6 Stories to Give You the Finance Buzz at SAPinsider

SAPInsider Financials Logo

It’s going to be a busy time this week for many of my colleagues and the visitors to SAPinsider Financials 2015 in Las Vegas, so I decided to give you my thoughts on some interesting sessions to see, if you’re attending, given that you’re spoilt for choice with such a comprehensive agenda. And I’m bucking the trend with this blog post – because instead of talking about products, I ‘m talking about customers and thought leaders, and in particular the stories that you’ll be able to see and hear at the event this week.

Excited yet? I am! And with good reason, because many valued SAP customers have decided to make the trip to Las Vegas to give an account of their experiences with SAP solutions for Finance…stories of implementation approaches, best practices, and where they have found business benefits.

So for anyone embarking on a software implementation project, or even just considering approaches to solving some of their finance department and process issues, these are key SAPinsider Financials 2015 sessions to attend.

Six in Focus – But Don’t Forget the Rest!

My six focus sessions are chosen not because I know the customer stories particularly well, but rather because they’ll give attendees a good flavor across a range of finance topics. And my apologies to the many other customers not listed here – whose sessions are equally as valuable – but I just couldn’t fit you all into one short blog post.

I would, however, encourage readers attending Financials 2015 to take a look at the many other customer-led sessions at the event this week, as well as those detailed here, just so that you select sessions that will be most relevant to you.

Ready to learn about some of the exciting sessions ahead? Then let’s go:

  1. Keynote address, TODAY, Tue 17 March at 8:30 am – Okay, it’s strictly an SAP-led session, but there’ll be a panel discussion in which thought leaders will be asked to give their view about challenges and opportunities facing CFOs. It’s sure to be an interesting discussion – and let’s face it, no-one wants to miss the keynote!
  2. Sun Products, Wed 18 March at 8:30 am – A session where you should learn some best practice advice on implementing credit, dispute, and collections management.
  3. Velux, Wed 18 March at 10:30 am – I really like the sound of this session, in which you’ll hear how Velux moved from a traditional to “beyond budgeting” approach.
  4. McKesson, Thu 19 March at 8:30 am – For anyone seeking advice on implementing SAP ERP Financials then this is a session for you!
  5. Bentley Systems, Thu 19 March at 1:00 pm – Hear how Bentley Systems automated and shortened the payment processing lifecycle with SAP Bank Communication Management.
  6. Telephone and Data Systems, Thu 19 March at 4:30 pm – This is one for those of you interested in financial consolidations, with particular focus on project planning.

Don’t Be Shy – Get Networking!

All of these customers are attending the event to share their knowledge and experience with you, and I know that if you have questions for them after hearing their sessions that they’ll be delighted to speak with you…so do take advantage of this in the event networking sessions.

And remember to also take a look at the full agenda, so that you can plan your sessions and make the best use of your time. I hope you have an interesting and informative week, and that you return to work buzzing with the excitement of the potential to put in practice what you have learned at the event.

Have a great week!

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

SAPInsider Financials Logo

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.

Are Exceptional EPM Systems the Exception?

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

Last time out I set a challenge for readers of this blog to question the performance management strategies and practices of their own organizations and executive teams. I hope you found this to be a useful and interesting exercise.

Quite naturally, many organizations over-rate the quality of their enterprise and corporate performance management (EPM / CPM) practices and systems. In reality they lack in in terms of how comprehensive and how integrated they are. For example, when you ask executives how well they measure and report either costs or non-financial performance measures, most proudly boast that they are very good. Again, this is inconsistent and conflicts with surveys where anonymous replies from mid-level managers candidly score them as “needs much improvement.”

Every organization cannot be above average!

What makes exceptionally good EPM systems exceptional?

Let’s not attempt to be a sociologist or psychologist and explain the incongruities between executives boasting superiority while anonymously answered surveys reveal inferiority. Rather let’s simply describe the full vision of an effective EPM system that organizations should aspire to.

First, we need to clarify some terminology and related confusion. EPM is neither solely a system nor solely a process. It is instead the integration of multiple managerial methods – and most of them have been around for decades arguably even before there were computers. EPM is also not just a CFO initiative with a bunch of scorecard and dashboard dials. It is much broader. Its purpose is not about monitoring the dials but rather moving the dials.

What makes for exceptionally good EPM is when multiple managerial methods are not only individually effective but also are seamlessly integrated and enhanced through embedded analytics of all flavors. Examples for using analytics to enhance EPM are to perform data segmentation, clustering, regression, and correlation analysis.

Winds section in orchestra

EPM is like musical instruments in an orchestra

I like to think of the various EPM methods as an analogy of musical instruments in an orchestra. An orchestra’s conductor does not raise their baton to the strings, woodwinds, percussion, and brass and say, “Now everyone play loud.” They seek balance and guide the symphony composer’s fluctuations in harmony, rhythm and tone.

Here are my six main groupings of the EPM methods – its musical instrument sections:

  1. Strategic planning and execution – This is where a strategy map and its associated balanced scorecard fits in. Together they serve to translate the executive team’s strategy into navigation aids necessary for the organization to fulfill its vision and mission. The executives’ role is to set the strategic direction to answer the question “Where do we want to go?” Through use of correctly defined key performance indicators (KPIs) with targets, then the employees’ priorities, actions, projects, and processes are aligned with the executives’ formulated strategy.
  2. Cost visibility and driver behavior – For commercial companies this is where profitability analysis fits in for products, standard services, channels, and customers. For public sector government organizations this is where understanding how processes consume resource expense in the delivery of services and report the costs, including the per-unit cost, of their services. Activity-based costing (ABC) principles model cause-and-effect relationships based on business and cost drivers. This involves progressive, not traditional, managerial accounting, such as ABC rather than broadly averaged cost factors applied without consideration of any causal relationships.
  3. Customer Performance – This is where powerful marketing and sales methods are applied to retain, grow, win-back, and acquire profitable, not unprofitable, customers. The tools are often referenced as customer relationship management (CRM) software applications. But the CRM data is merely a foundation. Analytical tools supported by software, that leverage CRM data can further identify actions that will create more profit lift from customers. These actions simultaneously shift customers from not only being satisfied to being loyal supporters.
  4. Forecasting, planning, and predictive analytics – Data mining typically examines historical data “through the rear-view mirror.” Then using hindsight directs attention forward to look “through the windshield”. The benefit of more accurate forecasts is to reduce uncertainty. Forecasted sales volume and mix of products and service are core independent variables. Based on these forecasts, process costs can be calculated from the required resource usage. CFOs increasingly look to driver-based budgeting and rolling financial forecasts grounded in ABC principles to determine future requirements of other dependent variables such as headcount and related spending.
  5. Enterprise risk management (ERM) – This cannot be overlooked when discussing EPM. ERM serves as a brake to the potentially unbridled gas pedal that EPM methods are designed to step on. Risk mitigation projects and insurance requires spending, therefore somewhat reducing resources that could otherwise be directed towards revenue generating activities. Many executives are resistant to anything that impacts profits – and bonuses. So it takes discipline to ensure adequate attention is placed on appropriate risk management practices.
  6. Process improvement – This is where lean management and Six Sigma quality initiatives fit in. Their purpose is to remove waste and streamline processes to accelerate and reduce cycle-times. They create productivity and efficiency improvements.

EPM as integrated suite of improvement methods

CFOs often view financial planning and analysis (FP&A) as synonymous with EPM. It is better to view FP&A as a subset. And although better cost management and process improvements are noble goals, an organization cannot reduce its costs forever to achieve long term prosperity.

The important message here is that EPM is not just about the CFO’s organization; but it is also the integration of all the often silo-ed functions like marketing, operations, sales, and strategy. Look again at the six main EPM groups I listed above. Imagine if the information produced and analyzed in each of them were to be seamlessly integrated. Imagine if they are each embedded with analytics – especially predictive analytics. Then powerful decision support is provided for insight, foresight, and actions. That is the full vision of EPM to which we should aim to aspire in order to achieve the best possible performance.

Today exceptional EPM systems are an exception despite what many executives proclaim. If we all work hard and are smart enough, in the future they will be standard practices. Then what would be next? Automated decision management systems relying on business rules and algorithms? But that is an article I will write about some other day.

In my next blog I shall change focus slightly, to look a little more deeply at the budgeting process, the challenges many organizations face in producing budgets and the possibilities for taking different approaches.

 

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.

Hear Gary share some of his thoughts concerning EPM innovations and best practices at the SAP Conference for EPM in Chicago, October 13/14, 2014

Is Risk Management Technology the Key to Sustainability?

Coffee-break with GameChangers

Today’s risk managers are between a rock and a hard place. They have to identify and implement the right risk management practices in order to prove that they’re adding value to the organization, comply with regulatory requirements, and sustain the business. But, with so many innovative technology options, it can be difficult to determine which risk management solutions they can use, if any, to ensure success.

In a recent SAP Game-Changers radiocast, panelists Saret van Loggerenberg, manager of risk and compliance for Exxaro Resources Limited; Scott Mitchell, chair of OCEG; and Bruce McCuaig, director of solution marketing for GRC solutions at SAP, share their thoughts on risk management trends, technology, and the human factor.

Defining the role of risk management

Risk management carries a different meaning for each organization, based on its needs, challenges, and goals. For Loggerenberg, governance, risk, and compliance (GRC) is not about ticking boxes for the sake of compliance; it’s about wanting to exist in the future. “It’s about how the company is directed and controlled, how to ensure that we make decisions effectively…and about remaining sustainable,” she says.

McCuaig agrees with Loggerenberg, adding that it isn’t enough to manage risk; organizations have to understand what causes risk in the first place. To illustrate his point, he shares some advice a fire inspector once gave him. “It does not matter how many fire extinguishers you have or what kind they are or how big they are, fire extinguishers don’t prevent fire,” he was told. “So just sitting here and trying to figure out how to control the fire does not really count. We need to understand what causes the fires.” The key is to manage risk before you even have to put a control in place, says McCuaig, and organizations are using technology to do just that.

Leveraging technology and the human factor to drive value

For risk management organizations, innovative technologies can “provide data, analysis, and information that informs us more about the world we don’t understand today…but we are going to have to play in tomorrow,” says Loggerenberg. The problem, she points out, is that “sometimes people implement technology because they think they are going to solve the problem with that, or that the technology is going to serve the purpose of what human behavior should actually do.”

Citing a recent risk management report, Loggerenberg says that, while 80 percent of risks have external root causes, 60 percent of them are people related. For this reason, “you cannot manage risk…without dealing with the human factor,” says McCuaig. “In fact, if all you did was deal with the human factor, you will probably be very, very successful at risk management.”

Mitchell concurs, and goes on to predict that the future of risk management lies in “a whole new wave of technology that is intended to help people in the enterprise get paired together for better decision making.” He expects that, instead of automating the human factor out of risk management, we need to look at collaborative technologies that will bring people together for decision making.

Navigating the path ahead

All panelists agree that the future of risk management is in technology. This includes everything from monitoring customer and employee sentiment on social media to using Big Data to identify trends and link cause-and-effect relationships. And, McCuaig says, “We have to do the right thing wrong a little bit and finally figure out how to make it work.”

For even more insights into risk management trends, technology, and the human factor, listen to the full radiocast.

Are Predictive Analytics the Best Weapon in Fighting Fraud?

Coffee-break with GameChangers

Fraud is as old as crime itself. Patterns emerge, are cracked, and then overhauled by crafty schemers. Methods become more sophisticated and evolve with technological innovations. In turn, companies must remain vigilant and adapt strategies against new types of attacks. Such strategies were the topic of a recent financial excellence radiocast for SAP Game-Changers, discussed by three expert panelists.

A sobering stat

If you think fraud is something that only happens to other companies, Derek Snaidauf, senior manager of advanced analytics with Deloitte, offers a startling wake-up call: “By some estimates, the typical organization loses five percent of its revenues to fraud each year, which translates to a potential projected global fraud loss of over $3.5 trillion.”

That number is not easy to dismiss, Snaidauf offers a few reasons for the growing fraud problem:

  • Further advances in technology
  • Improved coordination
  • Lower barriers to entry
  • Turbulent economic conditions

Fraud isn’t just on the rise in one area, but pervasive across all industries. Snaidauf says that the time for reactionary behavior and chasing lost payments is over. You need to prevent the dollars from going out the door in the first place.

A case for predictive analytics

President of the Cangemi Company, Michael P. Cangemi, believes most companies don’t leverage predictive analytics enough in disbursement areas, instead using a contingency firm to avoid double payments. This doesn’t fix the system – and then companies give half of the recovery money to a contingency firm. It’s not a sustainable model as the threat of fraud grows stronger.

“If you don’t think it’s happening, you’re just naïve,” Cangemi challenges. “The question is how much it is and then the cost benefit of implementing some kind of controls.”

Jérôme Pugnet, director of solution marketing for SAP solutions for governance, risk, and compliance, takes issue with the “predictive” label, because you cannot predict a specific event. Instead, he specifies, “It [software] helps you predict where it could happen, most likely, and how it could happen so you can be prepared.”

According to Snaidauf, a leading practice is having an enterprise fraud management office, the size of which varies based on the severity of your fraud problem. The trick is to break free from silos to centralize fraud applications throughout an organization, boosting their value. Institute a set of pillars to lead a successful fraud prevention program with:

  • Data scientists to build the rules and models
  • Investigators to pursue leads
  • Processes in place to treat and deal with fraud in the most effective manner with comprehensive analytics

A future of cooperation instead of competition

In the coming years, the panelists envision a climate where fraud detection approaches are far more open and shared across companies and industries. Big Data and social data will also play a large part in enhancing predictive models.

Pugnet takes this one step further, positing a theory that enhanced predictive capabilities will uncover trends that revolutionize the way employers treat their workforce. Motivating employees and treating them well could do a world of good in abating fraud. Instead of disgruntled employees with motives to commit fraud, there will be a team of workers invested in protecting the company from such actions.

Is your business ready to adopt predictive analytics in the fight against fraud? Get more information from the full radiocast.

Reimagine the Role of Internal Auditors

Coffee-break with GameChangers

If there’s any business group that could use a PR makeover, it’s the internal audit. Once a team that inspired dread and fear, it’s now undergoing a dramatic transformation, as discussed during a recent SAP Game-Changers radiocast, part of the Financial Excellence series. According to panel moderator Bonnie Graham, there are three reasons the role of internal auditors is changing:

1. Stakeholders are challenging internal auditors to up their game.
2. Boards are demanding better assurance of the value that internal auditors provide.
3. Management requires clearer insights.

Move from compliance police to strategic advisor

One of the panel guests, Malte Globig of the Flint Group, offers the idea that the internal audit group must act like external service providers, developing a better understanding of what’s important to their customers. If the company can more clearly understand the value their internal auditors are providing, it will be more willing to pay for their services, instead of looking to an external vendor. “We must never forget who our customers are,” Globig cautions.

Michael O’Leary of Ernst & Young goes a step further, saying, “What we are actually seeing is…the need for internal audit to innovate in order to keep up with such a fluid business environment.” He details three key principles for effective audit delivery:

1. People: Compile the right skill sets, the right talent, and the culture and geography that serve the needs of your company.
2. Processes: Streamline complex processes companywide to support the changing risk environment. Make sure that an internal audit function has the right people and processes for the company’s historical strategy, but also for the risks that lie ahead.
3. Technology: Deliver as much value as possible to stakeholders by adopting the most innovative technology. The percentage of spend that most internal audit groups dedicate to technology shows an upward trend that bodes well for internal auditors and the services they provide.

Take the audit mobile

Building on the discussion of advanced technology, moderator Bonnie Graham wonders whether introducing tablets to the audit process would enhance professionalism, ease evidence capture, grant instant data availability, and improve paper management.

Bruce Carpenter of SAP posits that, since we have all grown accustomed to using our mobile devices, providing auditors with tools like tablets is of paramount importance. He challenges internal audit groups to demonstrate innovation in each audit. Carpenter believes the increased sophistication of databases, and their ability to store structured and unstructured data, offer new opportunities to internal auditors; the enhanced insight that can be gained from such analysis raises the game of internal auditors’ work.

But the biggest and most welcome shift, Carpenter suggests, is that “the auditor is increasingly going to become a collaborator in business progress and that evolution is already starting to happen.” Rather than being seen as a numbers cop or a distraction, the auditor can be integrated more seamlessly into business processes.

Is your company ready to embrace this new role of the auditor? Listen to the full radiocast to find out more.

What Defines the CFO of the Future?

Coffee-break with GameChangers

It’s no secret that the financial world is dealing with a period of rapid change. Effectively managing these fluctuations is ultimately the job of the CFO – but what does the role of CFO look like now? A recent SAP Game-Changers radiocast explored this question with three panelists. Here are their opinions.

Diversify your duties

“Remain constructively discontent” might be the most useful advice to current CFOs and other financial leaders. This quote from Coca-Cola CEO Muhtar Kent was invoked by Kyleen Wissell, Corporate Director of Internal Controls within the office of the CFO at the Coca-Cola Company. She believes in a culture of innovation and growth – and that starts with strong entrepreneurial mentality at the top levels. Contentedness can lead to complacence, especially in a time of rapid advancement. A watchful eye on possible improvements inherently enables progress.

Elena Shishkina, CFO of SAP UK and Ireland, agrees. She multitasks in as many areas of the company as possible, because, as she says, “I don’t know how my role will look tomorrow. I strongly believe you can only achieve the best outcome for the team and for the organization if you lead with excellence.” Shishkina views herself not just as a leader in finance but a leader in overall business transformation.

Many CFOs now realize that their position is defined by more than a collection of numbers. Richard Sernyak, principle at PricewaterhouseCoopers responsible for the SAP finance transformation practice, concurs that statistics don’t paint a full picture of an organization’s financial health. Greater focus should be placed on unstructured data such as social media. He explains, “What’s important is that not everything that can be counted counts…you need to look beyond the data and really understand what’s important.”

Take control of a new role

The paradigm is shifting as CFOs need to keep up with their traditional, spreadsheet-intensive responsibilities while creating more value for the business. Some of the unique responsibilities now require CFOs to:

1. Act as the lynchpin across the company for presenting actionable information in a dynamic way.
2. Enable proactive, predictive modelling in real time on mobile devices.
3. Enhance performance by spending less time on tasks that don’t provide added value.
4. Look past the numbers to see their context.
5. Take a more holistic view of the business by adopting innovative technologies (which we discussed in another recent radiocast).

Leading a top-notch finance department requires more soft skills than ever before, according to Wissell. CFOs must draw upon emotional intelligence, considering their internal customers, external customers, and opportunities to introduce a pure model that touts more of a specialist view.

As the transformation marches on, all panelists agree that championing technology will become paramount for the CFO. Sernyak sees the role becoming more intertwined with that of CIO as more millennials flood the marketplace and eventually move into leadership positions. Beyond an affinity for fast-paced innovation, Shishkina asserts that CFOs of the future must be culturally aware and sensitive to different aspects of diversity.

That’s quite a list of attributes! So are you a CFO of the future? Listen to the full radiocast.