Writing ‘Accelerating Financial Closing with SAP'; an interview with the authors

FCbookJust before the holiday I hooked up with Elizabeth Milne, Birgit Starmanns and James Fisher from SAP to talk about their new book, ‘Accelerated Financial Closing with SAP’, which was published in the last quarter of 2013. Every time I’ve looked recently it shows as ‘out of stock’ on Amazon, which is always a good sign of demand exceeding supply. But as anyone who has written a technical accounting book knows, the reward is the reception you receive from your, often small, target audience, rather than the life-changing wealth that would be needed to adequately reflect the amount of time and effort involved in such a mammoth task. So, big respect everyone; now let’s get down to our discussion:

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CFOK; Why did SAP bring out a book on the Financial Close now?

Birgit: SAP has published books on various aspects of the Financial Close before but these tended to be written for a single audience – the expert user – and to focus on a single SAP solution. But with the acquisition of the solutions from cundus AG in early 2011, that subsequently became SAP Disclosure Management and SAP Notes Management, SAP effectively covers all aspects of the Finance Close from core accounting in the SAP ERP Financials solutions right through to the ‘last mile of finance’ with report production and publication.

James:  There’s more to come too. We touch on some of the newer technologies in the book such as the use of SAP HANA – the in-memory calculation engine – and how some corporate finance teams have already benefited from step changes in calculation speeds and productivity; about how mobile can be used to expedite some of the key stages in disclosure management and mention how the cloud is an increasingly attractive deployment option.  But companies are only now starting to adopt these newer technologies in significant numbers and over the next few years I can see us publishing revisions of the book that include new solutions at various stages in the close process and lots of new customer stories where adopting in-memory, mobile and the like have delivered major benefits. For me, it’s a work in progress that will need new editions over the coming years.

Elizabeth: Don’t forget regulation is always changing too. Although many have already done a lot of preparation, corporate finance teams based in North America are still waiting for the Securities and Exchange Commission to decide on the adoption and timing of IFRS – and there is increasing momentum behind Integrated Reporting, which will bring another dimension to the close as few companies to date have addressed sustainability as part of their routine financial reporting. We discuss these trends in the book but once they hit, we will certainly need to rewrite some key sections.

CFOK: What makes this book different from others?     

Birgit: We structured the book around three factors – Process, People and Technology – starting with an overview of all the different stages involved in the Financial Close, before stepping through each one in detail; covering the roles and responsibilities of the various people typically involved at each stage of the process and the software solutions needed to automate and expedite each step and how it all fits together into an integrated process.

Choosing that structure did mean we had some challenges to address, particularly where SAP offers a choice of solutions for various stages of the close such as with SAP Financial Consolidation or SAP Business Planning and Consolidation for consolidation and reporting. But reading through the finished book now, I think readers will get enormous benefit from the way we’ve structured the book and the detailed discussion of how various factors influence the choices that need to be made between overlapping solutions.

Elizabeth:  The people issue is an important consideration though. Besides the accounting and finance people involved at individual stages of the process, we also wanted the book to be of value to people from the IT side of the house, who might not need to immersed in the detail of each stage, but need to know how to diagnose issues across the entire end-to-end process, contribute to the discussion on selecting the most appropriate software solution to address the particular pain point, and know how to go about building a compelling business case to secure any necessary investment. So some chapters take a helicopter view of the process, while others, such as the chapter on disclosure management, which was a completely new SAP offering at the time we wrote the manuscript, is definitely a deep dive as we think that’s what most readers will want. But even then, we’ve shied away from slavishly replicating the type of content you find in a user manual. There’s little value in that.

James: The customer cameos are also an important element of the book in that they allow readers to see that the issues they might be experiencing themselves are far from unique; to understand something of the thinking process customers went through when selecting a particular solution and how it fits into their overall IT landscape – and to have some quantified proof of the type of improvements that their peers are achieving. This is all extremely useful material for building a business case and for developing a timetable for continuous improvement. Knowing where to look for quick wins and how to prioritize implementation initiatives can save a lot of frustration and wasted effort.

CFOK: Finally, what were the high points and low points of writing the book?  

Elizabeth: Well it’s not something that you can do during the normal working day; you have to be prepared to sacrifice weekends for a while and take advantage of any spare evenings.

Birigit: Keeping ourselves aligned with each other to ensure we didn’t repeat content unnecessarily initially took some coordination, but the most time-consuming thing for me was having to go back and revise what I’d already written to incorporate changes such as more recent research findings; additional functionality in newer versions of software and constantly changing regulation – to say nothing of how rapidly the newer technologies were coming along during the months we were actually writing.

James:  As we’ve already said, it’s a work in progress. I’m sure we all learnt a lot during the months we were writing the book – I know I did – and I’m confident that we will find tackling the next edition less daunting. But perhaps not just yet though.

CFOK: Thanks everyone.                

                        

EPM Reflections #7; Staying in Control of the ‘Last Mile of Finance’

EPM Reflections 7Continuing our out-takes from the SAP radio shows with this one that asked our panel of experts to discuss annual reporting . It challenged the panel to consider the importance of having the right people, processes, technology, and best practices in place to conquer the intensifying challenges in annual reporting disclosures.

Listen to what they had to say by clicking on the image.

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SAP builds out its Accounting and Financial Close offering with BlackLine Systems

blacklineSAP has always supported its customers’ businesses and built out its eco-system around its SAP Accounting and Financial Close solutions by endorsing partner solutions that integrate with SAP ERP and meet the necessary acceptance criteria. The latest is the BlackLine Financial Close Suite from partner BlackLine Systems which is a Software-as-a-Service (SaaS) offering that replaces many of the manual, labor-intensive processes in finance and accounting with an easy-to-implement, easy-to-use and easy-to-maintain solution for  account reconciliation, task management, variance analysis, journal entries, transaction matching and managing the integrity of system-to-system consolidations.

BlackLine Systems was the first to develop and offer a commercially available Account Reconciliation solution and is considered a market leader by analysts with more than 700 customers ranging from the Fortune 100 down to smaller mediums ones well beyond the Fortune 1000, in all adding up to more than 75,000 end users in over 100 countries. Examples of reference customers are insurance giant Zurich, e-commerce leader eBay, Mondelez International (formerly Kraft Foods), defense industry giant Northrop Grumman, and global aluminum manufacturer Novelis.

The use of these solutions will enable customers to reduce risk and achieve compliance in their account reconciliation and financial close processes, gain efficiencies and increase employee productivity, freeing-up resources to do other things. For more information including online demos, case studies and documentation, click here.

Get an advance copy of ‘Accelerated Financial Closing with SAP’ for FREE

FCbook

Writing a book while holding down a demanding day job is never easy but my colleagues James Fisher, Elizabeth Milne and Birgit Starmanns have collectively done some sterling work in combining their collective knowledge of the financial close with their practical knowhow and inside experience of working with SAP solutions to deliver Accelerated Financial Closing with SAP which is published in early November.

Having been invited to  read through the manuscript I can tell you it’s a definitive work that covers the entire financial close process from financial accounting through entity and corporate closing to disclosure and publication. Each stage is illustrated with practical workflow scenarios and customer examples as well as a detailed explanation on how to meet the latest regulatory and reporting requirements with SAP financial solutions such as SAP ERP Financials 6.0, SAP EPM 10.0 and SAP Disclosure Management. There is also some excellent advice on how to critically evaluate your own financial close process and create an action plan that will have you closing your books in record time.

FCbookContents at a Glance

  • Introduction to the Financial Close
  • Creating an Action Plan for Improving Your Financial Close
  • Information Management
  • The General Ledger and Subledger Close
  • The Financial Close in Controlling
  • Managing the Entity Close
  • Enhanced Internal Controls for Better Compliance
  • Intercompany Reconciliation
  • Financial Consolidation
  • Disclosure Management and XBRL Filings
  • Financial Reporting
  • The Future of Finance and Its impact on the Financial Close

GET AN ADVANCE COPY FOR FREE

The first 15 people that register for the SAP Enterprise Performance Management (EPM) Conference 2013 between 23-29 October will get a free signed copy hot off the press. The event is  being held in Dallas on November 5&6 and gives the opportunity to hear from experts from leading organizations,  such as Barnesandnoble.com, Statoil, Marathon Oil Company, Schwan Food Company, Delek US, Altalink, Flextronics, and more  – discuss how the SAP Enterprise Performance Management solutions help them manage their financial performance. You can also hear the book’s co- authors Elizabeth Milne talking on ‘Accelerating Your Financial Close-to-Disclose Process’, and Birgit Starmans presenting on ‘Introducing Innovation in Finance: Empowering Finance with Real Time Insight’.

New paper on how to improve the financial close-to-disclose process

FC1 A couple of months ago, we ran a series on the financial close to disclose process and the latest Thought Leadership Paper from SAP enterprise performance management (EPM) team brings this material and lots more besides into a single document to explain how the SAP suite of software help enterprises automate their financial close-to-disclose process. SAP is combining decades of business process expertise with an unprecedented ability to deliver “innovation without disruption” in order to help you run your business better by simplifying, automating and streamlining your financial performance management activities.

FC2The paper, ‘Automating the Last Mile of Finance’, begins with a recent survey showing that improving the “last mile of finance” ranks among CFOs top-two targets. The authors then describe the main CFO difficulties when running this process, and how SAP suite of software can help: connect systems of record (ERP) with systems of engagement (EPM), comply with IFRS, U.S. GAAP and XBRL, benefit from an “anywhere – anytime” insight on financial results on mobile, secure the external filing to regulators and investors and go live in weeks, not months.

Perhaps I should mention the team who produced the piece. They are Elizabeth Milne who has over 15 years of experience improving the software solutions for multi-national, multi-billion dollar organizations. She currently manages the accounting and financial close portfolio for SAP Product Marketing. Kristina Henn has over 12 years of experience in the software industry working in training, solution management and now in Solution Assembly and Knowledge Package, the department that delivers rapid deployment solutions. Stephane Neufcourt has been working in the enterprise performance management (EPM) space for more than 15 years and now leads the “Starter Kits & Innovations” group for all SAP Analytics portfolio solutions related to the financial close process.

How changes to international taxation could raise the bar on financial reporting

With many governments pulling back on public spending that is directly impacting many vulnerable groups in society, it’s not surprising that people and the press are making noises about the amount of tax paid by the super-rich and some of our global companies. Although they are complying with regulations, the ones that are in the frame in the UK are Google, Amazon  and Starbucks, which last month Reuters  reported as having paid no corporation tax on revenues of over UK£3bn over the last 3 years.  Last week, senior managers from these three companies were hauled up before an all-party panel of members of parliament to explain themselves and frankly they didn’t perform too well with some real gaffs about how they paid a huge amount in Value Added Tax. The fact is that is a sales tax paid by the customer and the comapny is simply the tax collector – doh, get it right!

Working within the regulations, these companies, ( and many others, including no doubt most of the UK’s own blue chips), are minimizing their exposure to the United Kingdom’s 24% corporate tax rate by repatriating high royalty fees for using their brands, transfer pricing service fees for IT and the like and basing their entities in countries such as Switzerland with its 12% rate of corporate tax where Starbucks operates its worldwide coffee-trading activities, and Ireland with a 12.5% rate, where Google has headquartered its European operations.  Let’s be honest, as long as we stick by the rules, wouldn’t we all do it?

Now it’s not just us whingeing Brits that are complaining; everyone is, including Germany and France, (which is already making changes to French law to tighten up some local loopholes), – and particularly the OECD that sets the rules. Even the Financial Times came out with a clear statement about the issue last week when it wrote,

‘The international tax system in effect provides vast subsidies for multinationals, helping them outcompete local rivals on a factor – tax – that has nothing to do with economic productivity. They free-ride on tax-funded benefits – roads, educated workforces, reliable courts – provided by the countries where they do business, while others pay for those benefits. This distortion is inefficient and unproductive, and corrupts the very fabric of markets.

Well my guess is that new regulation is being formulated, which will broadly centre on two key principles:

  • Unitary taxation where companies are taxed according to the genuine economic trading they do in each country.
  • Some form of minimum tax payable locally which would be determined by looking at the global profit of a company and then applying a formula based on where sales are made and where people are employed to allocate a fair share of the taxable profit to each country.

When this new regulation is unleashed it will mean that every company that trades outside its national borders will need to make an annual submission to the tax authorities of each country where it does business. This submission will combine the consolidated accounts for the whole global group that ignores all internal transfers and shows the group’s physical assets, workforce, sales and the overall profits which are broken down by country according to the weighting set out in the final formula.  Now if you thought getting ready for IFRS was a challenge, (albeit one which as yet has no firm delivery date for the US), step back and reflect on internal implications of this. Overnight the number of published reports has gone through the roof as one needs to be submitted in each country where you trade. Already the global financial crisis has stepped up the pressure from investors and regulators for accounting and reporting processes that are rock solid with no errors, faster reporting and agility in dealing with new disclosure requirements, such as this one which certainly raises the bar on transparency.

Reporting and disclosure is still a major concern for Finance. ‘Fortifying the Financial Close to Disclose Process’, a new research paper from APQC found that nearly 75% of organizations around the globe have the close-to-disclose process ranked among their top-two targets for financial management improvement over the next 18 months. The type of improvements that respondents currently seek cluster around four core themes:

  • Taking less time to gather and process financial data with benefits such as a 30% cost reduction for companies that have an integrated and automated end-to-end process.
  •  Automating the process to improve effectiveness by deploying solutions, such as SAP Financial Consolidation and SAP Disclosure Management, that have compelling functionality around key process areas such as variance analysis, journal entry processing, and close scheduling.
  • Being able to identify the root causes of accounting and reporting errors and reduce the risk of restatements through having more robust processes, particularly around intercompany accounts, something that SAP now packages with both SAP Financial Consolidation and SAP Business Planning and Consolidation, but still offers as a stand-alone solution that can even be integrated into a non SAP process – SAP Intercompany.
  • Strengthening the alignment between the data used for regulatory reporting and the data used for planning and resource allocation internally – again something that won’t get far relying on spread sheets.

There is lots of other interesting stuff in the report, which you can read here, (you may have to register) including benchmarking on various metrics and process steps. But it seems to me that the close-to-disclose process is set to become infinitely more burdensome if and when country level reporting for taxation purposes is mandated a few years down the line. So although more speed and less cost are compelling targets in the short and medium term, perhaps it’s time to step back and look at the bigger picture and whether the solutions you have today can cope with the demands of tomorrow when a new stakeholder enters into the picture.

Starter Kits for the Financial Close – an obvious choice

Customers are great fans of starter kits and rightly so in that they offer packaged best practice that can be quickly implemented and some come at a fixed price, which makes them even more attractive.

In this short video clip, Stefan Neufcourt, SAP’s resident expert on starter kits for finance, talks through the benefits of Enterprise Performance Management Financial Close Starter Kits for IFRS or GAAP – and the Starter Kit for Disclosure Management.

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My guess is if Stephan wanted another career, he could soon find employment doing voice-overs – I’ve not heard better for a long time!