Robert Kugel's Analyst Perspectives

CODA Financials Has a Flexible Approach to ERP

Posted by Robert Kugel on Jul 16, 2012 10:43:23 AM

CODA’s Financials has a specific target market, from companies in the upper half of the midsize range to the lower end of the large range (that is, companies with 500 to 2,500 employees) in services (not manufacturing) businesses. CODA, the company, started in the 1990s and differentiated itself by designing ERP and accounting software to run on a multidimensional database rather than the more common relational databases of the day. This has proven to be an elegant approach, because businesses inherently  have multiple perspectives from which to view and describe their operations. Some of the most common dimensions include products, customers, corporate business units, time and currency. Each of these can be defined in a hierarchy: Individual stock-keeping units are part of products, which are part of product families, which may be part of a specific brand. Days are parts of weeks or months, which are part of quarters, which are part of years. If the multidimensional database had been available in the 15th century when Fra Luca Pacioli codified double-entry bookkeeping, I’m certain the friar would have kept his books in this form.

The main advantage of keeping a company’s books using a multidimensional database is the system’s flexibility. In our ERP research only 6 percent of companies said that altering their ERP system to support process changes is easy. Half said doing that is manageable, and somewhat fewer (44%) said it’s difficult. As businesses evolve over time,  it’s often easier (and therefore cheaper) to reflect these changes in a multidimensional structure than a relational one. For certain operations, multidimensional databases provide ease of computation, as, for example, to create real-time financial or management reports. And it can be far easier to consolidate and close the books at the end of a period with a multidimensional database, especially for companies in CODA’s target market, which may have simpler corporate structures than bigger ones.

CODA can be especially useful in handling record-keeping tasks in organizations that use a larger vendor’s ERP system as their main accounting and financial application. For example, a major asset management company uses CODA for funds accounting and reporting but another application for its general accounting requirements. In this case, CODA’s multidimensional structure makes it easier to handle the business’s multiple currency requirements. When I first heard this, I scratched my head, since multiple currency capabilities are part of any system’s basic features these days. However, the company’s accounting involves detailed and complex treatment of these transactions, which it can do more easily in CODA Financials. It also can facilitate management of the legal entity aspects of the accounting process, thereby streamlining calculation of taxes owed and limiting the chances of errors in this process.

CODA was acquired in 2008 by Unit4, a Netherlands-based company. In 2009 Unit4 partnered with to offer FinancialForce, a single-ledger financial management software based on CODA that runs in the cloud on, the platform. Companies can use stand-alone components of the financial software in the cloud to securely manage and collect data around specific sales-related processes such as managing orders; the data is then pushed to their main ERP system, which may be on-premises, or they can have a full financial management suite in the cloud.

Unit4 also offers CODA users easy-to-deploy business analytics. Many midsize companies are challenged in deploying analytics because of their limited IT staffs and budgets. To address this issue, CODA’s business analytic applications are designed to be easy to deploy and affordable. They include common analytical requirements such as tracking budgets, managing resource utilization, profitability and break-even analysis and performance measurement, among others. Affordability stems from their purpose-built design so that they require limited modification (the company offers fixed price installation not to exceed three days) and are priced on a per-user/per-month basis. Unit4 tries to underscore their ease of deployment and affordability by referring to these offerings as “apps” that are available through an online store. Unlike smartphone apps, however, they are not immediately downloadable and require integration with existing enterprise systems.

Midsize companies face different sorts of challenges than larger or smaller ones. They have most of the same requirements as large organizations but not the scale to support complex IT systems. Over the past decade, information technology has been evolving in ways that have benefited midsize companies. As software has become more sophisticated, it has reduced the complexity of deploying and managing enterprise systems in much the same way as more sophisticated engineering has enabled cars to become more reliable and easier to maintain. I recommend that midsize companies and larger organizations with complex transaction processing requirements consider CODA when looking for a new ERP system.


Robert Kugel – SVP Research

Topics: ERP, Office of Finance, Operational Performance Management (OPM), CODA, Analytics, Business Analytics, Cloud Computing, Business Performance Management (BPM), CFO, Customer Performance Management (CPM), Financial Performance Management (FPM), FinancialForce, Sales Performance Management (SPM), financials

Robert Kugel

Written by Robert Kugel

Rob heads up the CFO and business research focusing on the intersection of information technology with the finance organization and business. The financial performance management (FPM) research agenda includes the application of IT to financial process optimization and collaborative systems; control systems and analytics; and advanced budgeting and planning. Prior to joining Ventana Research he was an equity research analyst at several firms including First Albany Corporation, Morgan Stanley, and Drexel Burnham, and a consultant with McKinsey and Company. Rob was an Institutional Investor All-American Team member and on the Wall Street Journal All-Star list. Rob has experience in aerospace and defense, banking, manufacturing and retail and consumer services. Rob earned his BA in Economics/Finance at Hampshire College, an MBA in Finance/Accounting at Columbia University, and is a CFA charter holder.