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.
Topics: Business Analytics, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Information Management (IM), Operational Performance Management (OPM), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), Uncategorized, Analytics, Business Intelligence
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.
Topics: Business Analytics, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Operational Performance Management (OPM), Sales Performance Management (SPM), Vendavo, price, pricing, optimization, revenue, cu, Big Data
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.
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.
Topics: blockchain, distributed ledger, DLT, ERP, SCM, sup, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Operational Performance Management (OPM), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), Uncategorized, Office of Finance
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.
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.
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.
Topics: Business Analytics, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Operational Performance Management (OPM), Sales Performance Management (SPM), Uncategorized, Big Data, Office of Finance
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.
Topics: Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Operational Performance Management (OPM), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), Uncategorized, Predictive Analytics, SAP
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.
Topics: accounting, analytics, ERP, EAM, CRM, HCM, innovat, Business Analytics, Business Performance Management (BPM), Cloud Computing, Customer Performance Management (CPM), Financial Performance Management (FPM), Human Capital, Mobile Technology, Operational Performance Management (OPM), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), Uncategorized
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.
Topics: Analytics, Big Data, Budgeting, Business Analytics, Connotate, cryptic, Customer Performance Management (CPM), Data, data science, Datawatch, equity research, Finance Analytics, Financial Performance Management (FPM), FP&A, Human Capital, Kapow, Kofax, Office of Finance, Operational Performance Management (OPM), Planning, Predictive Analytics, Sales Performance Management (SPM), Social Media, Statistics, Supply Chain Performance Management (SCPM), Strata+Hadoop, Business Intelligence