Robert Kugel's Analyst Perspectives

SAP’s New Fraud Management Analytical Application

Posted by Robert Kugel on Apr 2, 2013 11:20:35 AM

SAP recently announced its new Fraud Management analytic applications. Currently in “controlled” (limited) release, it’s a promising start for the product and a good example of the type of business process revolution that’s possible when companies can execute complex analytics on big data sets using in-memory and other advanced processing techniques. Over the next several years a wide swath of basic corporate processes will be transformed by the shift to in-memory processing and big data technology, two key foundational elements of my office of finance research agenda. HANA has been a consistent element of SAP’s product strategy and underlies many recent new releases, such as Business Suite on HANA.

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Topics: SAP, Fraud, Governance, GRC, Office of Finance, audit, Analytics, Business Analytics, Governance, Risk & Compliance (GRC), Business Performance Management (BPM), compliance, Financial Performance Management (FPM), Risk, HANA

Software to Fend Off Earnings Restatements

Posted by Robert Kugel on Mar 15, 2013 9:51:03 AM

I’m wondering whether the rapid rise in earnings restatements by “accelerated filers” (companies that file their financial statements with the U.S. Securities and Exchange Commission that have a public float greater than $75 million) over the past three years is a significant trend or an interesting blip. According to a research firm, Audit Analytics, that number has grown from 153 restatements in 2009 to 245 in 2012, a 60 percent increase. What makes it a blip is that the total is still less than half the number that occurred in 2006 as the Sarbanes-Oxley Act began to take effect. As well, the number of companies restating is still less than one percent of the total. Yet it’s a blip worth paying attention to, since the consequences of a restatement pose a serious professional challenge to finance executives. The right software can help address some of the underlying causes that lead to the need to restate earnings.

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Topics: Customer Experience, Governance, GRC, Office of Finance, Reporting, audit, close, Consolidation, Controller, Tax, XBRL, Governance, Risk & Compliance (GRC), Business Performance Management (BPM), CFO, compliance, Financial Performance Management (FPM), FPM, SEC

Addressing Key Operational Risk Requirements

Posted by Robert Kugel on Mar 13, 2013 10:00:22 AM

I’ve frequently commented on the artificiality of the emerging software category of governance, risk and compliance (GRC). The term is used to a cover a combination of what were once viewed as stand-alone software categories, including IT governance, audit documentation and industry-specific compliance management, to name three examples. While it’s still common for specific types of software to be purchased piecemeal by different departments, these disparate areas have started a long convergence process. Since just about all controls and risk management efforts require a secure IT environment to be effective, there is a growing interdependence between effective IT governance and everything else connected with enterprise GRC.

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Topics: Big Data, Performance Management, Predictive Analytics, Customer Experience, Governance, GRC, Operational Performance Management (OPM), Management, Analytics, Business Performance Management (BPM), compliance, finance, Financial Performance Management (FPM), Risk, financial risk management, IT Risk Management, Sarbanes Oxley, SOX

Vertex Enterprise Advances Tax Management

Posted by Robert Kugel on Feb 1, 2013 6:35:07 AM

Taxes – both indirect (sales or value added taxes, for example) and direct (income taxes) – are one the largest expense items on the corporate income statement. In recent years it has become common for large and even midsize companies to automate their indirect tax management process, but direct tax management has remained a bastion of manual processes built on a heap of desktop spreadsheets. In previous blog posts I discussed this issue and the role of the tax data warehouse as a necessary foundation for automating the direct tax process. Addressing an important need, Vertex is currently providing a limited release of its Enterprise offering, a single-platform approach to managing all types of taxes (direct and indirect) across the entire tax life cycle (from analysis through provisioning to audit defense) using a single data source.

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Topics: ERP, GRC, Office of Finance, audit, finance transformation, Tax, Analytics, Business Analytics, Governance, Risk & Compliance (GRC), Business Performance Management (BPM), CFO, Financial Performance Management (FPM), Information Management (IM), Vertex, FPM

The Spreadsheet and the Whale

Posted by Robert Kugel on Jan 29, 2013 9:06:31 AM

Banking giant JP Morgan raised eyebrows in 2012 when it revealed that it had lost a substantial amount of money because of poorly conceived trades it had made for its own account. The losses raised questions about the adequacy of its internal controls, and broader questions about the need for regulations to reduce systemic risk to the banking system. At the heart of the matter were the transactions made by “the London Whale,” the name given to a JP Morgan’s trading operation in the City by its counterparties because of the outsized bets it was making. Until that point, JP Morgan’s Central Investment Office had been profitable and apparently well controlled. In the wake of a discovery of the large losses racked up by “the Whale,” JP Morgan launched an internal investigation into how it happened, and released the findings of the task force established to review the losses and their causes [PDF document].

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Topics: Sales, GRC, Office of Finance, Operational Performance Management (OPM), error, Business Analytics, Business Collaboration, Business Intelligence, Business Performance Management (BPM), Data, Financial Performance Management (FPM), Information Management (IM), Sales Performance Management (SPM), controls

Office of Finance Research Agenda for 2013

Posted by Robert Kugel on Jan 10, 2013 9:02:37 AM

Businesses always see a lag between when technology makes some advance possible and when a majority of companies actually adopt it. There’s even a longer lag between the emergence of an advance in a business process or technique and the time it takes to become mainstream. When we write our research agendas at the top of each year, we have to strike a balance between focusing on the new and different, which is still many years away from general acceptance, and the mainstream, which has been anticipated for so long that it almost seems passé. Our research agenda for office of finance to support business for 2013, which I just finalized, is once again an attempt to balance the leading edge and the mainstream with an eye to practical solutions.

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Topics: Big Data, Planning, Predictive Analytics, Governance, GRC, Office of Finance, Operational Performance Management (OPM), Budgeting, close, Analytics, Business Analytics, Business Collaboration, CIO, Cloud Computing, In-memory, Business Performance Management (BPM), CFO, Financial Performance Management (FPM), Risk, Sales Performance Management (SPM), Workforce Performance Management (WPM), CEO, Financial Performance Management, FPM

Saving Microseconds with Informatica’s Ultra Messaging

Posted by Robert Kugel on Dec 20, 2012 11:23:08 AM

Increasingly, global financial markets compete on speed, so much so that high-speed trading capabilities have become a performance differentiator for the largest financial services firms and some investment funds. Transmitting messages with quotes, prices and trade data is a core capability for currency dealers. Informatica recently introduced Ultra Messaging, which is designed to offer global currency traders an efficient, high-throughput, lower-latency (that is, faster) and more secure method of linking their worldwide operations.

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Topics: Sales, GRC, Operational Performance Management (OPM), credit, currency, LAN, Informatica, Business Performance Management (BPM), finance, Financial Performance Management (FPM), WAN

Hewlett Packard Charges Fraud at Autonomy– Lessons Learned?

Posted by Robert Kugel on Nov 23, 2012 11:13:52 AM

Many people enjoy mystery stories or crime thrillers; in the same vein of savoring the whodunnit and howdunnit, I like a good accounting scandal. My fascination with cooking the books started when I was young with the “great salad oil swindle”, which wound up causing losses in excess of $1 billion in today’s money and even threatened a Wall Street collapse. This disaster was averted by the assassination of President Kennedy, which kept markets closed on Monday, November 25, 1963, and gave the parties involved an extra day to resolve the matter. Nowadays I look forward to receiving FIRST, a compendium prepared by IBM’s Risk Analytics group of the previous month’s financial shenanigans. So, the recent Hewlett-Packard-Autonomy imbroglio fascinates me.

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Topics: Fraud, Governance, GRC, Office of Finance, audit, IFRS, Governance, Risk & Compliance (GRC), Business Performance Management (BPM), Financial Performance Management (FPM), Hewlett Packard, Meg Whitman, SEC

What a Bugatti Can Teach Us About Information Management

Posted by Robert Kugel on Aug 29, 2012 11:37:25 AM

One of the community groups to which I donate my time is an organization that puts on a Concours d’Élegance – a vintage car show. Such Concours date back to seventeenth-century France, when wealthy aristocrats gathered to see who had the best carriages and most beaudacious horses. Our Concours serves as the centerpiece to a broader mission of raising money for several charities. There a many such events in the United States and elsewhere, but this one, which has been held every year since 1956, has the distinction of being the longest continuously running Concours in the United States.

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Topics: Big Data, GRC, Operational Performance Management (OPM), Business Analytics, Business Intelligence, CIO, Operational Intelligence, Business Performance Management (BPM), CFO, finance, Financial Performance Management (FPM), Information Management (IM), IT Performance Management (ITPM), Talent Management, FPM

Good Data Stewardship Is Critical for Business Analytics

Posted by Robert Kugel on Aug 24, 2012 12:29:51 PM

Our research consistently finds that defects in data are the root cause of a wide range of problems encountered by modern corporations. The magnitude of the problem correlates with the size of the company: Big companies have bigger headaches than midsize ones. Data issues diminish productivity in every part of a business as people struggle to correct errors or find workarounds. Issues with data are a man-made phenomenon, yet companies seem to treat bad data as some sort of force of nature like a tornado or earthquake – something that’s beyond their control to fix. At best they look for one-off workarounds and Band-Aids without tackling the root causes or recognizing the need to keep data issues in check. Data stewardship can and should be a part of a disciplined approach to management in the same way organizations implement quality control, cash management and legal compliance.

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Topics: Big Data, Predictive Analytics, GRC, Operational Performance Management (OPM), Business Analytics, Business Intelligence, CIO, Operational Intelligence, Business Performance Management (BPM), CFO, Customer Performance Management (CPM), finance, Financial Performance Management (FPM), Information Management (IM), IT Performance Management (ITPM), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), Workforce Performance Management (WPM), FPM