Tagetik provides financial performance management software. One particularly useful aspect of its suite is the Collaborative Disclosure Management (CDM). CDM addresses an important need in finance departments, which routinely generate highly formatted documents that combine words and numbers. Often these documents are assembled by contributors outside of the finance department; human resources, facilities, legal and corporate groups are the most common. The data used in these reports almost always come from multiple sources – not just enterprise systems such as ERP and financial consolidation software but also individual spreadsheets and databases that collect and store nonfinancial data (such as information about leased facilities, executive compensation, fixed assets, acquisitions and corporate actions). Until recently, these reports were almost always cobbled together manually – a painstaking process made even more time-consuming by the need to double-check the documents for accuracy and consistency. The adoption of a more automated approach was driven by the requirement imposed several years ago by United States Securities and Exchange Commission (SEC) that companies tag their required periodic disclosure filings using eXtensible Business Reporting Language (XBRL), which I have written about. This mandate created a tipping point in the workload, making the manual approach infeasible for a large number of companies and motivating them to adopt tools to automate the process. Although disclosure filings were the initial impetus to acquire collaborative disclosure management software, companies have found it useful for generating a range of formatted periodic reports that combine text and data, including board books (internal documents for senior executives and members of the board of directors), highly formatted periodic internal reports and filings with nonfinancial regulators or lien holders.
Topics: Big Data, Mobile, ERP, Human Capital Management, Modeling, Office of Finance, Reporting, Budgeting, close, closing, Consolidation, Controller, Finance Financial Applications Financial Close, IFRS, XBRL, Analytics, Business Analytics, Business Intelligence, Business Performance, Financial Performance, Governance, Risk & Compliance (GRC), CFO, compliance, Data, benchmark, Financial Performance Management, financial reporting, FPM, GAAP, Integrated Business Planning, Profitability, SEC Software
Oracle continues to enrich the capabilities of its Hyperion suite of applications that support the finance function, but I wonder if that will be enough to sustain its market share and new generation of expectations. At the recent Oracle OpenWorld these new features were on display, and spokespeople described how the company will be transitioning its software to cloud deployment. Our 2013 Financial Performance Management Value (FPM) Index rates Oracle Hyperion a Warm vendor in my analysis, ranking eighth out of nine vendors. Our Value Index is informed by more than a decade of analysis of technology suppliers and their products and how well they satisfy specific business and IT needs. We perform a detailed evaluation of product functionality and suitability-to-task as well as the effectiveness of vendor support for the buying process and customer assurance. Our assessment reflects two disparate sets of factors. On one hand, the Hyperion FPM suite offers a broad set of software that automates, streamlines and supports a range of finance department functions. It includes sophisticated analytical applications. Used to full effect, Hyperion can eliminate many manual steps and speed execution of routine work. It also can enhance accuracy, ensure tasks are completed on a timely basis, foster coordination between Finance and the rest of the organization and generate insights into corporate performance. For this, the software gets high marks.
Topics: Big Data, Mobile, Planning, Social Media, ERP, Human Capital Management, Modeling, Office of Finance, Reporting, Budgeting, close, closing, Consolidation, Controller, driver-based, Finance Financial Applications Financial Close, Hyperion, IFRS, Tax, XBRL, Analytics, Business Analytics, Business Intelligence, Business Performance, CIO, Cloud Computing, Financial Performance, In-memory, Oracle, CFO, compliance, Data, benchmark, Financial Performance Management, financial reporting, FPM, GAAP, Integrated Business Planning, Price Optimization, Profitability, SEC Software
Because of its impact on the Office of Finance, I’ve written in the past aboutthe proposed timeline and IT implications of the convergence of U.S. Generally Accepted Accounting Principles (U.S. GAAP) and the International Financial Reporting Standards (IFRS). While the bottom-line differences between U.S. GAAP and IFRS are likely to be minimal for most businesses, some aspects of the convergence promise to be significant and problematic. One important change is how companies account for leases. The process of arriving at these rules has been contentious because it represents a major change that will entail substantial process and accounting challenges for U.S. GAAP companies. These changes are likely to go into effect as part of U.S. GAAP well ahead of any adoption of IFRS in the U.S. IT systems also will be affected, but software could smooth the transition if vendors provide a workable product.
I recently attended Vision 2012, IBM’s conference for users of its financial governance, risk management and performance optimization software. From my perspective, two points are particularly worth noting with respect to the finance portion of the program. First, IBM has assembled a financial performance management suite capable of supporting core finance processes as well as more innovative ones. It continues to build out the scope of this suite’s capabilities to enhance ease of use, deepen the capabilities of existing areas and broaden to coverage to complementary or immediately adjacent software categories such as its pending acquisition of sales performance management vendor Varicent Software (covered by my colleague Mark Smith). More specifically, automating management of the extended financial close – that is, all activities from closing the books through filing financial reports with regulatory bodies such as the Securities and Exchange Commission (SEC) in the U.S. or the FSC in the U.K. – is growing increasingly important as regulatory requirements for external financial reporting expand. Companies that have adopted software to manage the extended close are demonstrating the value of using it.
JDA Software is an established vendor of (among other categories) accounting software for the retail sector. So it is a bit ironic that the company is in the process of restating its earnings for 2008 through 2010 because of revenue recognition practices that led it to book some revenue sooner than it should have. The issue centers on certain transactions the company linked to service agreements and license revenue. As well, in 2009 and 2010 some of its license contracts included a clause protecting customers if certain products were discontinued, which can be construed as promising a future deliverable that would have required a delay in recognizing some or all revenue from those license contracts. Also, JDA is re-evaluating vendor-specific objective evidence (VSOE) for its Cloud Services in 2008 through 2010 to determine whether it met the appropriate requirements to recognize revenue at the start of those contracts; otherwise revenue would have to be prorated over the life of the contract. For a public company, any accounting restatement is serious, and JDA’s stock price has declined since the start of the year, but this seems to be due more to a fourth-quarter 2011 revenue shortfall relative to expectations and a downward revision in earnings expectations than to the restatement. The changes it is likely to make are more optics than substance, which accounts for the muted response from the market.
Topics: Performance Management, Customer Experience, Human Capital Management, Office of Finance, end-to-end, IFRS, JDA Software, Business Analytics, Financial Performance, Governance, Risk & Compliance (GRC), GAAP
The evolution from United States Generally Accepted Accounting Standards (US-GAAP) to International Financial Reporting Standards (IFRS) has been under way for more than a decade. I’ve commented on IFRS adoption before. It’s a hot topic for accountants and auditors because it goes to the heart of how companies keep their books.
Topics: Office of Finance, closing, Controller, FASB, IASB, IFRS, XBRL, financial performance, Analytics, Business Analytics, Business Intelligence, Business Performance, Financial Performance, Governance, Risk & Compliance (GRC), CFO, financial statement, GAAP, SEC
For me, the most significant announcement to come out of the recent SAPinsider conference was the company’s formal release of Business Planning and Consolidation (BPC) running on HANA, SAP’s in-memory computing appliance. For me, HANA is a potential “game changer” for planning, statutory consolidation and other analytics-supported financial processes because of the substantial reduction it enables in processing time from loading to reporting. In-memory systems provide a substantial edge in speed of processing large data sets or complex calculations, whereas the latency between thought and answer in complex scenario analyses on disk-based systems often prevents a collaborative dialogue around possible situations and their potential outcomes. Today, companies have to simplify the analysis, severely limit the amount of detail or find some combination of the two. More than likely, they wind up not having a potentially valuable collaborative dialogue in activities such as weekly or monthly review and revision of operating plans and their financial consequences, closing the books or assessing the impact of pricing changes on profitability. In the case of planning, I expect that in-memory systems will enable make it easier for companies to make changes to detailed plans (such as the budget or production plans), which is difficult today for many of them.
Topics: Big Data, Mobile, Planning, Sales Performance, SAP, Social Media, Supply Chain Performance, Customer Experience, ERP, GRC, Office of Finance, Budgeting, IFRS, XBRL, Operational Performance, Analytics, Business Analytics, Business Collaboration, Business Mobility, Business Performance, Cloud Computing, Financial Performance, In-memory, Workforce Performance, finance, Financial Performance Management, GAAP, HANA
The melding of the world’s two main financial accounting standards – United States Generally Accepted Accounting Standards (US-GAAP) and International Financial Reporting Standards (IFRS) – continues apace. Initially, the idea was to converge the two into a single, global standard. Although there was general agreement that the concept was a noble one, there were enough differences to produce practical concerns about implementing these changes, especially in the United States. Then, in December 2010, the U.S. Securities and Exchange Commission (SEC), which mandates accounting standards for publicly traded companies, indicated that while in principle it favors a single international accounting standard, the Commission was going to take a “condorsement” approach, which I covered in a note last year. The SEC’s move essentially derailed the prior objective of replacing US-GAAP with IFRS by the middle of this decade. Still, the coming together of US-GAAP and IFRS continues to forge ahead even without acceptance of full adoption in the U.S. The two bodies that administer accounting standards, the Financial Accounting Standards Board (FASB), which manages US-GAAP, and the International Accounting Standards Board (IASB), which manages IFRS, are attempting to standardize wherever possible and harmonize as best they can elsewhere. One important area where there’s been significant progress is revenue recognition.
At first thought, it seems as if having a mountain of cash to manage is a problem most companies would like to have, but it’s a real problem nevertheless. To be sure, the large majority of companies are able to deal with their cash and short-term and longer-term monetary investments because the amounts are small enough to be manageable. Indeed, many companies, especially smaller ones, face the opposite problem and spend more time focused on their uncertain funding requirements. Still, over the past decade highly profitable companies have been generating more cash than they need to fund expanding operations and capital spending requirements (Apple and Oracle are two examples), and now they have to manage it. Larger companies may have portfolios in the tens of millions to billions of dollars in multiple currencies in multiple jurisdictions, so there’s a lot at stake.
Hans Hoogervorst, who just succeeded Sir David Tweedie as the chairman of the International Accounting Standards Board (IASB), recently said he is “optimistic the SEC will move to fully incorporate IFRS [International Financial Reporting Standards] shortly.” I find it hard to see why, unless one has a fairly elastic definition of “fully,” “incorporate” and “shortly” (or at least two out of three). Then again, one shouldn’t fault the head of an organization for expressing undue optimism since that’s what he or she is supposed to do.