Ventana Research Analyst Perspectives

The Office of Finance can be compared to a numbers factory where the main raw material, data, is transformed into financial statements, management accounting, analyses, forecasts, budgets, regulatory filings, tax returns and all kinds of reports. Data is the strategic raw material of the finance and accounting department. It is the key ingredient in every sale and purchase as well as every transaction of any description. Quality control is essential to achieving high standards of output in any factory, and finance is no exception. To that end, a great deal of effort goes into managing the department’s processes well. However, too little attention is paid to the quality of the raw material — the data — and how it is handled at every stage of a process. Since the office lockdowns forced by the pandemic of 2020, there has been widespread agreement that the finance and accounting department needs to digitally transform to ensure continuity and resiliency under any circumstances. To improve their performance and that of the entire organization, finance department executives must adopt a total quality management (TQM) approach to managing data in their department.

We’ve experienced an unusual, decades-long monetary policy in the developed world that emphasized interest rate repression as well as supply chain practices designed for lowest cost. This has produced a generation of chief financial officers likely unprepared to address the impact of fundamental changes now shaping a new, technology-driven approach to working capital optimization. Today’s CFOs must assess their working capital management processes and the systems that support them to balance the need to minimize the cost of working capital against customer requirements such as delivery times and order fulfillment. Technology can minimize frictions – and therefore costs – associated with managing inventories, receivables and payables balanced against customer satisfaction requirements and legal and regulatory considerations.

OneStream offers a platform designed to serve the needs of accounting and financial planning and analysis organizations. The software handles financial close and consolidation, planning and budgeting, analysis and reporting. The most notable part of the company’s presentations at its annual user group meeting – Splash – was the strategy and roadmap for its two artificial intelligence initiatives, Sensible ML and Sensible GPT. The former, unveiled last year, is a platform approach to applying machine learning to business forecasting, while the latter harnesses the power of large language models such as ChatGPT to streamline the performance of almost any business process.

In 2015, I began using the term continuous accounting to call attention to technology advances that enable finance and accounting departments to improve performance. These advances have continued, making an even more compelling case for adoption of continuous accounting.

The chief financial officer of a midsize organization faces a different set of challenges than those in larger or smaller enterprises. These organizations have grown to the point of requiring capabilities similar to larger businesses, but typically lack the staff or financial resources afforded to bigger organizations. The past decade of IT innovation – especially the expansion of cloud computing – has brought substantial benefits to midsize finance and accounting operations. Rapidly growing midsize organizations in particular should make investments in information technology that allow the business to scale without having to increase administrative head count, and focus resources on areas that accelerate growth, such as sales, logistics, R&D or customer support.

Early last December, just before ChatGPT became the new, bright, shiny object, The Economist magazine ran a story proclaiming that we had finally arrived at the age of boring artificial intelligence (AI). From my perspective, it’s unfortunate that didn’t last and that AI has been relegated back to the buzzword league. AI will be an increasingly important feature of business software through the end of this decade. Ventana Research asserts that by 2026, almost all vendors of software designed for finance organizations will have incorporated some AI capabilities to reduce workloads and improve performance. The same observation applies, to some significant degree, to other parts of an enterprise, so it’s important for people in operational roles to understand what AI can and cannot do. It’s also important for vendors to clearly and concretely communicate what they mean when they say, “AI-enabled.” Moreover, I prefer the alternative term “augmented intelligence” because it emphasizes that these systems enhance — rather than replace — the capabilities of the humans employing them, especially through improved decision-making and by eliminating the need to perform repetitive work.

As a rule, I dislike terms like “digital finance transformation” because there’s a wave-the -magic-wand quality to it that obscures the not-so-simple people and process elements necessary for true transformation. Six of the most common – and expensive – words used in an accounting department are “we’ve always done it this way.” Persuading staff to change can be a struggle, even if change makes their jobs easier and more rewarding. Moreover, digital transformation must cover the data elements as well as the process because manual data management is not only time-consuming at the data preparation stage, but it also creates the need for downstream reconciliations and other tasks to ensure accuracy.

An external audit examines an organization’s performance of accounting tasks. It validates the soundness of accounting systems and policies and compliance with generally accepted accounting principles in preparing financial statements – chiefly the income statement, balance sheet and statements of cash flow and equity. The auditor certifies that there are no material errors or omissions, and that the financial statements are compliant with requirements. Technology can transform this process to provide multiple benefits to audit firms and workers, making accounting cool again by using a continuous audit approach.

For 2023, the Office of Finance practice of Ventana Research introduced Close, Consolidate and Report as one of its six focus areas. The change reflects the recent evolution of technology that supports this part of the finance department calendar. Ventana Research expects that the increasing investment in software to streamline these processes will, by 2026, result in two-thirds of finance and accounting departments improving their use of readily available technology to close quarterly books within six business days, up from one-half that can do it today. Our research coverage in this area includes dedicated consolidation software and close management systems as well as applications for intercompany financial management (IFM), automated reconciliations and disclosure management. Software for the close-to-report cycle also helps achieve objectives in digitally transforming how these processes are executed. Beyond efficiency gains, using automation enables organizations to have management and financial information sooner, provides more time for analysis and crafting performance narratives, achieves superior control of processes, and supports accurate accounting with less effort. It also enables departments to attract and retain the best talent because it minimizes time spent on tedious, repetitive tasks best left to computers. Accountants can then focus on more rewarding work that takes advantage of their skills, experience and expertise.

Digitally transforming core business processes became essential as organizations locked down in early 2020 because of the pandemic and the need to operate remotely presented a set of new challenges that were best addressed by software. Especially in the areas of sourcing, purchasing and payments, software has the ability to streamline processes, shorten process cycles, reduce unnecessary costs, provide greater visibility into cash flows, increase control and improve results. Digitizing operations helps attract and retain the best talent because professionals spend less time on mechanical, repetitive tasks. For all these reasons, beginning this year, Ventana Research’s Office of Finance has established a Purchasing, Sourcing and Payments focus area. One reason is that our research suggests that this transformation is more talked about than done. Ventana Research asserts that by 2027, only one-fourth of larger organizations will consistently manage source-to-pay end-to-end, but those that do will outperform competitors. 

We live in a time of uncertainty, not unpredictability. Managing an organization in uncertain times is always hard, but tools are available to improve the odds for success by making it easier and faster to plan for contingencies and scenarios. Software makes it possible to quickly consider the impact of a range of events or assumptions and devise a set of plans to deal with them. Dedicated planning and budgeting software has been around for decades but is about to become all the more useful as vendors increasingly incorporate artificial intelligence using machine learning to assist in scenario planning. Organizations can quickly investigate the impact of different contingencies and the consequences of a range of reactions to them.

The cloud has come to dominate many business software categories, but until recently, enterprise resource planning for manufacturing and product-focused organizations has been a notable laggard. Cloud-based systems can be less costly to operate, perform better, be more secure and shift maintenance and update chores from the IT department to the vendor, freeing IT teams to concentrate on more strategic needs.

insightsoftware provides applications for finance departments and other business users in midsize and larger organizations, offering a broad range of functions including analysis, internal and regulatory reporting, planning, consolidation, tax provision and treasury. The software brings together applications that enable business users to maximize data collected in existing systems and streamline the performance of a range of office of finance functions, all while limiting or eliminating the involvement of IT professionals.

Trintech provides finance departments in midsize and larger organizations with software to accelerate their accounting close processes. This record-to-report (R2R) cycle is complex because it involves the coordination of numerous people, many systems and multiple sources of data. There are iterative portions that involve cycles of reviews and multiple levels of approvals. These include reconciliations and adjusting of entries during the close as well as authoring, editing and updating narratives in the creation of disclosure documents. All of these must adhere to internal controls that require defined processes including reviews and approvals by multiple individuals. One key objective within the R2R process is to minimize the time it takes to complete the accounting close, with the generally accepted norm being one business week. Shortening the close means that all downstream tasks can be finished sooner, providing executives, managers, directors and shareholders with information about the organization’s financial performance and health sooner. Ventana Research asserts that by 2026, two-thirds of finance and accounting departments will improve their use of readily available technology to close their quarterly books within six business days, up from one-half that can do it today.

Ventana Research coined the term intercompany financial management (IFM) to define a discipline for structuring and handling transactions within a corporation and between its legal entities designed to maximize staff efficiency and accounting accuracy while optimizing tax exposure, minimizing tax leakage and ensuring consistent tax and regulatory compliance. Technology has advanced to a point where this approach is feasible and cost effective. For that reason, Ventana Research asserts that by 2026, one-half of organizations with 10,000 or more employees will have implemented IFM to achieve tax, risk management and accelerated financial close benefits.

FinancialForce offers cloud-based ERP and professional services automation (PSA) software. The company targets midsize and larger services companies, especially those that provide professional services (such as consultants or field service organizations) as well as those that offer subscription-based or recurring revenue services and products. FinancialForce’s key point of differentiation is that it is built natively on the Salesforce platform, ensuring that CRM data is already located on the same platform as accounting and back-office data so organizations can orchestrate end-to-end, front-office to back-office processes without having to integrate different systems.

The subscription and recurring revenue business models became a significant part of the economy this century with the advent of streaming services for entertainment and software as a service. They have grown in popularity because they enhance customer lifetime value by evolving what had previously been a one-time-sale relationship into a delivery of ongoing services which can create a more loyal customer relationship as well as provide a regular, more predictable revenue stream. I recommend that corporations that have adopted or are planning to adopt either of these business models take a continuous accounting approach to managing their record keeping. Ventana Research asserts that by 2026, one-half of subscription organizations will use continuous accounting to remove constraints limiting sales and marketing flexibility, streamline back-office processes, shorten the accounting close and improve customer satisfaction.

Ventana Research recently announced its 2023 Market Agenda for the Office of Finance, continuing the guidance we have provided since 2003 on the practical use of technology for the finance and accounting department. Our insights and best practices aim to enable organizations to operate with agility and resiliency, improving performance and delivering greater value as a strategic partner.

Vertical strategies for enterprise resource planning systems are not new. They emerged more than two decades ago as vendors looked for ways to reduce costs and shorten time-to-value in a software category that was notorious for high costs and extended timelines. A vertical-plus strategy – the plus means it’s a platform, not just an application – takes advantage of recently available technology to extend the ease of implementation and maintenance of the system by having deeper integration with complementary applications, available low-code/no-code customization capabilities and a data pantry that enables the amalgamation of data from multiple sources for situational awareness and decision support. Moreover, the ongoing shift from on-premises to cloud-based ERP systems, especially those designed to address specific types of businesses, will accelerate over the next five years as more configurable and customizable systems designed for specific business verticals become available. A cloud-based platform facilitates the creation of a digital ecosystem that can enable a software vendor’s users to enhance customer experiences.

Workiva offers an environmental, social and governance application that enables organizations to manage the highly distributed tasks necessary for reporting to regulators and stakeholders on ESG matters. ESG issues have grown increasingly pressing over the past few years as investors and government entities urge organizations to measure and disclose relevant metrics. I’ve already covered the broader topic as it relates to external reporting and how financial planning and analysis groups are likely to own this mandate going forward. I’ve also addressed the data strategy that finance organizations should adopt to meet regulatory compliance requirements. Notably, I assert that by 2025, more than one-half of corporations required to comply with ESG reporting will centralize responsibility for preparing reports and filings with financial planning and analysis to achieve accuracy, control and efficiency objectives.

Ventana Research uses the term “data pantry” to describe a method of data storage (and the technology and process blueprint for its construction) created for a specific set of users and use cases in business-focused software. It’s a pantry because all the data one needs is readily available and easily accessible, with labels that are immediately recognized and understood by the users of the application. In tech speak, this means the semantic layer is optimized for the intended audience. It is stocked with data gathered from multiple sources and immediately available for analysis, forecasting, planning and reporting. This does away with the need for analysts to repeatedly perform data extraction, enrichment or transformation motions from the required source systems, all but eliminating the substantial amount of time analysts and business users routinely spend on data preparation.

After decades of overpromising and underdelivering, technology has now evolved to the point where it is fundamentally changing how accountants work – for the better. The pandemic and resulting support of remote work set the stage for a transformation of how accounting efforts are structured and performed, all for the better. Remote audits that became routine during lockdowns are evolving into virtual ones, where auditors take full advantage of advanced software to achieve dependably higher audit quality with less effort, while improving working conditions for auditors and staff accountants. Although discussions I’ve had with practitioners over the past two years indicate that organizations are using this approach to some extent, widespread use has become practical only recently.

Emburse offers a single platform that enables organizations — small, midsize and larger —to manage their travel and related expenses, pay invoices and handle their corporate spend. Today, technology has the ability to significantly increase the efficiency with which organizations handle expenditures while simultaneously containing costs, increasing controls and improving visibility into where the money is going. This is part of a broader trend toward digitizing outlays: I assert that by 2025, more than two-thirds of organizations will be using spend management software and corporate cards to achieve greater control and increased efficiency.

Managing corporate income taxes is a challenge for chief financial officers and their tax department professionals. Tax codes are often complex, so tax accounting as well as the data required for tax provisions and tax compliance are different enough from statutory accounting to create significant workloads for the tax department. The provision for income tax expense and, for public companies, the assembly of information related to tax-related disclosures, can be a factor holding up the completion of the accounting close.

Vena Solutions offers organizations a platform for financial planning, analysis and reporting as well as software to manage accounting consolidation and close processes. From the start, Vena has designed its applications to meet the needs of midsize organizations, which typically have the same requirements as large enterprises but with significantly fewer resources to acquire, manage and maintain technology. Ventana Research named Vena a Value Index Leader in Adaptability and a Vendor of Merit in its 2022 Value Index on Business Planning.

The theme of this year’s Oracle NetSuite SuiteWorld was “Full Suite Ahead,” with content aimed at demonstrating to customers (and prospective buyers) the value of using more of what NetSuite has to offer. The business logic behind this concept goes beyond the obvious objective of upselling existing customers to increase the average annual recurring revenue. As is often the case with subscription businesses, customers fail to take advantage of what’s already included in their service. Ensuring that customers are achieving full value is essential to retaining them, and almost always a precondition to selling them more. For a cloud software vendor, this translates to having an effective customer success organization backed by a customer-centric product strategy and a product management organization that delivers on the strategy. All of this was on display at the event.

The starting point of an era is never precise and rarely conforms to neat calendar delineations. For example, the start of the 20th century is associated with the outbreak of war in 1914. So I expect that decades from now, the consensus will hold that what became known as the 21st century began in the year 2020, with the pandemic serving as a catalyst that accelerated already existing trends and forced changes to prevailing norms and practices. This and other disruptive events that have followed are reverberating through economic and social networks and will ultimately result in some new equilibrium, but the ructions on the way there will be sharp and ever-present. Large-scale disruptions in most aspects of doing business have forced change on organizations. In this climate, the financial planning and analysis group can play a far more important role by using technology to enhance organizational agility and improve performance.

IBM Planning Analytics with Watson is a comprehensive, cloud-based business planning application that supports what Ventana Research calls integrated business planning. We coined this term in 2007 to describe a high-participation approach to business planning that integrates strategy, operations and finance. Our Next Generation Business Planning Benchmark Research demonstrated the value of IBP: Organizations that link planning processes get better results. Sixty-six percent of organizations that have an integrated method say it works well or very well, compared to only 25% that have little or no connection between plans.

The door opened to a new world in 2020, one that renders old assumptions suspect and future outcomes more varied and uncertain. It’s likely that the transition to what’s next will be bumpy, which makes planning more effectively that much more strategic.

Prophix offers cloud financial software for planning, budgeting, reporting and statutory financial consolidation designed to meet the requirements of midsize organizations and divisions of larger corporations. The company was one of the first to offer a planning platform capable of bringing together a company’s diverse planning processes and financial planning and budgeting. Its consolidation and close automation enable a shorter close and improved accounting staff productivity for midsize corporations that have even moderately complex legal entity structures that operate in multiple currencies. Increasingly, organizations are finding that having the right finance and accounting department software tools helps attract and retain the best talent.

ERP systems have been a fixture of organizational process management and record keeping for so long (more than three decades) that it is likely that few who use the software are aware that ERP is an acronym for Enterprise Resources Planning. Its smooth and uninterrupted functioning is essential to an organization’s accounting and finance processes. In manufacturing and distribution, ERP manages inventory and logistics. Some organizations use it to handle human resources functions like tracking workers, payroll and related costs. Its initial introduction represented a major advance, but its subsequent evolution has been slow and mainly a series of incremental refinements.

Sensitivity to environmental, social and governance issues – or ESG – has grown over the years and with it, increasing attention by some investors and government entities urging organizations to measure and disclose ESG metrics. 

It’s likely that finance analytics trace back to when people first began to record transactions on clay tablets. Financial analytics were given a boost with the codification of double-entry bookkeeping, an elegant system for recording transactions that facilitate the assessment of the performance and health of an organization. Further advances were achieved with the first mechanical – and then digital system – for automating computations, while personal computing devices made the numbers accessible to all.

Planful recently acquired Plannuh, a marketing-performance management application, to integrate into the Planful platform so that organizations can connect their marketing planning and analysis group with the finance department. There’s the old story of a CEO who said, “I know half my marketing spend is wasted, I just don’t know which half.” Plannuh is designed to answer that question.

A year ago, I wrote about how technology could be useful in an inflationary period, correctly anticipating the world we live in now. Responding effectively to changes in costs is always challenging, but even more so because of the choppy and chaotic nature of the current environment. Many organizations have a limited or no ability to raise prices, and are forced to find ways to minimize the impact of rising costs. And while it’s true that some organizations have a degree of pricing power, behind this generalization there is a more complex reality because this ability to raise prices often varies depending on specific products, customers and channels. Companies can best address the challenges of inflation by adopting a technique that Ventana Research calls “profitability management.”

A predictive finance department is one that can command technology to be more forward-looking and action-oriented while still fulfilling its core role of handling the financial elements of its organization including accounting, treasury and corporate finance. Beyond just automating rote tasks, technology also facilitates a shift toward becoming a predictive finance organization. Greater amounts of information, now available in near real time, and the increasing use of artificial intelligence (AI), enable more immediate analyses and assessments of possible courses of action, providing executives and managers the ability to better anticipate change and the agility to adapt quickly to unexpected circumstances.

Workday held its first in-person Rising user group meeting since 2019 in Orlando. Three topics are worth commenting on: Workday’s Extend offering, its industry accelerators and its progress with the Workday Adaptive Planning offering.

Organizations do not live in a vacuum and things happening outside their walls have a direct impact on how they perform. So, it is essential for them to incorporate external data in their forecasting, planning and budgeting, especially for predictive analytics and machine learning (ML) to support artificial intelligence (AI). I use the term external data to include any information about the world outside an organization (including economic and market statistics), competitors (such as pricing and locations), and customers. Until recently, it was adequate for organizations to regard external data is a “nice to have” item, but that is no longer the case. External data is necessary for many functions, including useful and accurate competitive intelligence used by sales and marketing groups. It is also essential for the effective applications of AI using ML for business-focused planning and budgeting and predictive analytics.

General Omar Bradley is credited with saying, “Amateurs study strategy, professionals study logistics.” This is a battlefield commander’s perspective on the often-overlooked importance of mastering the nitty-gritty in achieving military objectives. I think the same is true when it comes to data in business computing because, in my experience, it is often an overlooked or secondary consideration.

The lockdowns of 2020 forced accounting departments to adapt to managing their close-to-report cycle without face-to-face contact, prompting many to adopt digital technologies to facilitate the process. It gave further impetus to the digital transformation of the department, which aims to eliminate unnecessary manual tasks such as consolidations and reconciliations using software automation. And, rather than looking at the close as a set of discrete tasks, Controllers and CFOs increasingly are managing the process as a connected stream of responsibilities from pre-close activities to creating and publishing financial, management and external reports. This approach is consistent with what Ventana Research calls continuous accounting.

Especially in the United States, baby boomer retirements and fewer graduates with accounting degrees is posing a growing challenge to finance department executives in attracting and retaining the best accounting talent. The solution, which may not seem obvious, is to make accounting cool, again.

“Digital finance transformation” became an even more important topic over the past two years as finance and accounting departments have had to cope with an unrelenting set of new challenges that have had a profound impact on business operations, financial markets and regulatory environments. Digital technologies enable organizations to cope with change and improve performance by increasing efficiency, reducing risk, achieving greater visibility into opportunities, shortening process cycles and completing core processes. Digitizing department operations helps attract and retain the best talent because professionals spend less time on mechanical, repetitive tasks. Unfortunately, our research suggests that transformation is more talked about than done. I assert that by 2025, only one-third of finance departments will have achieved a level of technology competence to be described as digitally transformed while the CFOs of those that do will have greater influence in their organization's management.

Anaplan offers a cloud-based business planning platform that incorporates a modeling and calculation engine. The tool makes it relatively easy to add or expand the scope of plans that can be connected and monitored on a single platform. This Integrated Business Planning (IBP) approach enables organizations to use the software for financial planning or budgeting, sales, supply chain, workforce, marketing and IT planning. These are the types of plans in which companies often need to create models that incorporate their specific requirements, business systems and strategy. I expect that by 2025, one-fourth of financial planning and analysis (FP&A) groups will have implemented IBP.

Although the digital transformation of the finance department was a topic of discussion before 2020, it became a front-and-center issue as organizations locked down and in-office interactions became impossible. Finance and accounting departments were immediately confronted with a challenge because of their limited adoption of technology that would support a virtual working environment. As our 2019 Office of Finance Benchmark Research found, they are technological laggards: 45% are at the tactical or lowest level of competence in using technology across multiple processes and functions, while only 12% are at the highest. In my experience, many finance and accounting professionals and those running the department do not necessarily think that such competence is necessary, but this thinking is outdated because, increasingly, technology is the only practical way to address the department’s responsibilities (for example, the new revenue recognition for contracts accounting standards). To gain full advantage of technology, finance and accounting organizations must become “fast followers,” avoiding the bleeding edge but breaking the habit of waiting until the last possible moment before adopting proven advances.

Since its inception 20 years ago, Ventana Research has advocated for a shorter accounting close because it can improve the performance of the entire organization, not just finance and accounting. An important benefit of a shorter close is increased staff time for analysis and the preparation of reports and narratives that improve communications with the board and outside investors. Similarly, the department can provide those in operating roles the financial and managerial accounting results to highlight opportunities and issues they must address.

We conducted our recent Smart Close Dynamic Insights Research in part to assess to what extent the substantial disruptions of the pandemic have impacted the accounting close. When office lockdowns began in the first quarter of 2020, many finance departments were challenged by having to do their quarterly close remotely without their normal face-to-face interactions. In the United States, the Securities and Exchange Commission was so concerned that corporations would be unable to meet their filing deadlines that they gave registrants carte blanche to extend their filing if necessary. As it turned out, only a relative handful did, and all but one of those was based in China; but for many, that first calendar close required a heroic effort. Since then, organizations have made concerted efforts to adopt and use technology to enable them to operate resiliently under any conditions. Our research finds that while organizations have to some extent adapted to operating a more remote working environment, progress toward a faster close has been elusive. The research also confirms that organizations that use technology effectively to automate processes are better able to complete their close sooner.

OneStream offers a platform designed to serve the needs of accounting and financial planning and analysis organizations. The software handles financial close and consolidation, planning and budgeting, analysis and reporting. For me, the most significant announcement at the company’s recent user conference was the unveiling of its Sensible ML (Machine Learning) offering, which is in limited general release. I’ve commented on the importance of artificial intelligence in business applications, and Sensible ML is a promising and important step in that direction.

A few years ago – somewhat tongue in cheek – I began using the term “data pantry” to describe a type of data store that’s part of a business application platform, created for a specific set of users and use cases. It’s a data pantry because, unlike a general-purpose data store such as a data warehouse, everything the user needs is readily available and easily accessible, with labels that are immediately recognized and understood.

Artificial intelligence using machine learning has passed through the bright, shiny object stage and software vendors are well into the process of making the concept a reality in their offerings. Ventana Research defines AI as the use of technology to process information in much the way humans do, including improving accuracy in recommendations, actions and conclusions as more data is received. I like the alternative term “augmented intelligence” because it emphasizes that these systems enhance – rather than replace – the capabilities of the humans employing them, especially through improved decision-making and eliminating the need to perform repetitive work.

Organizations need to use external data in planning and budgeting, both data and third-party forecasts. This need also extends to external data in training artificial intelligence systems to assist in planning and for predictive analytics. Companies do not live in a vacuum and things occurring outside physical facilities have a direct impact on how an organization performs. Incorporating external data and third-party forecasts in any systemic fashion is really only practical if you’re using dedicated planning and budgeting software. And increasingly, planning and budgeting software will be incorporating AI capabilities. Watch this brief video presentation by Ventana Research SVP and Research Director Robert Kugel to uncover the benefits of organizations using external data. 

Sage recently announced that it is expanding its Sage Intacct software offering to support discrete manufacturing, with its initial foray into this competitive market centered in France. The move supports the company’s strategy of building out the scope of industries served by its cloud applications to include product-oriented business models and expanding Sage Intacct’s geographic footprint. The company has been extending the functionality it offers customers with human capital management as well as budgeting and planning and extending beyond its sole focus on service organizations to be able to support product-focused businesses. These include wholesale distribution, construction, retail (with the recently completed Bright Pearl acquisition) and now discrete manufacturing, specifically industrial machinery and supplies, electrical equipment and electronic parts.

The term "corporate spend" usually refers to the incidental but still significant outlays organizations make to support operations. Especially in nonmanufacturing industries, purchases of indirect goods and business services – such as computers, office supplies, furniture and services – as well as travel and entertainment can represent a significant percentage of total costs. Technology has evolved to the point where executives – especially the chief financial officer – need to take an overarching approach to corporate spend that utilizes technology to tighten controls, deepen visibility into expenditures, increase productivity and reduce process frictions. Spend management software and corporate spend cards – either physical or virtual – offer a means of achieving spend management objectives. This is part of a broader trend to digitizing outlays: I assert that by 2025, more than two-thirds of organizations will be using spend management software and corporate cards to achieve greater control and increased efficiency.

Ventana Research recently published the results of our Business Planning Value Index Research and I commented on its connection to our emphasis on using software to unify planning processes across an enterprise to improve performance. Since 2007, we have advocated what we call Integrated Business Planning (IBP): a high-participation, collaborative, action-oriented approach to planning and budgeting built on frequent, short planning sprints. Short planning cycles enable companies to achieve greater agility in responding to market or competitive changes.

I recently attended an analyst conference held by Unit4, an enterprise resource planning vendor focused on midsize organizations in people-centric industries. The conference was intended to communicate the company’s strategy, product updates and roadmap. The meeting took place shortly after announcement of the availability of Unit4 Industry Mesh and the acquisition of Compright, which does compensation planning as well as in the context of the broad technology shifts affecting ERP applications.

Software that automates the full scope of the accounting close, including reconciliations, consolidation and reporting, has grown more capable and affordable over the past five years. By enabling consistent process management that captures best practices, and by automating rote, repetitive activities to boost staff productivity, these applications enable organizations to shorten the close, make the process more efficient and reduce the risk of material errors by strengthening accounting controls. As accounting departments have learned over the past two years, close automation software helps ensure business continuity under any circumstance, especially as remote workforces that are able to perform the close virtually become more commonplace.

The use of artificial intelligence (AI) using machine learning (ML) will be the single most important trend in business software this decade because it can multiply the investment value of such applications and provide vendors an important source of differentiation to achieve a competitive advantage in what are today very mature software categories. I assert that by 2025, almost all Office of Finance software vendors will have incorporated some AI capabilities to reduce workloads and improve performance. However, software vendors will be challenged to apply innovations in this area quickly while ensuring that the AI capabilities function well enough in the real world to foster rapid adoption while avoiding user frustration. The failures of the Apple Newton and Microsoft’s Clippy office assistant stand out as examples of too-ambitious-too-soon attempts at infusing intelligent automation.

Over the past decade, how organizations manage processes and record data related to transactional events captured by an enterprise resource planning system has undergone a significant evolution. Some of the more recent changes have been the result of a steady migration to the cloud, since these systems are typically updated frequently, require less maintenance, have better performance and are more readily available than those operating on-premises.

Digital transformation of the Office of Finance has been a recurring theme for several years, but adoption accelerated when offices were locked down and organizations had to collaborate remotely. It involves shifting manual work, often completed via spreadsheets circulating in emails, to software and systems for improved performance.

Managing corporate income taxes is a challenge for chief financial officers. Tax codes are often complex, so tax accounting as well as the data required for tax provisions and tax compliance are different enough from statutory accounting to create significant workloads for the tax department. Today, the worldwide trend to higher taxes and growing tax code complexity is increasing the payoff for digitizing an organization’s tax function.

Subscription management and billing services help organizations offer unique benefits and enhance delivery to customers. By making services more personalized, organizations can acquire – and retain – more customers.

The challenges of the pandemic prevented auditors from visiting client offices, which led to widespread adoption of remote audit processes. Although there are outward similarities between a remote audit and a virtual audit, they aren’t the same. A remote audit uses technology to adapt the existing audit processes to an environment where in-person interactions are impossible. A virtual audit uses technology to redefine and streamline how auditors conduct an annual audit.

Irked by the need to account for every penny of his college expenses, poet Robert Frost penned the lines:

In the context of planning, budgeting and benchmarking, external data includes information about the world outside an organization such as economic and market statistics, competitors and customers. Today, a comprehensive set of external data is a “nice to have” item in most organizations, but that’s likely to change. External data is necessary for useful and accurate business-focused planning and budgeting, and for performance benchmarking. It is also essential for the effective applications of artificial intelligence (AI) to these functions.