How to Improve the Governance of Your End-to-End Financial Close

By Stefan Karl, Senior Director, Finance Solutions, SAP.

Originally posted on SAP Analytics, 28 April 2015. Reposted with permission.

As part of our ongoing accounting and financial close series, today we’ll discuss how to improve the compliance and quality of the financial close with automated internal control management and governance of financial master data.

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So far in our blog series, we’ve covered all steps of the financial close – from accounting to entity close, corporate close, and reporting and disclosure. Most of the solutions presented include governance capabilities – for example, structured approaches to compliance with multiple accounting standards, standardization of closing tasks and reporting templates across subsidiaries and closing cycles, or flexible workflow approvals.

The two solutions covered in this blog apply to the end-to-end financial close, and this is why we’ve grouped them into a separate pillar for Financial Close Governance.

Automate Your Compliance and Control Management Processes

As part of the external financial close, management is often required by regulations to establish and assess the effectiveness of internal control over financial reporting. This should provide reasonable assurance regarding the reliability, i.e. completeness and correctness, of the external financial reporting. This management assessment is then often subject to an external audit. But, even without external reporting requirements, it’s become a good business practice to establish a sound internal control system and perform automated control testing to detect errors in business processes early on.

A comprehensive solution providing such functionality is SAP Process Control which is part of a suite of SAP solutions for governance, risk, and compliance. Key capabilities of SAP Process Control are as follows:

  • Document: maintain your compliance and control structures which includes defining organizations, processes, controls, risks, policies and regulations
  • Scope: perform materiality analysis and assess risks to determine in-scope organizations and processes, and thus avoid over-testing and under-testing.
  • Evaluate: schedule manual and automated control evaluations to execute your test strategies including issue identification and remediation
  • Monitor: leverage process control automation to identify, track and review any exceptions identified by continuous monitoring processes
  • Report: use embedded analytics and reports to provide continuous insight into the status of compliance and controls

Continue reading

Plan Simpler at SAPPHIRE NOW 2015

By Karuna Mukherjea, Sr Director Product Marketing, SAP

Originally published on SAP Community Network, 27 April 2015. Reposted with permission.

SAPPHIRE NOW as always continues to mark a time at SAP where we showcase our latest innovations, get to meet our existing customers and start building relationships with our new customers and the larger SAP Community. My colleague Pras Chatterjee talks about the “New Perspectives in Planning” that will shared at SAPPHIRE NOW 2015. SAP is about making the lives of our customers simpler! On that note we decided to make planning simpler. With the launch of our latest solution SAP Cloud for Planning, finance professionals can really simplify and optimize the FP&A Process. Built natively on the SAP HANA Cloud Platform with embedded analytics and collaboration and consumer grade UI, this application has truly transformed how the FP&A function and the role it will play in finance organizations.

Plan Simpler with SAP Cloud for Planning

Attend these Demo Theater Sessions and learn how you can plan better by simplifying financial planning and analysis. See how the SAP Cloud for Planning solution helps by delivering a people-centric user interface, embedded analytics, collaboration capabilities, and powerful modeling, all within a single product. Also get a chance to meet with the SAP Cloud for Planning Product Experts and discuss how this solution can solve your current challenges of FP&A.

Explore the Benefits of Planning Solutions in the Cloud

Attend these Demo Theater Sessions and learn how to make your planning faster and simpler with real-time insight, collaboration, and powerful modeling. See how the combination of the SAP HANA platform and the SAP Cloud for Planning solution make this possible. Examine all the new design features the cloud planning solution offers.

Get Ready for Next-Generation Financial Planning and Analysis in the Cloud

Join SAP and Deloitte in this micro forum discussion.This discussion will help you determine if you’re ready for simpler financial planning in the cloud. Hear SAP and business partner experts discuss the access, collaboration, and deployment benefits of a cloud-based planning solution and offer sound advice on how to get started.

We look forward to seeing all of at one or more of these sessions. If you are unable to attend any session come by our “Simplify Financial Planning and Analysis” Demo Station located at LB210 in the Line of Business Finance area. Learn how to Plan Simpler with SAP Cloud for Planning and have a great SAPPHIRE NOW.

Are You Planning on a Great SAPPHIRE NOW?

By Pras Chatterjee, EPM Product Marketing, SAP

Originally published on SAP Community Network, 21 April 2015. Reposted with permission.

This year brings a new perspective for all of us in the world of Planning with SAPPHIRE NOW just around the corner, this being “Plan Simpler”!  It’s something Finance folks in the world of Financial Planning & Analysis have been striving to achieve for years, but this year at SAPPHIRE NOW within the Line of Business Finance Campus we have real world highlights that showcase how this is possible.  With the launch of S/4 HANA and all the excitement around SAP Simple Finance, Planning now has a platform to take it to the next level!

Transform Business Planning with In-Memory Technology
Attend this session to hear how ServiceNow powers their SAP Business Planning and Consolidation, version for SAP NetWeaver to enhance the way they focus on Business Planning and accelerate their Financial Close process.  John To from ServiceNow will spend time discussing how the power of SAP HANA accelerates the way they do business now and he’ll highlight the future of their landscape all with the industry leading In-Memory Database platform!

Improve and Simplify Your Business Planning – repeated twice
Attend this live demo to see how you gain real-time access to your actuals leveraging SAP Business Planning and Consolidation embedded within your SAP Simple Finance solution via Integrated Business Planning for finance.  With the power of SAP HANA, the cloud and mobility learn how to enhance and extend the way you do your planning!

Simplify Finance Processes through Real-Time Integrated Financial Planning
Join me at this Microforum where I help customers understand the value that SAP Simple Finance brings to customers with the ability to improve data access and deliver real time information for the business all with the spirit of providing unparalleled ability to perform Business Planning.  We’ll spend some time amongst peers and experts understanding where you are on the SAP roadmap and what it takes to get to a level where business users can be supported in a manner that allows them to make decisions based on instant insight.

SAPPHIRE NOW presents a great opportunity in the world of Budgeting, Forecasting and Planning to gain a foothold for your enterprise and organization in having one SAP Simple Finance platform, powered by SAP HANA.  Learn how to move forward from where you are now, how to provide the real time access to data one needs in this day and age and how to gain the competitive advantage over everyone else.  Learn how to bring together SAP ERP, SAP Simple Finance, SAP Business Planning and Consolidation, Integrated Business Planning for finance through the great events we have planned.  Learn to “Plan Simpler” and plan on having a great SAPPHIRE NOW!

How to Reduce the Time, Risk, and Cost of Producing Standard Periodic Financial Reports

By Elizabeth Milne, Sr Director, EPM Product Marketing, SAP

Originally published on SAP Analytics, 17 April 2015. Reposted with permission.

I finished my close, now how can I reduce the time, risk, and cost of producing standard periodic financial reports?

As part of our ongoing accounting and financial close series, today we’ll discuss disclosure management, which is a market term for producing standard periodic financial reports.

In our last blog, we discussed reporting and analysis for the financial close, and disclosure management is an extension of that. It’s the process of producing the final product of the close to disclose process. So after you run all your batch processes, close each entities’ books, reconcile intercompany, collect and check data at corporate, run consolidation, and make consolidating adjustments you need to produce formal reports. As in our last blog, this is for both internal and external purposes. Examples of this end product: annual report, quarterly report, board report, ops review, and so on. Depending on your organization, the final product will vary, and most likely you will have multiple reports that vary internal and external and periodically.

In most organizations, there’s a designated “owner” of these types of reports. For this blog’s purposes, let’s call her Leia. This is usually a manual process. She has a word document that each period she does a “save as” then updates the information in that report with the new period information. She then e-mails the document to various stakeholders, C-level executives, and/or divisional or market unit leads who make their edits and send them back to her. Leia then consolidates all the changes into a master document, which has multiple review cycles.

Let’s discuss the challenges with Leia’s approach – lack of Automation, Visibility, and Control.

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Lack of Automation

Leia collects data in the report from disparate data sources across system landscapes. Some data comes from the consolidation solution and other from the HR system. Sometimes you can link data in word to outside sources, but Leia does a manual cut and paste for spreadsheets and narrative. With this approach, ’’is easy to make mistakes. Data is often reused in multiple reports, so she updates it in one report she needs to remember to update it.

Lack of Visibility

Because Leia’s e-mail communications produce multiple document instances and versions, it’s difficult to keep track of who changed what where. E-mail workflow is difficult to manage and audit. Last-minute adjustments may cause inconsistencies and lack of control. Leia needs to ensure that if she updates the revenue number on page 6, than the revenue break down on page 36 is also updated.

Lack of Control

Since Leia’s company does business globally, regulations in different jurisdictions add to her complexity problem. She also has to deal with multinational groups across continents and time zones (so when working with Asia, for example, the smallest change could cost a whole day). And at the end of the day, multiple output formats are required (PDF, HTML, XBRL). People, process, and technology has been a key theme in this series so far and disclosure management is no exception. However, while Leia depends on e-mail and word processor technology, she focuses more on the people and the process. This is a prime area of improvement to leverage technology. Disclosure management solutions are plentiful in the market. I’m the most familiar with SAP Disclosure Management so I can share some of the functionality that might help Leia.

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Automation with SAP Disclosure Management

SAP Disclosure Management has a central data store so Leia can automate the population of this data store by creating feeds from her various data sources. This will save her from manually updating data and making mistakes. Data is often reused in multiple reports, so if she updates it in one report she needs to remember to update it everywhere. With SAP Disclosure Management, Leia can create multiple reports based on the same data store so she doesn’t need to update the same data in multiple reports, just the data store.

Visibility with SAP Disclosure Management

Leia can create a report structure within SAP Disclosure Management where she can organize a report into multiple chapters. She can assign different chapters to different people for updating. Additionally, there’s a built-in work flow so she can assign a different approver for that editor to the same chapter. The workflow also makes it very easy to see what chapters have been completed and which still need work. Last-minute adjustments are then easier to manage since the report update is now automated.

Control with SAP Disclosure Management

Since SAP Disclosure Management hosted on a server and accessibly via the internet, all of Leia’s stakeholders can access the report 24/7 in all time zones. Creating different reports for different jurisdictions can be managed easily since she can reuse chapters in multiple reports. And at the end of the day, SAP Disclosure Management can provide multiple output formats (PDF, HTML, XBRL).

SAP Disclosure Management helps Leia (or you) reduce the time, risk, and cost of producing standard periodic financial reports.

Discuss All These and More at SAPPHIRE NOW
Please join us at SAP’s SAPPHIRE NOW conference May 5 – 7 in Orlando, Florida. SAPPHIRE NOW and ASUG Annual Conference is the ultimate opportunity to maximize your SAP investment and find solutions to your most pressing business challenges. Through face-to-face interactions with executives, industry experts, peers, and SAP partners, you’ll be able to leverage diverse points of view as you expand your business network. Learn best practices, explore cutting-edge solutions, and discover ways to reduce complexity in your business. With hundreds of sessions, you have the ability to customize your experience based on what’s most important to you.

I will be there with all of our guest bloggers from this series. If you’d like to discuss any of the topics in this series in more detail please stop by the Demo Station LB209: Simplify Accounting and Financial Close Processes and ask our experts. I look forward to seeing you there.

Read the previously published blogs in this series and stay tuned for upcoming blogs in the accounting and financial close series, where we will go into much greater detail on corporate governance. Learn more on our recent blog on reporting and analysis for the corporate close.

Elizabeth Bio & Pic

Bringing Analytics Back into Your Financial Planning and Analysis

By Karuna Mukherjea, Sr Director Product Marketing, SAP

When we examine the solutions that are available for our finance users to support the FP&A function, the primary focus of the solutions are planning & budgeting with forecasting. The solutions fail to provide users with the ability to analyze in context of their plan, budgets, or forecasts. The Financial Planning and Analysis function truly becomes relevant from my perspective when the financial analyst is spending less time manually configuring reports, consolidating information and more time on analyzing the data. The more time they spend on analysis the higher the impact on the growth of the organization.

The impact is even more significant when the FP&A solution is consumed in the cloud. Read the recent Aberdeen Report, “The Next Generation of Cloud FP&A: Simple, Collaborative, and Real-Time.” According to the report, cloud technology:

  • Enabled much higher consumption of the FP&A solution
  • Took away the complexity of engaging users in the analysis process
  • Made “real time” a reality

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A particularly powerful statistic is that more 75% of people who want the ability to “What-If analysis or simulation” have either already implemented a cloud solution or plan to in the short term. In order to provide value to customers, the next generation of FP&A solutions need to include functions not only around planning but also focused on collaboration and analysis and must be in the cloud.

Finance users need a full comprehensive analytical platform that can:

  • Simulate planning scenarios in real time
  • Perform self-service analysis – drill down on metrics, KPIs, and plan
  • Share insight and analysis with stakeholders

Your Financial Planning and Analysis Checklist

Best in class organizations are looking for in-memory analytics in the next generation of cloud FP&A solutions.

For more information review the Aberdeen Checklist, “Next Generation of Cloud FP&A Solutions: What To Look For” and learn how a full comprehensive analytical platform can significantly impact the growth of your organization.

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Understating Analytics: Breaking down Reporting and Analysis Options for the Financial Close

By Elizabeth Milne, Sr Director, EPM Product Marketing, SAP

Originally published on SAP Analytics, 10 April 2015. Reposted with permission.

As part of our ongoing accounting and financial close series, today we’ll discuss reporting and analysis for the financial close.

In my last blog, we began to discuss financial reporting at a high level. We discussed how to get stuff out of a consolidation reporting tool. But the topic of reporting and analysis, as it relates to the financial close, is a lot broader than just basic financial statements. When financial reporting is mentioned, external reporting is the first thing that comes to mind – statutory and regulatory reports that are required by external stakeholders.

But just as important are the internal stakeholders. Examples of stakeholders:

External stakeholders

  • Statutory reporting to government agencies
  • Auditors
  • Financial lending institutions
  • Stockholders and stock exchanges

Internal stakeholders

  • Board members
  • Business owners
  • Executives, managers, and analysts

External stakeholders have standard consolidated reports that are required, but the internal stakeholders need more analytics. They need more ways of slicing and dicing information, often not only from consolidation systems but from operational systems. Analytics solutions from SAP are grouped as follows:

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  1. Enterprise performance management (EPM) encompasses strategy, planning and consolidation solutions (like SAP Business Planning and Consolidation as we discussed in some of our previous blogs) and SAP Disclosure Management (which we’ll cover in our next blog).
  2. Governance, risk and compliance (GRC) as it relates to the close will be covered in an upcoming financial close governance blog.
  3. Predictive analytics is an interesting one as it relates to the financial close process. The close process allows an organization to report what happened in the past. This is not “predictive” at all. However, being able to analyze why things happened in the past is where the close gets interesting and predictive analytics can help. As we collect more and more financial data at lower levels of granularity, we can then start to do predictive analytics and statistical analysis on the correlation and relationship of data to help figure out why things happened and what decisions can be made to affect financial information favorably in the future.
  4. Business intelligence (BI) is all about taking business data and making it consumable. There are various tools discussed below that help you anayze information to support your organizations to make informed decisions.

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As seen above the SAP BusinessObjects Business Intelligence platform allows you to collect data from multiple sources, which could include financial consolidation data, and layer a Business Intelligence layer on top of it in order to standardize reporting across your organization.

Agile Visualization Solutions

Leveraging solutions such as SAP Lumira and SAP BusinessObjects Explorer allow you to discover trends, outliers, and areas of interest in your business. You can tell your story with self-service visualizations and analytics. This will allow you to easily adapt to business scenarios by combining, manipulating, and enriching data.

Dashboards and Apps

SAP BusinessObjects Dashboards and SAP Design Studio enable you to create powerful environment to build interactive and visually appealing analytics. You’re provided with a rich set of controls, like buttons, list boxes, drop-down, crosstabs, and charts. This allows you to create those pretty dashboards that our C-level executives love so much.

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Reporting Solutions

SAP Crystal Reports and SAP BusinessObjects Web Intelligence help you to create high productivity designs for reports. Users can quickly build formatted reports on any data source. You can securely distribute reports both internally and externally and minimize IT support costs by empowering end users to easily create and modify their own reports.

Bringing It All Together

When addressing financial reporting concerns, there are many stakeholder requirements that need to be addressed. As such, there are many reporting options that are available. To bring up our recurring theme of “People, Process and Technology:”

  • People – Consider who’s consuming the reports and what’s the best format to share the information with them.
  • Process – Decide which process the data is collected by, and how you can best standardize it for consumption.
  • Technology – Asses your people and process requirements and work with a software specialist to help identify the best tool to support you.

Discuss All These and More at SAPPHIRE NOW
Please join us at SAP’s SAPPHIRE NOW conference May 5 – 7 in Orlando, Florida. SAPPHIRE NOW and ASUG Annual Conference is the ultimate opportunity to maximize your SAP investment and find solutions to your most pressing business challenges. Through face-to-face interactions with executives, industry experts, peers, and SAP partners, you’ll be able to leverage diverse points of view as you expand your business network. Learn best practices, explore cutting-edge solutions, and discover ways to reduce complexity in your business. With hundreds of sessions, you have the ability to customize your experience based on what’s most important to you.

I will be there with all of our guest bloggers from this series. If you’d like to discuss any of the topics in this series in more detail please stop by the Demo Station LB209: Simplify Accounting and Financial Close Processes and ask our experts. I look forward to seeing you there.

Read the previously published blogs in this series and stay tuned for upcoming blogs in the accounting and financial close series, where we will go into much greater detail on reporting. Learn more on our recent blog on the corporate close.

Elizabeth Bio & Pic

How Successful Would Beethoven be Implementing Performance Management?

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

In my prior blog I described the acceleration in the adoption rate for integrated enterprise performance management (EPM) methods, and new deployment options like mobile and Cloud, will have an effect similar to the one Ludwig van Beethoven’s masterpiece – his third symphony, Eroica – had on the future of classical music. We will get to Beethoven in a minute.

First, however, some background. My interests in integrated EPM waver back and forth from explaining the mechanics and outcomes from its various components to wagging my finger at those who have been naughty for not yet implementing its components. Should I be a teacher or a police officer?

First, what do I mean by the integrated components of EPM? In my prior blog I wrote “the core EPM methods include strategy management (strategy maps, balanced scorecard, dashboards); profitability analysis (by products, channels, and customers); driver-based budgets and rolling financial forecasts), enterprise risk management (ERM); and continuous improvement (lean and six sigma quality management).” There are several more minor EPM methods that I could name, but the key phrase is “integrated” methods.

Most of the EPM methods like these have been around for decades, and arguably even before there were computers. So EPM’s components are not new methods that managers have to learn. But like a table top jigsaw puzzle, the challenge is integrating them without seeing the puzzle box cover. The additional challenge is to imbed in each method business analytics of all flavors, such as segmentation analysis, but especially predictive analytics as managerial styles shift emphasis from being reactive to proactive.

Beethoven and Heroics

Now let’s return to Beethoven. I was educated as an industrial engineer, and I do not view myself as a scholar of the performing arts, literature, or classical music. However I have always been a careful observer and listener of what I see and hear. As I continuously witness the success and failure of attempts to fully implement various EPM methods, I compare them with Beethoven. Why?

During Beethoven’s “middle period” of music composition he was attracted to heroes and heroic efforts. This was the time period around 1810 that he composed some of his most popularly recognized pieces such as Eroica (his Third Symphony that I wrote about in my prior blog), Egmont (from Goethe, and his Op. 84), and Emperor (piano concerto no. 5 in E-flat, Op. 73). What is common about Beethoven’s interest in heroics and champion-like project managers who take on the challenge to implement and integrate EPM’s methods? It is these three heroic phases: crisis, struggle, and triumph.

Crisis

The initiation of an EPM project, such as developing a balanced scorecard or an activity-based cost management system, may not result from a crisis. But you could liken typically quickly emerging organizational interest and eventual need in such a method to being a crisis situation. The spark typically occurs when an executive (or a champion or coalition of concerned managers) realizes disturbing deficiencies.

Examples of these sparks are employees that have little or no clue as to what the executive team’s strategy is. Performance measures are too summarized, too late, and have little explanatory value to what caused their result. There is little trust in the managerial accounting system to accurately calculate the costs and profit margins of products or standard service-lines (or outputs government organizations). And further, there is no inclusion of the increasingly more important non-product costs-to-serve (e.g., distribution, selling, marketing, customer service) to measure the channel and customer profitability levels. There are other similar types of deficiencies I could describe, but the point here is the crisis moment emerges when some motivated managers start asking, “How long do we want to perpetuate operating this way and making decisions with no data or with flawed and misleading data, measures, and financial reporting?”

This is when, in my opinion, Beethoven is at his best. It begins with the first of his four orchestral movements. The music starts with a single note or a few brief chords or with a melodramatic song giving the feel of a thunderstorm or being lost in a blinding snow storm. You know how Beethoven’s 5th symphony begins. The famous four notes – “da da da duh.”

Struggle

The next stage of heroics in Beethoven’s works is the struggle. How do we get started? What is the road map? How do we get buy-in, both from executives at the top and co-workers and employees at the bottom? How do we get funding? How do we select the correct key performance indicators (KPIs)? How do we construct an activity-based cost assignment model? How many activities should we divide our processes into? At what size is our model too complex to understand or unmanageable to maintain? Where do we get all the input data to feed our systems? Do we even have the data? If we have the data, are there quality and integrity problems with it? Is the data scattered about in disconnected and disparate data sources?

Life and work can be a struggle.

How did Beethoven compose his music to deal with this phase in his second and third movements? Sometimes moody. Sometimes sad.

Triumph

Not everyone wins. It is so tragic to me when during my international business travels that I visit an organization that initiated and even completed an EPM component method, like activity-based costing; and then they abandoned it (see my earlier blog on this topic). An executive pulled the plug on it. The reason may be that it already provided the answer they wanted (so it was more like a one-time project rather than a permanent, repeatable production system). Alternatively they may have concluded it is not worth the administrative effort to collect, calculate, and report the information (meaning someone excessively over-engineered the system and made it unnecessarily complex). Alternatively the method may be something a new executive does not understand (like in Kipling’s poem, the blind men and the elephant … touching the tail, it must be a rope).

But you can triumph and win.

Beethoven provides you the thrill of triumph in his fourth and last movement. The decibels grow louder. The chords are crisper. At this point you want to march with your feet to his music.

What does it take to triumph in successfully implementing an integrated EPM framework of methods? A few tips. Do not over-plan and under-execute. Analysis paralysis. Just get going. Make mistakes early and often, to learn from, and not later when it is costly to make changes. Even more critical, do not under-estimate the magnitude of peoples’ resistance to change and the need for behavioral change management.

So, how successful would Beethoven have been implementing EPM? Read my prior blog, “Beethoven’s ‘Eroica Effect’…is this the Cloud for Enterprise Performance Management?”.

I already provide you the answer there.

 

About the Author: Gary Cokins, CPIM

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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.