Robert Kugel's Analyst Perspectives

Technology Enables Working Capital Optimization

Posted by Robert Kugel on May 10, 2023 3:00:00 AM

We’ve experienced an unusual, decades-long monetary policy in the developed world that emphasized interest rate repression as well as supply chain practices designed for lowest cost. This has produced a generation of chief financial officers likely unprepared to address the impact of fundamental changes now shaping a new, technology-driven approach to working capital optimization. Today’s CFOs must assess their working capital management processes and the systems that support them to balance the need to minimize the cost of working capital against customer requirements such as delivery times and order fulfillment. Technology can minimize frictions – and therefore costs – associated with managing inventories, receivables and payables balanced against customer satisfaction requirements and legal and regulatory considerations.

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Topics: Office of Finance, Enterprise Resource Planning, continuous supply chain, digital finance, Sustainability Management, Purchasing/Sourcing/Payments

OneStream Advances Generative AI to Improve Productivity

Posted by Robert Kugel on May 1, 2023 3:00:00 AM

OneStream offers a platform designed to serve the needs of accounting and financial planning and analysis organizations. The software handles financial close and consolidation, planning and budgeting, analysis and reporting. The most notable part of the company’s presentations at its annual user group meeting – Splash – was the strategy and roadmap for its two artificial intelligence initiatives, Sensible ML and Sensible GPT. The former, unveiled last year, is a platform approach to applying machine learning to business forecasting, while the latter harnesses the power of large language models such as ChatGPT to streamline the performance of almost any business process.

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Topics: Office of Finance, AI and Machine Learning, digital finance

Using Continuous Accounting to Improve Performance

Posted by Robert Kugel on Apr 26, 2023 3:00:00 AM

In 2015, I began using the term continuous accounting to call attention to technology advances that enable finance and accounting departments to improve performance. These advances have continued, making an even more compelling case for adoption of continuous accounting.

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Topics: Office of Finance, ERP and Continuous Accounting, digital finance, Purchasing/Sourcing/Payments, Consolidate/Close/Report

Reasons Your Midsize Organization Needs a Finance Technology Update

Posted by Robert Kugel on Apr 5, 2023 3:00:00 AM

The chief financial officer of a midsize organization faces a different set of challenges than those in larger or smaller enterprises. These organizations have grown to the point of requiring capabilities similar to larger businesses, but typically lack the staff or financial resources afforded to bigger organizations. The past decade of IT innovation – especially the expansion of cloud computing – has brought substantial benefits to midsize finance and accounting operations. Rapidly growing midsize organizations in particular should make investments in information technology that allow the business to scale without having to increase administrative head count, and focus resources on areas that accelerate growth, such as sales, logistics, R&D or customer support.

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Topics: Office of Finance, Business Planning, ERP and Continuous Accounting, digital finance, Consolidate/Close/Report

Now with the Miracle Ingredient AI!

Posted by Robert Kugel on Mar 30, 2023 3:00:00 AM

Early last December, just before ChatGPT became the new, bright, shiny object, The Economist magazine ran a story proclaiming that we had finally arrived at the age of boring artificial intelligence (AI). From my perspective, it’s unfortunate that didn’t last and that AI has been relegated back to the buzzword league. AI will be an increasingly important feature of business software through the end of this decade. Ventana Research asserts that by 2026, almost all vendors of software designed for finance organizations will have incorporated some AI capabilities to reduce workloads and improve performance. The same observation applies, to some significant degree, to other parts of an enterprise, so it’s important for people in operational roles to understand what AI can and cannot do. It’s also important for vendors to clearly and concretely communicate what they mean when they say, “AI-enabled.” Moreover, I prefer the alternative term “augmented intelligence” because it emphasizes that these systems enhance — rather than replace — the capabilities of the humans employing them, especially through improved decision-making and by eliminating the need to perform repetitive work.

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Topics: Office of Finance, Business Intelligence, Business Planning, Enterprise Resource Planning, ERP and Continuous Accounting, natural language processing, AI and Machine Learning, continuous supply chain, digital finance, Purchasing/Sourcing/Payments, Consolidate/Close/Report

Close Automation is Essential for Digital Finance Transformation

Posted by Robert Kugel on Mar 28, 2023 3:00:00 AM

As a rule, I dislike terms like “digital finance transformation” because there’s a wave-the -magic-wand quality to it that obscures the not-so-simple people and process elements necessary for true transformation. Six of the most common – and expensive – words used in an accounting department are “we’ve always done it this way.” Persuading staff to change can be a struggle, even if change makes their jobs easier and more rewarding. Moreover, digital transformation must cover the data elements as well as the process because manual data management is not only time-consuming at the data preparation stage, but it also creates the need for downstream reconciliations and other tasks to ensure accuracy.

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Topics: Office of Finance, digital finance, Consolidate/Close/Report

The Continuous Audit Improves Quality and Efficiency

Posted by Robert Kugel on Mar 22, 2023 3:00:00 AM

An external audit examines an organization’s performance of accounting tasks. It validates the soundness of accounting systems and policies and compliance with generally accepted accounting principles in preparing financial statements – chiefly the income statement, balance sheet and statements of cash flow and equity. The auditor certifies that there are no material errors or omissions, and that the financial statements are compliant with requirements. Technology can transform this process to provide multiple benefits to audit firms and workers, making accounting cool again by using a continuous audit approach.

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Topics: Office of Finance, digital finance, Consolidate/Close/Report

Our Focus on Close, Consolidate and Report in Finance

Posted by Robert Kugel on Mar 14, 2023 3:00:00 AM

For 2023, the Office of Finance practice of Ventana Research introduced Close, Consolidate and Report as one of its six focus areas. The change reflects the recent evolution of technology that supports this part of the finance department calendar. Ventana Research expects that the increasing investment in software to streamline these processes will, by 2026, result in two-thirds of finance and accounting departments improving their use of readily available technology to close quarterly books within six business days, up from one-half that can do it today. Our research coverage in this area includes dedicated consolidation software and close management systems as well as applications for intercompany financial management (IFM), automated reconciliations and disclosure management. Software for the close-to-report cycle also helps achieve objectives in digitally transforming how these processes are executed. Beyond efficiency gains, using automation enables organizations to have management and financial information sooner, provides more time for analysis and crafting performance narratives, achieves superior control of processes, and supports accurate accounting with less effort. It also enables departments to attract and retain the best talent because it minimizes time spent on tedious, repetitive tasks best left to computers. Accountants can then focus on more rewarding work that takes advantage of their skills, experience and expertise.

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Topics: Office of Finance, digital finance, Consolidate/Close/Report

Our Focus on Purchasing, Sourcing and Payments in 2023

Posted by Robert Kugel on Mar 8, 2023 3:00:00 AM

Digitally transforming core business processes became essential as organizations locked down in early 2020 because of the pandemic and the need to operate remotely presented a set of new challenges that were best addressed by software. Especially in the areas of sourcing, purchasing and payments, software has the ability to streamline processes, shorten process cycles, reduce unnecessary costs, provide greater visibility into cash flows, increase control and improve results. Digitizing operations helps attract and retain the best talent because professionals spend less time on mechanical, repetitive tasks. For all these reasons, beginning this year, Ventana Research’s Office of Finance has established a Purchasing, Sourcing and Payments focus area. One reason is that our research suggests that this transformation is more talked about than done. Ventana Research asserts that by 2027, only one-fourth of larger organizations will consistently manage source-to-pay end-to-end, but those that do will outperform competitors. 

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Topics: ERP, Office of Finance, continuous supply chain, digital finance, Purchasing/Sourcing/Payments

More Effective Contingency Planning Improves Agility

Posted by Robert Kugel on Feb 28, 2023 3:00:00 AM

We live in a time of uncertainty, not unpredictability. Managing an organization in uncertain times is always hard, but tools are available to improve the odds for success by making it easier and faster to plan for contingencies and scenarios. Software makes it possible to quickly consider the impact of a range of events or assumptions and devise a set of plans to deal with them. Dedicated planning and budgeting software has been around for decades but is about to become all the more useful as vendors increasingly incorporate artificial intelligence using machine learning to assist in scenario planning. Organizations can quickly investigate the impact of different contingencies and the consequences of a range of reactions to them.

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Topics: Office of Finance, Data Management, Business Planning, AI and Machine Learning, digital finance