Does finance really need enterprise software?
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This is an intro to a recent Finance Roundtable we held in Singapore. There is a more detailed article that I will post as well which provides additional context to this presentation.
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Does finance really need enterprise software?
- 1. Does Finance really Need Enterprise Software? Kurt J. Bilafer – Regional Vice President Analytics November 13, 2013
- 2. Confusion over the Role of Finance Misconception Focus is on Closing Books Doesn’t understand the business and just slows things down Excel Jockeys Reality Rapidly moving from stewards of the business to Trusted Advisor Have access to the most expensive and accurate data in the organization Embracing Innovations & Improving Transparency © 2011 SAP AG. All rights reserved. 2
- 3. Confusion over SAP Misconception SAP just does ERP SAP = EXPENSIVE Deployments take too long Reality Over 50% of SAP’s license revenue comes from non-ERP solutions SAP has solutions for everyone, including SMEs. We offer solutions in the Cloud, on Device and in-memory We have several offerings to accelerate your deployment © 2011 SAP AG. All rights reserved. 3
- 4. Greater Expectations of Finance INCREASING PRESSURES ON THE OFFICE OF FINANCE Financial Risk Management Performance Management Operational Efficiency & Effectiveness
- 5. How Finance Can Run Better Financial Risk Management Embedded risk management and controls from transactional processing to financial reporting Performance Management Operational Efficiency & Effectiveness Embed a 360° view of enterprise performance with agile budgeting and actionable profitability reporting Streamline financial functions and provide self-service reporting and analysis Lower % revenue at risk Superior Return on Capital Employed (ROCE) Shorter time to close books Reduced incidence of penalties for non compliance Lower proportion of unprofitable products and customers % of time spent of working with the business Minimize risk of financial restatements Minimize # earnings warnings Lower cost of finance as % of revenue
- 6. The Cost of Not Knowing… Operational Risk Financial Risk Strategic Risk Diminished customer loyalty Increased cost of capital Loss of revenue streams Decreased shareholder value
- 7. Proactively Balance Risk and Opportunity MANAGE BETTER PROTECT BETTER PERFORM BETTER Automate manual tasks Automate monitoring Align with strategy and planning Employ best practices Real-time analysis Embed analytics Reduce effort and cost Industry-specific solutions Scenario modeling
- 8. © 2013 SAP AG. All rights reserved. 8
- 9. Impact of using Enterprise Software By the Numbers 3x Lower finance cost as percentage of revenue for top quartile organizations versus bottom quartile organizations 76% Higher operating margin where financial systems provide historical and forward- looking views into financial and operational performance 26% Fewer days to close annual books in an integrated G/L system so that no reconciliations are necessary 22% Lower audit cost with the use of automated controls rather than manual controls 13% Higher financial forecast accuracy for top quartile organizations versus bottom quartile organizations 28% Lower error rate in bills sent out when billing system is integrated with A/R and re- entering data is eliminated 24% Higher operating margins where enterprise mobility is embedded in all business processes 15% Fewer days sales outstanding where finance leadership has a financial dashboard that provides a timely view into predefined key metrics
Notas del editor
- All of these issue impact the CFO and his team{BUILD}So more than ever, the CFO has to balance between sound stewardship and value creation, walking the proverbial fine line - always balancing between entrepreneurship and caution, between the big picture and accuracy in the details. {BUILD}Fulfilling the stewardship role by ensuring regulatory compliance and effective risk management – but no CFO is going to be recognized or rewarded for just doing that{BUILD}The expectation is that they add value by helping the organization to outperform stakeholder‘s financial expectations – generating more profit in the private sector or achieving more cost effective outcomes in the publicsector (Performance Management){BUILD}And while doing so he/she needs to satisfy the requests from the organization for even higher service quality at further reduced cost.{BUILD}It is a real struggle with increasing pressuresand while there is nothing fundamentally new with that picture, the stakes and challenges have gotten significantly higher in past years. Including the personal consequences of failure.Financial Risk Management - Embedded risk management and controls from transactional processing to financial reportingBusiness Enabler - Embed a 360° view of enterprise performance with agile budgeting and actionable profitability reporting with a view of riskOperational Efficiency & Effectiveness - Streamline financial functions and provide self-service reporting and analysis
- So what are the best practices that customers are deploying in order to achieve the successes that we know are possible?To ENSURE REGULATORY COMPLIANCE AND EFFECTIVE RISK MANAGEMENT (FINANCIAL RISK MANAGEMENT), customers are looking to embed risk management and access and process controls all the way through from transactional processing to financial reporting. They are looking for specific compliance functionalities in core financial and performance management systems and they are implementing new solutions to address specific pain points.- Manage every step of the financial close for timely and accurate regulatory reporting- Quicker and cost effective compliance by embedding content including IFRS, XBRL and internal controls- Effectively manage the risk of credit, debt and financial instruments When it comes to OUTPERFORM FINANCIAL OBJECTIVES AND CREATE SUSTAINABLE VALUE (PERFORMANCE MANAGEMENT) the best in class organizations have designed a 360 degree view of both financial and operational performance across their organizations so managers can take better decisions more quickly. Kaplan and Norton often refer to the Execution Premium process, I’ve been know to refer to closed-loop performance management but essentially this is about breaking down traditionally siloed performance management processes and increasing alignment, insight and the ability to take action.Cascaded strategy and KPI’sEfficient and effective planning and budgeting that gives the agility needed to cope with uncertaintyDetailed and accurate reporting of costs and net profitability to support decision makingQuick and easy scenario analysisAnd finally by streamlining all financial functions (from transaction processing right the way through to disclosure management) and by leveraging self-service analytics, built in content organizations are able to DELIVER SUPERIOR SERVICE AT REDUCED COST (OPERATIONAL EFFICIENCY & EFFECTIVENESS).Complete end-to-end solutions for processing financial transactions enabled within a unique shared service framework Seamless treasury and credit management operationsPervasive business analytics for self service reporting and analysisMake efficient use of cash and capital