (software for small and midsize retailers, including a point-of-sale system). The company also has software that manages CRM, HR and human capital and supply chains,  and provides financial performance management (FPM) and governance, risk and compliance (GRC) capabilities. These components of the software suites are adequate for the needs of many of the company’s target customers and are not intended as stand-alone applications.

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Infor at the End of the Beginning

Posted by Robert Kugel on May 3, 2014 10:54:41 PM

From my perspective, Infor’s strategy to accelerate revenue growth is to offer companies more innovation and a lower and more predictable cost of ownership than its rivals in the business software market; its products include the major categories of ERP, human resources and financial performance management. It aims to innovate by focusing on improving the user experience and to lower costs by redesigning its software architecture. The innovation stems from a fresh approach to designing interactions between users and business software: simplifying it and providing a more modern user experience that people have grown accustomed to in their personal software. The better cost-effectiveness rests on designing its software to reduce the expense of integrating and customizing it. One element of this is creating richer functionality for narrowly segmented micro-verticals. Another is offering cloud-based versions built on less expensive open source infrastructure and third-party commodity services. The software markets that Infor serves are mature and offer limited growth. So to be successful the company must increase both its market share and its share of a company’s IT spend (capturing internal IT spending and outlays to third-party consultants and systems integrators). To prove that the company’s strategy is working will require sustained organic growth (excluding new acquisitions) in revenues.

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Finance Analytics Requires Data Quality

Posted by Robert Kugel on Apr 22, 2014 9:48:59 AM

Our research consistently finds that data issues are a root cause of many problems encountered by modern corporations. One of the main causes of bad data is a lack of data stewardship – too often, nobody is responsible for taking care of data. Fixing inaccurate data is tedious, but creating IT environments that build quality into data is far from glamorous, so these sorts of projects are rarely demanded and funded. The magnitude of the problem grows with the company: Big companies have more data and bigger issues with it than midsize ones. But companies of all sizes ignore this at their peril: Data quality, which includes accuracy, timeliness, relevance and consistency, has a profound impact on the quality of work done, especially in analytics where the value of even brilliantly conceived models is degraded when the data that drives that model is inaccurate, inconsistent or not timely. That’s a key finding of our finance analytics benchmark research.

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Requirements for Becoming a Strategic Chief Risk Officer

Posted by Robert Kugel on Apr 17, 2014 9:55:14 AM

The proliferation of chief “something” officer (CxO) titles over the past decades recognizes that there’s value in having a single individual focused on a specific critical problem. A CxO position can be strategic or it can be the ultimate middle management role, with far more responsibilities than authority. Many of those handed such a title find that it’s the latter. This may be because the organization that created the title is unwilling to invest the necessary powers and portfolio of responsibilities to make it strategic – a case of institutional inertia. Or it may be that the individual given the CxO title doesn’t have the skills or temperament to be a “chief” in a strategic sense.

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Finance Departments Still Lag in Using Advanced Analytics

Posted by Robert Kugel on Apr 11, 2014 9:54:39 AM

Business computing has undergone a quiet revolution over the past two decades. As a result of having added, one-by-one, applications that automate all sorts of business processes, organizations now collect data from a wider and deeper array of sources than ever before. Advances in the tools for analyzing and reporting the data from such systems have made it possible to assess financial performance, process quality, operational status, risk and even governance and compliance in every aspect of a business. Against this background, however, our recently released benchmark research finds that finance organizations are slow to make use of the broader range of data and apply advanced analytics to it.

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Anaplan Springs Forward with Winter Release

Posted by Robert Kugel on Apr 4, 2014 8:36:44 AM

Anaplan, a provider of cloud-based business planning software for sales, operations, and finance and administration departments, recently implemented its new Winter ’14 Release for customers. This release builds on my colleagues analysis on their innovation in business modeling and planning in 2013. Anaplan’s primary objective is to give companies a workable alternative to spreadsheets for business planning. It is a field in which opportunity exists. Our benchmark research on this topic finds that a majority of companies continue to use spreadsheets for their planning activities. Almost all (83%) operations departments use spreadsheets for their plans, as do 60 percent of sales and marketing units. Yet the same research shows that satisfaction with spreadsheets as a planning tool is considerably lower than satisfaction with dedicated planning applications. But despite general agreement in companies that the planning process is broken and spreadsheets are a problem, companies seem reluctant to break the bad habit of using spreadsheets. This conclusion suggests that either switching to dedicated software hasn’t been easy enough or that the results of doing it have not been compelling enough to motivate change. Anaplan intends to address both of these issues.

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Cloud Computing is More Than Multitenancy

Posted by Robert Kugel on Apr 2, 2014 9:22:01 AM

There’s a growing realization that the multitenant approach to the cloud isn’t the only option that companies should weigh in deciding between deploying software on-premises and in the cloud. That some people describe the multitenancy approach as “the real cloud” reflects the contentious nature of some technical debates, especially those that occur early in the evolution of a new technology. Multitenancy does have advantages that confer cost savings, and these have been important in the first stages of cloud adoption. However, we predict that single-tenant structures will rapidly gain in importance as corporations mature in their use of cloud computing, especially with respect to how they manage their ERP systems, as I have written. Corporations are increasingly adopting Web-based applications and moving their computing environments to a hybrid model that combines a combination of on-premises and cloud deployment options (private, community and public; single- and multitenant; or managed cloud). The right choice depends on the needs of the company and the ability of vendors to provide services that match their requirements.

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The Virtues of Automating Reconciliation

Posted by Robert Kugel on Mar 29, 2014 8:40:50 AM

Reconciling accounts at the end of a period is one of those mundane finance department tasks that are ripe for automation. Reconciliation is the process of comparing account data (at the balance or item level) that exists either in two accounting systems or in an accounting system and somewhere else (such as in a spreadsheet or on paper). The purpose of the reconciling process is to identify things that don’t match (as they must in double-entry bookkeeping systems) and then assess the nature and causes of the variances. This is followed by making adjustments or corrections to ensure that the information in a company’s books is accurate. Most of the time, reconciliation is a matter of good housekeeping. The process identifies errors and omissions in the accounting process, including invalid journal postings and duplicate accounting entries, so they can be corrected. Reconciliation also is an important line of defense against fraud, since inconsistencies may be a sign of such activity.

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ERP’s Future Is Hybrid Cloud

Posted by Robert Kugel on Mar 20, 2014 9:56:42 PM

Information technologists are fond of predictions in which the next big thing quickly and entirely renders the existing thing so completely obsolete that only troglodytes would cling to such outmoded technology. While this vision of IT progress may satisfy the egos of technologists, it rarely reflects reality. Mainframes didn’t disappear, for example. Although they long ago lost their dominant position, many remain key parts of corporate computing infrastructures. The IT landscape is a hybrid because technology users have varying requirements and constraints that can lengthen replacement cycles. Most business users of IT pay little attention to the religious wars of technologists because they take a pragmatic approach: They use technology to achieve business ends. This scenario is repeating itself in clamor about another corporate mainstay, the ERP system, which advocates claim will soon be redeployed en masse to cloud computing. That, too, won’t happen. I believe that ERP will increasingly become cloud-based, but it will be in hybrid cloud environments.

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Microsoft Shows Off More than ERP with Dynamics

Posted by Robert Kugel on Mar 12, 2014 1:30:04 PM

Convergence is the Microsoft Dynamics business software user group’s meeting. Dynamics’ core applications are mainly in the accounting and ERP category, descendants of products Microsoft acquired: Great Plains (now GP), Solomon (SL), Navision (NAV) and Damgaard’s Axapta (AX), to which Microsoft has added its own CRM application. It has been more than a decade since the acquisitions of Great Plains (which itself had already purchased Solomon Software), and Navision, Damgaard and the software applications family has evolved steadily if slowly since then. More recently, Microsoft has added cloud services that simplify and improve the connection between remote users and the on-premises core systems, as well as integration with Office365.

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Building a Better Business Case for Buying Software

Posted by Robert Kugel on Feb 27, 2014 8:59:18 AM

When it comes to making a business case for software investments, many people fail to recognize that the case itself is just one part of what amounts to an internal sales and marketing effort that they must perform well to be successful. Focusing only on the numbers and assumptions in a spreadsheet is not enough. Making a successful business case requires an understanding of the audience’s perspective and motivations. Since the individuals who will review the business case may not be sufficiently aware of the issues that are behind it and their seriousness, it may be necessary to begin an awareness-building program before presenting the business case. And because the benefits of software investments can be difficult to quantify, executive sponsors are useful in achieving acceptance of these calculations. Unfortunately, many business cases founder because proponents do not realize the importance of taking a sales and marketing approach.

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FinancialForce Broadens Its Reach with ERP and More

Posted by Robert Kugel on Feb 26, 2014 8:12:35 AM

FinancialForce recently introduced FinancialForce ERP, a family of cloud-based software designed to support a variety of customer-centric businesses such as professional services organizations or companies that specialize in business and industrial distribution. Many of these types of businesses are midsize or small (having 50 to 1,000 employees) and can benefit from the integration of FinancialForce’s accounting, professional services automation, human capital management (HCM) and supply chain management (SCM) software. The company added the last two capabilities at the end of 2013 with the acquisitions of Vana Workforce and Less Software, respectively, which I commented  on. Like FinancialForce’s, their software runs on the Salesforce1 platform, which means that integration of these elements was straightforward. It also enables companies that use or are planning to use salesforce.com for sales and customer service to simplify integration of those with the operational and back-office software, by enabling single sign-on, end-to-end process management and a single data source for reporting and analysis. This integration can significantly reduce or even eliminate the need to re-enter information into systems or to use spreadsheets, documents and email to manage processes. With all of the data available in a single system, creating reports and automating their distribution becomes easier. All of this, in turn, should cut the amount of time and effort spent on administrative and clerical functions and enhance the productivity of the organization.

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Five Priorities for the Office of Finance in 2014

Posted by Robert Kugel on Feb 20, 2014 1:35:14 AM

A core objective of my research practice and agenda is to help the Office of Finance improve its performance by better utilizing information technology. As we kick off 2014, I see five initiatives that CFOs and controllers should adopt to improve their execution of core finance functions and free up time to concentrate on increasing their department’s strategic value. Finance organizations – especially those that need to improve performance – usually find it difficult to find the resources to invest in increasing their strategic value. However, any of the first three initiatives mentioned below will enable them to operate more efficiently as well as improve performance. These initiatives have been central to my focus for the past decade. The final two are relatively new and reflect the evolution of technology to enable finance departments to deliver better results. Every finance organization should adopt at least one of these five as a priority this year.

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The Challenge of Making ERP Systems More Configurable

Posted by Robert Kugel on Jan 31, 2014 9:43:58 AM

In the wake of the past year’s usual crop of failed ERP implementations, I’ve read a couple of blogs that bemoan the fact that ERP systems are not nearly as user-friendly or intuitive as the mobile apps that everyone loves. I’ve complained about this aspect of ERP, and our research confirms that ERP systems are viewed as cumbersome: Just one in five companies (21%) said it is easy to make changes to ERP systems while one-third (33%) said making changes is difficult or very difficult. Yet as with many such technology topics, addressing the difficulty in working with ERP systems is not as straightforward as one might hope. ERP software vendors must make it easier, less expensive and less risky for customers to adapt the systems they buy to their changing business needs. To do this, vendors must design products to be more configurable. The goal should be that organizations can make changes and add new capabilities to their ERP system in far less time than it takes today and without having to engage outside consultants.

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Boardwalktech Addresses Spreadsheet Woes in Business

Posted by Robert Kugel on Jan 15, 2014 10:16:28 AM

Our benchmark research on enterprise spreadsheets explores the pitfalls that await companies that use desktop spreadsheets such as Microsoft Excel in repetitive, collaborative enterprise-wide processes. Because people are so familiar with Excel and therefore are able to quickly transform their finance or business expertise into a workable spreadsheet for modeling, analysis and reporting, desktop spreadsheets became the default choice. Individuals and organizations resist giving up their spreadsheets, so software vendors have come up with adaptations that embrace and extend their use. I’ve long advocated finding user-friendly spreadsheet alternatives.

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Opportunity for the Office of Finance in 2014

Posted by Robert Kugel on Jan 13, 2014 8:22:59 AM

Senior finance executives and finance organizations that want to improve their performance must recognize that technology is a key tool for doing high-quality work. To test this premise, imagine how smoothly your company would operate if all of its finance and administrative software and hardware were 25 years old. In almost all cases the company wouldn’t be able to compete at all or would be at a substantial disadvantage. Having the latest technology isn’t always necessary, but even though software doesn’t wear out in a physical sense, it has a useful life span, at the end of which it needs replacement. As an example, late in 2013 a major U.K. bank experienced two system-wide failures in rapid succession caused by its decades-old mainframe systems; these breakdowns followed a similarly costly failure in 2012. For years the cost and risk of replacing these legacy systems kept management from taking the plunge. What they didn’t consider were the cost and risk associated with keeping the existing systems going. Our new research agenda for the Office of Finance attempts to find a balance between the leading edge and the mainstream that will help businesses find practical solutions.

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IBM Integrates Risk Management for Financial Services

Posted by Robert Kugel on Dec 18, 2013 9:47:56 AM

Integrated risk management (IRM) was a major theme at IBM’s recent Smarter Risk Management analyst summit in London. In the market context, IBM sees this topic as a means to differentiate its product and messaging from those of its competitors. IRM includes cloud-based offerings in operational risk analytics, IT risk analytics and financial crimes management designed for financial institutions and draws on component elements of software that IBM acquired over the past five years, notably from Algorithmics for risk-aware business decisions, Open Pages for compliance management, SPSS for sophisticated analytics, Cognos for reports, dashboards and scorecards, and Tivoli for managing all of this in a Web environment. Putting its software in the cloud enables IBM to streamline integration and maintenance, offer more flexible deployment and consumption options and potentially lower the total cost of ownership.

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FinancialForce.com Expands into Human Capital and Supply Chain Management

Posted by Robert Kugel on Nov 28, 2013 6:38:04 AM

FinancialForce.com, a provider of cloud-based financial applications, recently announced two pending acquisitions. One is Vana Workforce, which makes a human capital management (HCM) application aimed at small to midsize companies. The other is LessSoftware, a supplier of Web-based supply chain management (SCM) applications. The acquisitions are part of FinancialForce’s strategy to build a broad suite of applications that run on salesforce.com’s Force.com platform. The three companies already have joint customers, so they build on established use cases and relationships. FinancialForce.com itself is jointly owned by salesforce.com and Netherlands-based Unit 4.

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