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: Operational Performance Management (OPM), Analytics, Business Analytics, Business Intelligence, Uncategorized, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Information Management (IM), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM)
Today’s proponents of artificial intelligence (AI) tend to focus on its spectacular uses such as self-driving cars and uplifting ones such as medical treatment. AI also has the potential to aid humanity in more modest ways such as eliminating the need for individuals to do tedious repetitive work in white-collar areas. Along these lines, at its recent Vision users conference, IBM displayed an application of its Watson cognitive computing technology designed to automate important aspects of regulatory and legal compliance. Should it prove workable, the application of cognitive computing to compliance could be the first step in achieving what various “Paperwork Reduction Act” legislation has failed to do: substantially cutting the time needed to comply with rules imposed by government entities.
Topics: Big Data, Operational Performance Management (OPM), Cloud Computing, Governance, Risk & Compliance (GRC), Uncategorized, Business Performance Management (BPM), Financial Performance Management (FPM), GRC, governance, risk, compliance, risk management
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: Office of Finance, Operational Performance Management (OPM), Uncategorized, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), blockchain, distributed ledger, DLT, ERP, SCM, sup
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.
Workiva offers Wdesk, a cloud-based productivity application for handling composite documents. I use the term “composite document” to refer to those in which text is created and edited collaboratively by multiple contributors and which incorporates tabular and numerical data from multiple sources in a controlled process. Composite documents often have formats defined by law, regulation or contract and must be created at periodic intervals. To comply with the requirement by the United States Securities and Exchange Commission (SEC) that companies “tag” their financial filings using eXtensible Business Reporting Language (XBRL), many companies acquired software to automate the creation and tagging of these composite documents.
Topics: Mobile Technology, Business Collaboration, Cloud Computing, Governance, Risk & Compliance (GRC), Uncategorized, Business Performance Management (BPM), Composite Software, Financial Performance Management (FPM)
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: Big Data, Office of Finance, Operational Performance Management (OPM), Business Analytics, Uncategorized, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Sales Performance Management (SPM)
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: Predictive Analytics, SAP, Operational Performance Management (OPM), Uncategorized, Business Performance Management (BPM), Customer Performance Management (CPM), Financial Performance Management (FPM), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM)
In our Office of Finance benchmark research 60 percent of participants said it takes their companies six or more business days to complete their quarterly close; that exceeds the best practice benchmark of five days. Consultants, academics and vendors have stressed the importance of shortening the close for almost a quarter of a century. The main reason for doing so is to provide executives and managers with timely information about the company’s performance. Yet our research shows that it’s taking longer for companies to complete their close than it did a decade ago: On average they now finish the monthly process in 6.8 days, compared to 6.5 days, and complete the quarterly close in 8.0 days vs. 7.5 days. The research suggests that the main reason for this increase is that companies use outdated manual close processes, which often are poorly executed and rely heavily on spreadsheets.
New rules governing revenue recognition 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 will enforce fundamental changes in this area of accounting. The new rules will affect companies that use even moderately complex contracts in their dealings with customers. They include, for example, contracts that are structured using tiered pricing or volume discounts or ones that routinely involve modifications, such as adding or dropping users, or that allow seasonal changes to services. The changes necessitate an extensive review of an organization’s contracting and accounting policies and processes and are likely require changes to procedures and systems. Companies affected by the new rules also will need to examine their planning and budgeting processes. Those that currently use desktop spreadsheets for planning and budgeting should consider adopting dedicated planning and budgeting software in order to cope effectively with the increased complexity of planning in this new environment.