Place your bids for an improved Financial Close

I came across an interesting SAP customer story the other day, which was in part referred to in an earlier CFOKnowledge article published in November 2013. As you’ll know from reading that blog article, SAP had augmented its comprehensive Accounting and Financial Close offerings by endorsing the BlackLine Financial Close Suite a Software-as-a-Service (SaaS) offering from partner BlackLine Systems. Citing benefits such as reduced risk and easier compliance in their account reconciliation and financial close processes, efficiency gains and increased employee productivity, along with the freeing-up of resources (personnel time) to do other things, on the face of it this cloud-based solution has much to offer. I can certainly see why this would appeal to organizations eager to improve and further streamline their Financial processes.Businessman Looking at Stock Prices

An article in SAP Insider this month now reports how eBay have transformed their Journal Entry, Task Management, and Account Reconciliations processes using BlackLine’s solution, working in tandem with their existing SAP ERP software landscape. According to the article the results of the implementation have been a reduction by several days in the financial close, greater visibility into close processes and reconciliations, and improved auditing controls. And by the sound of it, the system also seems to be easy to implement and use.

Take a look at the SAP Insider article for more information (you may need to register for access), I think you’ll find it an interesting read, and it may perhaps leave you wondering whether you should also bid for an improved Close process.

What’s Needed in a Solution for Driving Profitability Improvements in Manufacturing

Although growth is now returning to most economies, companies should not expect all the woes of the recent past to disappear overnight. Profit margins will continue to be tight as raw material prices continue to increase while selling prices are still under pressure as customers continue to ask for ‘your best price’. This situation requires manufacturers in particular to continually improve their efficiency and cost position by doing more with less.

Although much of the core information about material costs, labor rates, logistics, storage, cost of sales, return rates and the like already resides in companies’  ERP system, they are far from ideal for planning, profitability modelling and what-if? simulations and most practitioners today recognize that these are best done by front-ending the ERP system with purpose-built performance management applications such as those in the SAP EPM portfolio.

indexThis is something that a recently published white paper ‘Manufacturers: optimize cost tracking, product profitability analysis and simulation’ by Sébastien L’Hôte of the Stampa Group  - one of the Europe’s leading experts in delivering enterprise performance management solutions – picks up on, suggesting that when it comes to modelling forward-looking costs and profitability in manufacturing where there are complicated bills of materials then it makes eminent sense to use an independent tool that directly retrieves data from the ERP application. The solution that the paper recommends is SAP Profitability and Cost Management (PCM) on the basis that although it was designed as a costing and profitability management solution, it has very flexible dimensionality that can be used for things such as manufacturing sites and selling territories as well as a flexible rules engine for forward-looking scenario planning and budgeting.

N-tiered Bill of Materials - something that always needs bespoke modelling

N-tiered Bill of Materials – something that always needs bespoke modelling

SAP Profitability and Cost Management was always designed to be part solution / part toolbox so that it can be configured for a number of uses; product costs simulations, customer profitability, shared services chargeback – and the calculation and audit of transfer prices, which is another increasingly hot topic coming under scrutiny.  But the new “Bill of Materials” functionality which has been available since version 10.0, enriches an already comprehensive tool for both SAP, non-SAP and hybrid environments.  At a time when Finance is expected to take a lead in driving productivity and profitability improvement initiatives in manufacturing environments, flexible, open and agnostic  solutions such as SAP Profitability and Cost Management that can easily be tailored to specific, and often complex situations, may be just what you’re looking for.

Who has the big picture for performance management?

Almost all the documented case studies of companies benefiting from EPM solutions are still to do with the stand-alone silo solutions for planning and budgeting, (and sometimes rolling reforecasts), workforce planning, consolidations and cost management. There is nothing wrong with this and in most instances the organizations have benefited from real dollar savings in improved efficiency in the finance department yet alone the less tangible, but ultimately far more important benefits, of better decision making, greater agility and the like.

But where is the big picture? With the power of in memory computing such as SAP HANA that can eat up big data and spit out the results before you can blink, isn’t it time one of the vendors or analysts set out the big picture; the end game, so that companies can plan out the easily digestible chunks that will ultimately eat the elephant? 

At the moment, the hot topic seems to be Integrated Business Planning, ( i.e. the seamless integration of annual budgeting with detailed sales and operations planning), and undoubtedly this will be transformed by the power of in memory computing. But sadly, the vision seems to have stopped there for the moment, when surely there is a laundry list of other pieces of functionality that ought to be included in scope. For instance what about:

  • Full P&L, balance sheet and cash flow forecasts – in total and by business segment  
  • Dynamic cash flow, working capital and foreign currency forecasting – something SAP have already released with SAP Dynamic Cash Management
  • Forward looking process costing and cost and profitability forecasts at category and product level

From the outside, it seems to me that the vendors are currently going through this type of laundry list and ‘clustering’ some of the obvious pieces such as cash flow, working capital and foreign currency forecasting together into new ‘uber’ solutions for clearly defined groups of users. Again, in my mind that’s all good and it will certainly be easier for the vendor to sell and the client to buy.

But surely the clusters still need unifying so managers can get quick answers about how changes to the sales and operations plan impact product profitability in future periods; determine how to utilize current capacity to optimize profits and how best to supply products to new geographies.  

Given the technologies available at the time, the mega vendors did an excellent job in developing and delivering a vision for ERP. So I guess it’s back to the drawing board with the whole of operational and financial performance management in scope this time around.   

The SAP and Open Text eBook

From Joe Pacor

Click to access

We’re often inundated with solution content which is received sporadically, gets filed away, or worse, gets misplaced or deleted. Then someone will ask you about that particular topic and the mad scramble begins to compile all of the dispersed material. Wouldn’t it be great if all of the content you ever wanted on a topic was organized in an electronic library, or eBook, which coordinated the material in a very easy-to-consume manner? Well, that is exactly what has been created in the ‘SAP and OpenText Solution Extensions e-Book’, available now for your review. Months of hard work by SAP Partner Marketing went into the production of this multi-faceted piece of collateral, so let’s take a quick look at what you will find.

Firstly, the partnership between SAP and Open Text offers solutions which span the entire enterprise, providing fully integrated content management applications for your business processes. The eBook material is indexed to accommodate quick access to the areas of most interest to you. The structure of the collateral combines positioning and messaging information along with a variety of media, including customer testimonial videos, solution demonstrations, and thought leadership recordings. You can hear direct commentary from industry analysts, as well as the SAP and Open Text leadership team…and gain access to related white papers. The eBook even contains value calculators which assist in determining the most likely benefits for your company, based upon the individual corporate metrics which you enter. Continue reading

On Your Mark…Get Set…IPO and Go

From Joe Pacor

Well, maybe not so fast. The first half of 2011 did show significant gains over the same period last year, with 79 IPO’s raising $24B, verses 70 IPOS’s and only $9B last year. Many familiar names have shared the spotlight recently, including Zillow, Linked-In, and my northeastern regional favorite, Dunkin D’s. However, things slowed down a bit following the volatility after the S&P US credit downgrade. So I thought this pause provided an opportunity to review the financial IPO readiness companies need to adhere to in order to ensure a successful market launch. There is an adage that asserts a pre-IPO company should be operating and acting like a public company…but what does that mean?                                                    

Firstly, full financial transparency and reporting is a prerequisite prior to a successful IPO. Investors will be analyzing all information in advance of the listing, assessing how effective the finance and accounting functions are, as well as the corporate governance. There will be a focus on key issues, such as the treatment of revenue recognition, the valuation of inventory, and cost management, to name a few. Then there is the attention given to the company’s ability to accurately forecast, plan and budget for the upcoming business operations. Next, there will be the evaluation of management’s ability to properly disclose risk-based processes and efficiently record and report on transactions which merit such attention during the close process. In addition, there is always a keen interest in the treasury and risk management capabilities, especially in light of the impending large infusion of capital which results from the IPO. The good news is that these considerations can be very well-managed in advance of going public.

So, what steps are necessary to ensure the IPO goes as smoothly as planned? From the finance perspective, it starts with the strength of the applications and the IT infrastructure which is in place. It is paramount to have the right information, at the right time, available for all interested parties. Reliable, current and useful corporate financial data is a reflection of the management team and can even be viewed as a competitive differentiator. The timely ability to report on results and address issues, risks and opportunities will instill investor confidence right out of the gate. Important areas to focus on include: accounting and financial close processes; disclosure management procedures; business planning and forecasting; corporate governance and controls; risk management and treasury functions; and, corporate performance management. Before going public, the best investment to be made will be in these solutions. SAP has comprehensive offerings supporting the IPO financial landscape, and you’re invited you to learn more at the micro site SAPCFO

Better travel management is a must in the zero-growth economy

Well if the economic recovery is well and truly over and we’re set for an extended period of decimal point growth, we can expect to see renewed focus on cost control and boards on willing to approve investments that give a rapid payback. One of those has to be better management of corporate travel where the better enforcement of policies coupled with more automated travel management can soon impact the bottom line.

In this video clip, James Westgarth of aircraft manufacturer Airbus talks about how they use SAP Travel Management across their 55,000 employees – many of whom travel – and how it has helped them improve expense-report accuracy, better negotiate with providers, and better user experience for everyone.

Everything you need to know about Controlling in SAP

If you use Controlling in SAP ERP Financials (aka the management accounting functionality of the SAP Business Suite), a new book by my colleague and friend Janet Salmon is a must-have resource for your daily work. You’ll learn how to perform transactions with fewer steps and less effort, and you’ll discover how to troubleshoot minor problems and system issues. In addition to the core areas of Controlling, you’ll also find coverage of more advanced topics, such as SAP NetWeaver BW, SAP BusinessObjects, the SAP Financials Closing Cockpit and topics added in recent enhancement packages.

 Janet has been with SAP since 1992, working first as a translator and then as a technical writer for Product Cost Controlling and is now one of our experts on the Controlling modules. I don’t think I will offend her by saying she is a plain-speaking, no-nonsense type of person so you can expect lots of practical advice with insightful examples that will quickly teach you everything you need to know about the most common processes, tasks and features – as well as clear guidance on the more advanced topics such as SAP NetWeaver BW, SAP Business Objects, and SAP Financials.

Click here for a link the more details