Robert Kugel's Analyst Perspectives

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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Topics: Planning, Office of Finance, Operational Performance Management (OPM), Reporting, Revenue Performance, Budgeting, Tax, Business Performance Management (BPM), Financial Performance Management (FPM), Sales Performance Management (SPM)

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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Topics: Planning, Customer Experience, Office of Finance, Reporting, Revenue Performance, Budgeting, Tax, Governance, Risk & Compliance (GRC), Business Performance Management (BPM), commission, Customer Performance Management (CPM), Financial Performance Management (FPM), Sales Performance Management (SPM)

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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Topics: Planning, Operational Performance Management (OPM), Reporting, Budgeting, Human Capital, Analytics, Business Analytics, Business Collaboration, Business Performance Management (BPM), Business Planning, Customer Performance Management (CPM), Financial Performance Management (FPM), Sales Performance Management (SPM), Supply Chain, Supply Chain Performance Management (SCPM), Workforce Performance Management (WPM), Demand Planning, Integrated Business Planning, Project Planning

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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Topics: Big Data, Planning, Predictive Analytics, Sales, Social Media, Human Capital Management, Marketing, Office of Finance, Operational Performance Management (OPM), Reporting, Budgeting, Controller, Business Analytics, Cloud Computing, In-memory, Business Performance Management (BPM), CFO, Customer Performance Management (CPM), Financial Performance Management (FPM), Sales Performance Management (SPM), Supply Chain, Workforce Performance Management (WPM), capital spending, demand management, Financial Performance Management, financial reporting, FPM, Integrated Business Planning, S&OP

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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Topics: Big Data, Planning, Predictive Analytics, Marketing, Office of Finance, Operational Performance Management (OPM), Reporting, Budgeting, Human Capital, Sales and Forecasting, Analytics, Business Analytics, Business Collaboration, Business Performance Management (BPM), Business Planning, Customer Performance Management (CPM), Financial Performance Management (FPM), Sales Performance Management (SPM), Supply Chain, Supply Chain Performance Management (SCPM), Demand Planning, Integrated Business Planning, Project Planning, S&OP

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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Topics: Big Data, Planning, Predictive Analytics, Governance, GRC, Office of Finance, Budgeting, close, end-to-end, Tax, Tax-Datawarehouse, Analytics, CIO, In-memory, Business Performance Management (BPM), CFO, CPQ, Financial Performance Management (FPM), Risk, CEO, Financial Performance Management, FPM

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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Topics: Mobile, Planning, Predictive Analytics, ERP, FP&A, Office of Finance, Reporting, Self-service, Budgeting, close, closing, computing, Controller, dashboard, Tax, Analytics, Business Intelligence, Cloud Computing, Collaboration, Business Performance Management (BPM), CFO, Data, finance, Financial Performance Management (FPM), Financial Performance Management, FPM, Microsoft Excel, Spreadsheets

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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Topics: Big Data, Mobile, Planning, ERP, FP&A, Office of Finance, Reporting, Self-service, Budgeting, close, closing, computing, Controller, dashboard, Tax, Analytics, Business Analytics, Business Collaboration, Business Intelligence, Cloud Computing, Collaboration, Business Performance Management (BPM), CFO, Data, finance, Financial Performance Management (FPM), Financial Performance Management, FPM, Microsoft Excel, Spreadsheets

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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Topics: Big Data, Mobile, Planning, Predictive Analytics, ERP, FP&A, Office of Finance, Reporting, Self-service, Budgeting, close, closing, computing, Controller, dashboard, Tax, Analytics, Business Analytics, Business Intelligence, Cloud Computing, Collaboration, Business Performance Management (BPM), CFO, Data, finance, Financial Performance Management (FPM), Tagetik, Financial Performance Management, FPM, Microsoft Excel, Spreadsheets

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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Topics: Planning, Office of Finance, Operational Performance Management (OPM), Reporting, Self-service, Budgeting, dashboard, Analytics, Business Analytics, Business Intelligence, Business Performance Management (BPM), Customer Performance Management (CPM), Data, Financial Performance Management (FPM), Information Applications (IA), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), Workforce Performance Management (WPM), Financial Performance Management, Microsoft Excel, Spreadsheets