Bringing Collaboration into Your Financial Planning Process

By Karuna Mukherjea, Sr Director Product Marketing, SAP

Financial Planning and Analysis (FP&A) is the process of planning, analyzing, collaborating and reporting on the organization’s financial strategy. I want to specifically focus on the collaboration piece in this blog.

“Collaboration” – the simple yet powerful act of working with others on a task or activity to achieve shared goals. Let’s take the example of Ballet, almost always, by nature is a collaborative art form. Ballet needs music, dancers costumes, a venue, lighting, etc. One could always do a solo performance but the beauty and power of ballet really comes out when individuals and art collaborate and produce the show.

Real time Collaboration can dramatically alter the performance of an FP&A system, according to a recent Aberdeen Report. Collaboration in Financial Planning and Analysis includes consolidating inputs from multiple sources, analyzing the data, and communicating results that are understood and respected by decision makers. In the past, while users understood the importance of collaboration, they did not have the right tools and technologies to be effective in real time and context of a specific plan or report being analyzed. E-mail and messenger were the tools of the choice, which were not integrated with their planning system. Now the game has changed with a solution featuring a collaboration engine embedded in the planning system.

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Benefits of this embedded collaboration are simply amazing. An FP&A user can now:

  • Collaborate with their colleagues and stakeholders in real time from the same application where they are planning and analyzing
  • Optimize the decision process by providing in-context information to the decision makers
  • Share reports, tasks, and other related information with key stakeholders
  • Build an effective social community to contribute to the FP&A Process

Organizations are considering social collaboration functionality as a key part of their cloud technology.

For more information read the Aberdeen Report, “Next Generation of Cloud FP&A: Simple Collaborative and Real-Time” and learn how to collaborate on your plans like never before.

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Why is There High Interest in Enterprise Performance Management? – Part 2

By Gary Cokins, Founder of Analytics-Based Performance Management LLC

In part 1 of this blog I questioned why EPM was receiving such popularity at the executive level, and posited some theories. Here in part 2 I give my view of some deep root cause effects.

Deeper root cause forces spurring interest in EPM today

There is a more deep-seated root cause than the forces described in part 1 of this blog. It involves a growing gulf related to (1) the ability of an organization’s managers to have consensus and agree with each other, and (2) the uncertainty of future external influences impacting their organization.

The figure below is a modified and simplified framework developed by Ralph D. Stacey, Ph.D., a scholar in organizational management.[1] The framework proposes that different managerial approaches are required based on where a problem resides in the two dimensional matrix with the axis “level of managers’ agreement” and “degree of uncertainty.”

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The lower left and upper right zones of the matrix are easiest to understand:

  • Bottom-left zone with high agreement and certainty. University MBA programs typically focus here. Past data is gathered and used to predict the future. Managers easily and rationally reach consensus and the expected outcomes are confidently predictable. Projects, initiatives, and actions are selected and monitored with variance analysis from plans used for mid-course control and adjustments.
  • Upper-right zone with lack of agreement and high uncertainty. In this zone there is often avoidance of decisions and it borders on chaos. Breakdowns occur here because traditional methods of planning, debating, negotiating and committing don’t work. Organizations get balkanized and either make strategic mistakes breaking from the past or take no action due to lack of confidence. Innovation and creativity should prevail in this zone, but they often come up short. 

The widening of the zones “in between”

As we move from the lower left to the upper right zone then politics and coalition building occurs. This is because there are broad differences about “how to get there” rather than the expected outcomes. Cause-and-effect relationships are rarely known or understood, so this is where a shared vision of the future state is more important than project planning. What is needed in this area of the matrix are the executive team’s ability to lead and inspire their employees and to continuously sense-and-respond to unexpected factors.

My belief as to why there is an accelerating interest in EPM is due to expanding gulf in this “in between” zone. This “in between” section of the matrix involves increasing complexity, uncertainty and change. In this section there is a gathering storm threatening all organizations. This is where agenda building overrides fact-based decision-making. This is where blind muddling by managers unfortunately overrides something more desirable – vision, inspiration, and good enterprise risk management (ERM) practices from the executives. As markets become more intensely competitive, managers are faced with more high-stakes decisions. As a result success in this “in between” area of the matrix requires both making the right decision in the first place and then executing on that chosen path direction.

The collective suite of integrated methodologies that comprise EPM (e.g., strategy mapping, scorecards, customer profitability management, rolling driver-based financial forecasts, enterprise risk management, etc.) provide the solutions for this “in between” section. EPM shifts problems and decision making from this “in between” section toward the lower left zone – making them simpler problems. Here is how and why technologies become essential enablers:

  • A shift in emphasis toward applying analytics of all flavors, including predictive analytics with what-if and economic trade-off scenarios, bolsters proactive rather than reactive decision making.
  • Gathering all information into an enterprise-wide and common information platform with scalable real-time information replaces disparate and disconnected data sources. These are increasingly cloud-based and accessible with mobile devices.
  • Cross-functional communication and collaboration amongst employees and automated rule-based decisions replace self-serving silo and bunker mentality.
  • The work processes, priorities, initiatives and target-setting of managers and employee teams are aligned with the strategic intent of the executive team. These replace pet projects, minimal (or non-existent) accountability, and internally competing silo department performance metrics that are suboptimal and degrade maximizing stakeholder needs – such as for shareholders or customers.
  • Economic measures of customer profitability and potential customer value are made visible to support differentiated service levels, offers or deals to achieve maximum profit yield from the sales and marketing budget.
  • Exception reporting, alert messaging, and at-a-glance visual reporting improves traction and accelerates speed in the strategic direction set (and continuously re-set) by the executive team.

Organizations need top-down guidance from its executives with bottom-up execution. Effective EPM, not simply the narrow CFO financial view of better budgeting and control, shifts decisions that are currently waffling in the “in between” section of the matrix – and away from the dreaded upper right zone of high uncertainty and lack of managers’ agreement. Complexity is expanding due to the forces described earlier, and EPM software brings rational thinking to convert once perceived complicated problems from the upper right into simpler and solvable problems in the lower left.

Understanding what EPM does is more important than trying to define what it is.

[1] Stacey, Ralph D.; Complexity and Creativity in Organizations; Berrett-Koehler Publishers, Inc.; 1996.

 

About the Author: Gary Cokins, CPIM

Gary_Cokins

Gary Cokins (Cornell University BS IE/OR, 1971; Northwestern University Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in enterprise and corporate performance management (EPM/CPM) systems. He is the founder of Analytics-Based Performance Management LLC www.garycokins.com . He began his career in industry with a Fortune 100 company in CFO and operations roles. Then 15 years in consulting with Deloitte, KPMG, and EDS (now part of HP). From 1997 until 2013 Gary was a Principal Consultant with SAS, a business analytics software vendor. His most recent books are Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics and Predictive Business Analytics.

gcokins@garycokins.com; phone +919 720 2718

http://www.garycokins.com

Linkedin.com contact: http://www.linkedin.com/pub/gary-cokins/0/15a/949.

Why is There High Interest in Enterprise Performance Management? – Part 1

By Gary Cokins, Founder of Analytics-Based Performance Management LLC

There is much confusion and little consensus as to what enterprise performance management (EPM) is. Different information technology research firms define it differently. Different consulting firms describe it to fit their unique competencies rather than what their clients may require. Since my impression is that most of these organizations view EPM far too narrowly – such as only a CFO initiative with better budgeting and control – my feeling is that it is better to discuss what EPM does rather than have arcane debates about defining what it is.

I argue that organizations have been performing the various methods that comprise EPM for decades – well before it received its recent popular references in the media. Organizations have been pursuing basic types of performance management methods arguably even before there were computers! So why is EPM receiving popularity as a buzz phrase now?

The Debut of EPM at the Enterprise Level

If you had done a Google search a few years ago on the term “performance management”, the results would have predominantly referred to the human resources and personnel departments’ attention to monitoring and improving individual employees including employee appraisals. But if you do that Google “search” today the shift is toward the performance of the organization or enterprise in its entirety – not for individual employees. Today the term “enterprise” typically precedes “performance management.”

Some would argue that this shift to where EPM regularly appears in the media and information technology (IT) community has been due to the IT research firms observing that business intelligence software vendors – the type with functionality more towards data-mining and analyzing data rather than producing the raw transactional data – are now integrating analytical information across multiple departments. For example, a computer manufacturer’s purchasing system detects a temporary vendor part shortage that, in turn, is directly signaled to its customer order entry agents to influence their customers to select alternative product variations, perhaps with a discount or deal as inducement, until the part shortage is resolved. The risk of a missed sales opportunity is eliminated. This “demand shaping” is more powerful than “demand management.” This type of communication from the purchasing function deep in the bowels of the production function to a call center agent deep in the sales function would have rarely existed a few years ago.

Others might argue that the increasing appearance of EPM at the organizational level arose from the same IT research firms observing that ERP software vendors like SAP now provide strong combination suites of at-a-glance visual dashboards and scoreboards. Further, these reporting tools are now linked to strategic planning and execution; managerial accounting; and forecasting tools – and they are extremely scalable to handle millions of records for products, distribution channels, and customers.

These are certainly factors, but I believe the emergence and interest with EPM in the media and marketplace has deeper root causes.

The forces causing interest in EPM today

I believe that a better way to understand what EPM is about is to understand what problems the various EPM methods solve – the immense forces on management – such as these:

  • A failure and frustration by executives to execute their usually well-formulated strategy. The terminations of CEOs by boards of directors have been recently occurring at record high levels due to this frustration
  • A lack of trust among managers to achieve results is an increasing concern. Consequently, there is an escalation in accountability of managers and employee teams for results with consequences
  • Change is the new constant. Increasingly rapid decisions by employees (without time for higher management input) needs to leverage trade-off and predictive analytics. This means a need for employees to understand their executive team’s strategy
  • Mistrust by managers of their managerial accounting information and its flawed and/or incomplete product, channel, and customer profitability reporting
  • Poor customer value management. There is a shift from being product-centric to customer-centric with customers now viewed as the primary source of shareholder wealth creation. Surveys report customer retention and growth as the CEO’s number one concern
  • Dysfunctional supply chain management with a lack of trust among the traditional adversarial relationships between buyers and sellers along the supply chain. Trading partners should ideally be collaborating and identifying mutually beneficial projects and actions
  • Balancing risk appetite with risk exposure to optimize financial results with anticipatory risk mitigation actions

Today effective EPM software goes well beyond query and reporting data mining – it addresses and resolves all of these issues. The result is rather than just monitoring the dials of its key performance indicator (KPIs) dashboards, organizations must move those dials. The purpose of EPM is not just managing but improving organizational performance.

Join me in part 2 of this blog next week where I shall discuss the deep root cause forces spurring interest in EPM today.

About the Author: Gary Cokins, CPIM

Gary_Cokins

Gary Cokins (Cornell University BS IE/OR, 1971; Northwestern University Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in enterprise and corporate performance management (EPM/CPM) systems. He is the founder of Analytics-Based Performance Management LLC www.garycokins.com . He began his career in industry with a Fortune 100 company in CFO and operations roles. Then 15 years in consulting with Deloitte, KPMG, and EDS (now part of HP). From 1997 until 2013 Gary was a Principal Consultant with SAS, a business analytics software vendor. His most recent books are Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics and Predictive Business Analytics.

gcokins@garycokins.com; phone +919 720 2718

http://www.garycokins.com

Linkedin.com contact: http://www.linkedin.com/pub/gary-cokins/0/15a/949.

Simplifying Finance in an increasingly complex world – outlook on Financials / GRC 2015

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By Henner Schliebs, SAP. Originally posted on SAP Business Trends, 17 February 2015. Reposted with permission.

We all have read the new mantra multiple times: if we simplify everything – we can do anything. This holds true for the finance department more than ever, considering that the use of technology is key to enabling a real-time business process environment. There were some threatening results revealed in a recent study that the CFO magazine has published, like “80% of respondents would need easier to use technology if they’d wanted to meet their growth targets”. So, this latest shift in technology enabling true real-time processes will be the focus topic of this year’s Financials 2015 / GRC 2015 event hosted in Las Vegas in March (Wynn Hotel, 3/17-3/20, follow the discussion #Financials2015).

As there will be hundreds of sessions that show customer success stories, the latest and greatest in financial management, EPM, Analytics, GRC and Ariba solutions I would like to highlight the Simple Finance sessions so that you can build your agenda around those, especially given that any S4/HANA journey will start with Simple Finance:

  1. start with the keynote where Thack Brown will elaborate on the need for speed (aka real-time finance processes) and introduces some external thought leaders to the panel discussions around a modern finance organization. I won’t tell too much when mentioning that Thack will launch another important mile stone of Simple Finance to the public…
  2. one of the most compelling use cases of Simple Finance is the central journal, so this session lead by Carsten Hilker shows you how to non-disruptively start your Simple Finance implementation arriving at one source of the truth
  3. for those in need of a high-level introduction to Simple Finance I’d highly recommend Martin Naraschewski’s session about the roadmap to Simple Finance, where he will elaborate on the needs of a typical finance transformation initiative
  4. one thing that was highly anticipated by you all is more insight into Integrated Business Planning – your unique opportunity to natively connect EPM with your Simple Finance ERP system to allow planning, simulations and scenario modeling directly on your transactional data. Pras Chatterjee off course will show integration to the new Cloud for Planning solution as well
  5. new to the game is the Simple Finance Cash Management solution that is introduced by Christian Mnich, where he will give insights into how to better plan and forecast liquidity based on an integrated process leveraging your ERP / S4HANA system
  6. a dedicated session on the new Accounting solution will provide better understanding of the concepts of the greatest innovation since R/3 building the base for S4HANA. Stefan Karl will guide you through this
  7. want to learn how to get to Simple Finance? Join charming expert Birgit Starmanns and understand what to consider if you want to adopt Simple Finance including advanced predictive finance analytics
  8. join our partner John Steele at Deloitte when he talks about real-time finance processes and the role that HANA plays in this highlighting finance use cases like fast close, financial risk management or finance operations
  9. the experts from TruQua will deliver a thrilling session around the analytics that Simple Finance can provide in form of HANA Live content or via integration of SAP Analytics and EPM solutions. Dave Dixon’s presentation is a good example
  10. finally you’d want to learn about the fast close capabilities of Simple Finance where Stefan Karl walks you through how to become a world’s fastest closing company like SAP

Note there are many “hands-on”-like sessions on the Monday (3/6) as part of the Pre-Conference Workshops that deliver tremendous value for practitioners.

Please be sure this is just the Simple Finance top 10 – please be sure you also learn from customers how SAP Financial Management solutions helped them achieve targets.

Follow the discussion on twitter or facebook or SCN and please share your thoughts.

10 Things to See and Do at SAPinsider Financials 2015

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By David Williams, Head of EPM and GRC Product Marketing, SAP

We’re already well into 2015 and the first key event for the SAP EPM (Enterprise Performance Management) team, partners, and most importantly, our customers, is just about upon us. SAPinsider Financials 2015, hosted by Wellesley Information Services, and co-located with SAPinsider GRC 2015, runs from March 17 – 20 in Las Vegas. It’s one of the key annual events that features EPM-related content. Given there’s so much to see and do at the event, and I often get asked for an agenda of EPM content, I thought why not put together a list of 10 things to see while attending the event. Think of it as a checklist of don’t miss items/sessions. Here we go:

  1. Cloud for Planning, Cloud for Planning, Cloud for Planning. The latest and greatest cloud-based planning and analysis application has been available since February. Make sure to check out one of the many SAP Cloud for Planning sessions and demos to see why it sets a new standard for planning in the cloud
  2. SAP Business Planning and Consolidation 10.1, version for SAP NetWeaver. “BPC” continues to be one of the most widely deployed planning and consolidation applications on the planet. Discover what’s new in the latest release and see how BPC fulfills integrated business planning for Finance capabilities as part of Simple Finance
  3. Close to Disclose. Closing the books and disclosing results continues to be a highly-manual task for many. Discover how you can accelerate/automate the financial close to disclose in one of the presentation or demo sessions including a Jumpstart deep dive on March 16th
  4. Speaking of Jumpstarts, there are 6 Finance ones and these are a good way to get up to speed on subjects such as SAP Simple Finance, simplifying plan and report deign in SAP Business Planning and Consolidation, and the impact of big data on Finance and GRC security among others
  5. EPM solution center. Go deep into product demos with our solution experts across a range of topics including planning, consolidation and profitability analytics, while not forgetting of course the new SAP Cloud for Planning application
  6. Show floor demos. Have a seat and take a well-earned rest from all that walking around the show floor, while watching one of the EPM solution experts show you the latest and greatest product features
  7. Customer delivered sessions. For many the key attraction of SAPinsider is hearing our customers’ financial transformation stories, in their own words. In 2015 you can hear from Lexmark, Velux, Delicato, IDEXX, Telephone and Data Systems and Applied Materials among others
  8. Simple Finance. It’s bound to be a big draw, and so there’s a number of SAP Simple Finance focused sessions. But of course don’t miss the keynote address to hear about the SAP vision to help simplify finance
  9. Visit our partners. Why not take the opportunity to speak with some of our business partners at the event? This year you’ll find the event global sponsor PwC, premier sponsors EY, KPMG and Z Option, as well as Deloitte, itelligence and BlackLine among others
  10. Say hi to the SAP team. Really please do – we’d be delighted to meet you. There will be a number of our subject matter experts at the event that can discuss topics such as planning and financial consolidations

The complete agenda is available here. Safe travels to Las Vegas and if you’d like to meet send me a tweet @daveswilliams!

EPM Reflections #6: Improving planning and consolidation at Petrobras

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Just a few short weeks after closing the doors on the SAPinsider Financials event in Nice (see my earlier blog), we moved back over the Atlantic in June to take up residence in Orlando, for the annual SAPPHIRENOW event.

If you’ve never been to SAPPHIRENOW then I’d highly recommend it. Here’s the link to the conference website so that you can make a note of the dates. It’s the jewel in the crown of SAP conferences and presented on a huge scale. SAP solutions for EPM were proud to appear in the Line of Business Finance forum at the event this year, showcasing our EPM solutions, and more importantly having the opportunity to bring some of our customers along to the event also to share their stories of EPM use. Thankfully many of the SAPPHIRENOW stage presentations are recorded for on-demand playback, and here I am able to share with you one of our customer stories Petrobras, who present their experience of using SAP Business Planning and Consolidation, version for SAP NetWeaver, powered by SAP HANA.

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And, if you like the full video link above, then why not also view a shorter video clip that Daniela Marques Pereira recorded for us afterwards which is available on YouTube.

 

EPM Reflections #3: A Leader in EPM

EPMReflections 2014_3

For SAP solutions for EPM, the big news in March was the release of the 2014 Gartner Magic Quadrant for CPM (aka EPM) Suites. This Gartner report, as with other Analyst reports, offers unbiased opinion concerning the relative merits of software vendors and their solutions in the EPM space. Gartner’s report is based not only on an assessment of software capability and innovation, but also upon customer feedback, and as such the SAP team always eagerly awaits the results of this annual survey.

Reported in this CFOKnowledge blog post by my colleague David Williams, SAP was once again indicated as a “Leader” in this Analyst report.

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Read David’s blog post here, or if you prefer click the image above to go straight to the short-report, available at the SAP website.