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VentanaResearchBenchmark_FinanceAnalyticsAnalytics has long been a core discipline of Finance, applied to analysis of balance sheets, income statements and cash-flow statements. However, as I’ve noted, most finance departments have not kept up with recent advances. Our recent research in finance analytics shows that few organizations are realizing the potential of more advanced analytic methods and tools such as predictive analytics and driver-based modeling. One reason for this sluggishness is that they have not looked past yesterday’s requirements to see what possible. Another is that they are distracted by the difficulties they face in simply doing tried-and-true analysis, which is the result of difficulties in accessing the necessary data and inadequate tools. A third reason is that people receive too little training in the application of analytics to business and the use of more advanced analytic tools and methods.

Companies typically do not provide training – or testing – to enhance the analytical skills of their employees. Testing skills is useful in exposing individual and organizational gaps and injects motivation into the training process. Creating analytics requires a thorough knowledge of the basics: which methods to use under which circumstances and the best approaches to take. Newer analytic approaches and tools can be complex, so it makes sense to train people to gain a better understanding of both the basic uses of analytic tools and advanced analytics. Yet the research shows that fewer than one-third (31%) of companies provide training for people who create analytics. This may be because organizations hire people who they assume already have the skills or the talent to pick them up as needed on the job. They also may be reluctant to spend money and unaware of the indirect expenses of not doing so. Because they rarely test employee skills, organizations may not be aware of the shortfalls in competence that are costing them time and money. For whatever reason, the lack of training – especially in the creation of analytics – is shortsighted.

vr_NG_Finance_Analytics_13_training_improves_analytics_skillsTraining is vital to building analysts’ skills, especially for creating analytics. The research demonstrates a correlation. We found that a large majority (83%) of the companies that provide training in creating analytics have staffs whose skills they deem excellent or above average, compared to only half (52%) of those that provide training only in using analytics and just one-third of those that provide no training at all.

Companies that fail to test individual skills are unlikely to discover the link between weak skills and poor performance. People may complete their assignments but take twice as long as necessary to do them. If the analysts are using spreadsheets, they may be constructing models and analyses that have unseen errors (as they did in the infamous London Whale episode) or needlessly complex models because they are unfamiliar with built-in functions that simplify tasks.

Training those who create analytics also helps ensure that time spent on analytics is used as effectively as possible. In about half (47%) of the companies that train analytics creators, people spend the largest amount of their time where they should – in working with the analytics to get answers or model business issues and analysis – compared to 27 percent of organizations that only provide training for users and 20 percent that provide no training. In about three-fourths of companies that provide only training for users (73%) or no training (76%), they spend the largest amount of time on data-related tasks (waiting for data, preparing it and reviewing it for errors) rather than on analysis. Fully half of companies that provide training for creators also use analytics and performance indicators to improve individual or business unit performance, many more than those that train only users (20%) or provide no training (17%).

Analytics can be a valuable tool for finance departments and can help them play more significant roles in their organizations, which many finance professionals now want to do. But until more of them make the often extensive changes and investments the research shows they need, this goal will be more of a hope than a promise. Training finance professionals in the creation and use of both basic and advanced analytics is essential for companies to improve their performance. Being prepared and training is the best path to be effective in finance analytics.


Robert Kugel – SVP Research

Epicor used its recent user group conference to explain its strategic direction and product roadmap. The company is the result of multiple mergers of business software corporations over the past 15 years; its target customers are midsize companies and midsize divisions of larger organizations. Its most significant products are Epicor (ERP software aimed mainly at manufacturing and distribution companies) and Activant Solutions (software for small and midsize retailers, including a point-of-sale system). The company also has software that manages CRM, HR and human capital and supply chains,  and provides financial performance management (FPM) and governance, risk and compliance (GRC) capabilities. These components of the software suites are adequate for the needs of many of the company’s target customers and are not intended as stand-alone applications.

It’s worthwhile to view Epicor’s situation in market context. During the first decade of the century there was a sharp decline in demand for ERP and other software categories as well as limited technology advances, and this led to a wave of consolidations. For example, Oracle bought PeopleSoft (which had acquired JD Edwards), Microsoft picked up Great Plains and Navision (both of which had just acquired rivals), and Infor was assembled from multiple layers of consolidated companies. These corporate restructurings made sense from both financial and operating perspectives in that they could achieve some economies in administration and R&D in a relatively stable business and technology environment. That era has ended. The challenge facing all vendors of legacy ERP systems is to significantly redesign their core applications to address evolving market requirements. These include a user experience that is more intuitive and productive and reducing the cost of implementing and operating the software. Epicor is positioned to address these challenges, but success will depend on its ability to accelerate its development efforts in enhancing the user experience and lowering the total cost of ownership of its software (whether on premises or in the cloud) while adding users to boost revenues.

vr_bti_br_technology_innovation_prioritiesExecutives at the user conference highlighted their development themes, which are consistent with our research on business technology innovation priorities. Epicor will concentrate development efforts on utilizing Microsoft’s infrastructure and the customer benefits that this makes possible. For example, the most recent release of ERP 10 was presented customers with fewer issues than the previous major release because it didn’t have to deal with the complexities that go with trying to support multiple IT environments. Speakers emphasized five key themes in product design going forward: choice, collaboration, responsiveness, simplicity and mobility. All of these are consistent with the broad market trends that have been under way for a few years. Addressing all of them is necessary for Epicor to achieve its strategic goals. Specifically, the company has been investing in making its applications more granular so that companies can have end-to-end process management as well as the flexibility to deploy only the pieces of the software suite that they need. Epicor is also intent on giving companies the choice to deploy its software on-premises or in the cloud in multitenant or single tenant form. I have written about the importance of this for new ERP deployments. Since finance and manufacturing – not just the front office – are now social entities and because social capabilities facilitate collaboration in managing processes, the company has been beefing up these features of its software. Executives also emphasized that its development strategy is to provide simplicity in deployment and the user experience (including ease of use, ease of upgrades and better performance) and to expand mobility options. Ease of upgrades is essential for the company to compete in the on-premises market and to support a hybrid cloud strategy. The company is planning to offer enhancements to its ERP 10 software every four months, so it’s critical that upgrading be simple or customers will fall behind and satisfaction will decline.

Epicor also has been evolving its reporting and financial performance management capabilities over the past five years; these are essential for an ERP vendor to offer. It has taken the individual budgeting, planning and reporting created for specific applications and built an FPM application that supports its applications and gives users of FRx (a once widely used but discontinued product from Microsoft) a replacement option. Sessions at the conference highlighted numerous small but essential enhancements that Epicor has made over the past two years to all of the applications that deepen functionality and enhance their usability.

At this point Epicor has a large installed base and a product line that is attractive to midsize companies and as a tier 2 package for larger companies. However, after a decade of technology drowsiness, business software markets are becoming more dynamic. ERP systems are about to undergo a considerable transformation, driven by the growing availability of technologies that can address the operational shortcomings of established systems. A demographic shift is taking place in the ranks of senior executives and managers – from the baby boom generation to those who grew up with computer technology – and this will drive demand for a new generation of ERP software. Soon, to be competitive these systems will have to deliver a better user experience, greater flexibility and agility as well as mobility and lower cost of ownership. Epicor is heading in this direction, but it will need to run hard just to sustain its market position.

The company is moving to rationalize its software offerings (while still supporting existing users), which is essential to be able to quickly evolve its offerings by providing flexible deployment options and facilitate ongoing enhancements to its products. It would benefit extending its partnerships to add product breadth. For example, its FPM capabilities are solid for some customers but especially for its larger ones it lacks some essential capabilities that we evaluate in our Value Index on this topic.

Epicor is no longer a public company, and that can be a good thing when management needs to make investments and take chances it might not dare when financials results must be published every quarter. This is especially true for the ERP category since, as a result of the complexity of the product, no single big breakthrough will change the market; a steady and protracted series of incremental advances will in aggregate determine which vendors succeed over the long term. Epicor has a solid foundation, but to achieve its strategic objective of remaining a major business software player, it will need to invest heavily and execute consistently and nimbly over the next several years.


Robert Kugel – SVP Research

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