Ventana Research Analyst Perspectives

Ventana Research expanded its core Office of Finance focus areas this year to reflect new and important opportunities to use technology to gain effectiveness through greater efficiency. The focus area we caption as “Purchasing, Sourcing and Payments” also includes receivables. Doing a better job of record-keeping and organizing paperwork, especially in a minutiae-laden process like order-to-cash, may seem trivial. Yet, when the pandemic required organizations to lock down in early 2020, digitally transforming core business processes became essential, and the need to operate remotely presented a new set of challenges best addressed by software. Ventana Research asserts that by 2026, only one-third of larger organizations will consistently manage order-to-cash end-to-end, but those that do will outperform competitors.

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.

We added purchasing, sourcing and payments to our core Office of Finance focus areas this year to reflect new and important opportunities to use technology to gain effectiveness through greater efficiency. Doing a better job of record-keeping and organizing paperwork – especially in a minutiae-laden process like source-to-pay – may seem trivial. Yet digitally transforming core business processes became essential as the pandemic required organizations to lock down in early 2020, and the need to operate remotely presented a new set of challenges best addressed by software. Moreover, accounts payable work can be done remotely, and organizations that go this route find that digitizing the process works best.

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.

A professional services automation application marries front- and back-office functions, helping services organizations address core business challenges by ensuring that:

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.

Ventana Research has announced its market agenda for 2023, continuing a 20-year tradition of credibility and trust in our objective efforts to educate and guide the technology market. Our research and insights are backed by our expertise and independence, as we do not share our Market Agenda or our market research – including analyst and market perspectives – with any external party before it is published. We continuously refine our Market Agenda throughout the year to ensure we offer the expertise and insights organizations rely on to better assess and navigate the direction of the technology industry.

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.

In the face of a very uncertain future, companies have been discovering the value of rapid planning and budgeting cycles. As events unfold, they’re changing expectations for the future significantly on a daily or weekly basis. However, even when the world returns to a steadier state, companies will benefit from making their planning and budgeting processes faster, easier, more relevant, more strategic, more agile and more accurate.

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.

The technology industry has established itself as a pivotal force in its ability to help organizations become more intelligent and automated. But doing so has required a journey of epic proportions for most organizations that have had to endure a transition of competencies and skills that was, in many places, transitioned to consulting firms who were hired appropriately to manage changes. Unfortunately, this step led, in many cases, to an extended focus on digital transformation rather than the necessary modernization of business processes and technology. Through 2024, after concerted investment into digital transformation, one-half of organizations will require a new digital business and technology agenda for organizational resilience.

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.

The worldwide market for software to manage indirect income taxes, which includes sales and use, goods and services (GST) and value-added taxes (VAT), has been growing because of recent compliance mandates, the growth of e-commerce as well as a desire to accelerate business processes by reducing friction in areas such as tax compliance, cutting administration costs and lowering risk. Vertex provides businesses with cloud-based software that manages indirect tax processes for midsize and larger companies, especially for those with complex tax profiles. Vertex enables local and worldwide compliance backed by its ongoing tax research that continually compiles tax rules for over 19,000 jurisdictions. Because links with core financials is an essential capability for organizations of any size, Vertex maintains pre-built integrations with the leading ERP and financial management systems. Cloud-based systems are now the norm to support teams that are geographically dispersed and enable hybrid work environments. Ventana Research asserts that by 2026, a majority of midsize and larger companies will have digitized their indirect tax compliance to ensure accuracy as jurisdictions step up audits to increase revenues.

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.

Environmental, social and governance issues have grown increasingly pressing over the past few years as investors and government entities urge organizations to measure and disclose ESG 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. (It’s mainly been a marketing and public relations effort up to now.) FP&A departments are also likely to be charged with responsibility for internal ESG analysis and reporting, because to achieve environmental and social goals, organizations will need to assign specific objectives to individual business units and their responsible parties. I assert that by 2025 more than one-half of corporations required to comply with ESG reporting will centralize responsibility for preparing related reports and filings with FP&A to achieve accuracy, control and efficiency objectives. To do so, FP&A groups must immediately establish a data management strategy consistent with its targeted ESG analysis and reporting approach.

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.

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.

Value-added tax is a type of levy that is applied at each step of a transaction chain, from basic inputs to the final good or service. The amount assessed is based on the value added by an organization (hence the name) when a transaction occurs. VAT is used throughout the world because, historically, it has been harder to evade compared to income taxes. VAT is a common method of national taxation: Approximately 85% of countries impose it worldwide. A notable exception is the United States, where sales and use taxes are imposed at the state and local level and applied only to the price of the final good or service. As commerce has become global and cross-border sales have increased, traditional methods for calculating, applying and complying with VAT regimes has grown more complex. To achieve higher tax revenue while ensuring better compliance, governments are turning to technology to make collections more effective while making processes more efficient.

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.

Reconciling accounts at the end of a period is one of those mundane finance department tasks that are ripe for automation. Reconciliation is the process of comparing account data (at the balance or item level) that exists either in two accounting systems or in an accounting system and somewhere else (such as in a spreadsheet or on paper). The purpose of the reconciling process is to identify things that do not match (as they must in double-entry bookkeeping systems) and then assess the nature and causes of the variances. This is followed by making adjustments or corrections to ensure that the information in an organization’s books is accurate. Most of the time, reconciliation is a matter of good housekeeping that identifies errors and omissions in the accounting process, including invalid journal postings and duplicate accounting entries, so they can be corrected. Reconciliation also is an important line of defense against fraud since inconsistencies may be a sign of such activity.

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.

I am happy to share insights gleaned from our latest Value Index research, an assessment of how well vendors’ offerings meet buyers’ requirements. The Ventana Research Value Index: Business Planning 2022 is the distillation of a year of market and product research. Drawing on our Benchmark Research, we apply a structured methodology built on evaluation categories that reflect real-world criteria incorporated in a request for proposal to business planning vendors supporting the spectrum of planning. Using this methodology, we evaluated vendor submissions in seven categories: five relevant to the product experience ﹘ Adaptability, Capability, Manageability, Reliability and Usability ﹘ and two related to the customer experience ﹘ Total Cost of Ownership/Return on Investment and Vendor Validation.

Having just completed the 2022 Ventana Research Value Index for Business Planning, I want to share some of my observations about the business planning software market and how it has advanced as an important part of our market coverage for almost two decades. Dedicated applications for planning and budgeting have been around since the 1980s and are, therefore, quite mature, with robust features and functionality as well as continual refinements in usability and performance. Outwardly, the specifications for offerings in this category appear very similar, but how the software works is at least as important to buyers’ preferences. Moreover, planning is not a mechanical process, so despite limited differentiation at the surface, an organization can find that one vendor’s offering is a better fit for its individual approach to planning than others.

Ventana Research recently announced its 2022 Market Agenda for the Office of Finance, continuing the guidance we have offered 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.

As with many IT innovations, augmented reality (AR), extended reality (XR) and the related topic of spatial computing had been discussed to death long before they became a practical reality. As a user interface, AR is already well understood in terms of its ability to open vast new vistas in entertainment as well as making physical tasks, such as machinery maintenance and warehouse pick-and-pack, far more efficient. In the case of spatial computing, by using glasses to superimpose workflow directions, instructional videos, messages and the like onto the three-dimensional world, individuals can complete tasks faster with little formal training and make fewer errors in the process. So, long before these AR devices, tools and their related UI techniques are adapted to create a new era of immersive business computing, here are some thoughts on this idea.

Ventana Research has announced its market agenda for 2022, continuing the tradition of reliability in our efforts to educate and guide the technology market. Our assessments are backed by our expertise and independence, as we do not share our market agenda or our research – including analyst and market perspectives or our Value Index – with any external party until it is published. We review and refine our market agenda throughout the year to ensure we offer the expertise and insights organizations rely on to better assess and navigate the direction of the technology industry.

Pricing is an issue that almost every for-profit company confronts – and usually agonizes over. Chief financial officers must play a part in setting the strategic direction of pricing in their organization. They should not be involved in tactical pricing decisions because they are not close enough to markets and customers, but they should be part of the strategic design of pricing, especially as part of a profitability management effort, which I’ve discussed before.

ESG reporting is a matter that organizations – and especially publicly held corporations – will be confronting over the next several years. Ventana Research asserts that by 2025, one-half of corporations with 1,000 or more employees will have a formal ESG reporting process in place to address legal mandates or shareholder demand. The roots of ESG investing go back many decades but it has gained significant attention recently as demand in the investment world for non-accounting measures to guide ethical investments has grown. Organizations face three distinct challenges in dealing with ESG. In this analyst perspective, Ventana Research SVP and Research Director Robert Kugel discusses the considerations and benefits of organizing your organization’s ESG reporting.

Several years ago, I noted the importance of gaining resilience in managing supply chains. The world had entered a new era of trade following the financial crisis of 2007, as multilateral relationships were steadily fragmenting. For decades, sourcing and supply chain management was focused almost exclusively on achieving the lowest cost, and the world’s trade environment supported this approach. However, I observed that the new era of trade, supply chain planning and execution, would be more complex, and organizations needed to shift focus to emphasize business continuity and sustainability, accommodating change with the least disruption at the lowest cost. Sourcing decisions, logistics and product design would be crafted with an eye to a far-from-perfect and changeable world. Higher costs would be balanced against necessary resilience and sustainability, supported by the ability to make changes rapidly with assurance and limited risk.

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.

A looming challenge for companies in the developed world is price inflation, an issue periodically fretted over – but not experienced at a macroeconomic level in most developed economies – over the past four decades. Price inflation has been a frequent bugaboo that never emerged because of persistent disinflationary forces in the world economy over the past forty years. It remains to be seen to what extent recent price rises are persistent or transitory but “what if?” was the most important phrase organizations used in 2020. What if this time it really is different?

As a result of the rapidly changing business landscape in 2020 and the need to quickly – and intelligently – change business plans and budgets, many more companies have been deciding to adopt a continuous planning approach to be able to add speed and flexibility. Transforming how organizations plan and budget has become a top-of-mind issue for CFO and even CEOs. Ventana Research has been advocating what we call continuous planning to improve organizational performance. In this multimedia Analyst Perspective, SVP and Research Director Robert Kugel discusses three important technologies necessary for continuous planning – technologies that can substantially enhance the effectiveness of the FP&A organization.

Environmental, social and governance reporting by public corporations has become a top-of-mind issue for senior executives and boards of directors as countries increasingly consider or mandate its implementation in some form. The fundamental rationale for ESG reporting is rooted in the inability of purely financial measures to capture externalities (such as greenhouse gas emissions) or provide metrics that enable an objective assessment of management’s ability to properly determine trade-offs between short-term results and long-term sustainability. And, while in the United States the Sarbanes-Oxley Act mandates that auditors assess governance, the focus of this assessment is on preventing financial fraud as opposed to broader objectives that may be important to the functioning of the company as a sustainable entity.

The annual Ventana Research Digital Innovation Awards showcase advances in the productivity and potential of business applications, as well as technology that contributes significantly to the improved processes and performance of an organization. Our goal is to recognize technology and vendors that have introduced noteworthy digital innovations to advance business and IT.

The annual Ventana Research Digital Innovation Awards showcase advances in the productivity and potential of business applications, as well as technology that contributes significantly to the improved processes and performance of an organization. Our goal is to recognize technology and vendors that have introduced noteworthy digital innovations to advance business and IT.

A year of business uncertainty, lockdowns and operational disruptions forced finance and accounting organizations to adapt and change in many ways that are proving to be permanent. The need to operate virtually resulted in some organizations accelerating their adoption of technology, bringing them closer to achieving a transformation of the finance and accounting function: reshaping the department into an organization that is more forward-looking and strategic. Strategic in the sense of providing greater visibility into how the company and each of its business units is performing and insight into how to achieve better results going forward. Its focus is on what is happening next and not merely on what just happened. It does not only explain past results but uses that context to provide guidance about the choices executives and managers have, and the likely impact of those choices. To truly achieve this degree of transformation requires a different departmental structure, one that incorporates a Finance IT capability.

The annual Ventana Research Digital Innovation Awards showcase advances in the productivity and potential of business applications, as well as technology that contributes significantly to the improved processes and performance of an organization. Our goal is to recognize technology and vendors that have introduced noteworthy digital innovations to advance business and IT.

These days it strikes me that the motto of successful salespeople – "ABC: Always Be Closing!" – should apply equally to corporate controllers, albeit in the accounting sense. This is a reference to an approach to managing the finance department that I have been advocating, which I call "continuous accounting." It is a holistic way of managing the accounting function that, in large part, emphasizes using technology to distribute workloads more evenly over an accounting period, spreading closing activities as evenly as possible over time rather than waiting until the end of the month or quarter. Continuous accounting also stresses improving staff efficiency by automating repetitive processes as well as enhancing organizational effectiveness by improving data integrity in finance processes.

There has been a lot of market activity around vendors offering sales-forecasting products (or functionality to address sales forecasting) as part of a wider technology offering for sales and revenue management. As I have discussed in my Analyst Perspective: The Art and Science of Sales from the Inside Out, the pandemic accelerated the prior trends that are now forcing sales leaders and sales teams to reexamine traditional notions of how B2B sales are conducted. In addition, with the rise of the subscription business model and digital e-commerce, a more holistic approach to identify where revenue is coming from and how to manage and optimize a predictable revenue stream is becoming a pressing need. I cover the basic premise of this management of revenue streams in my Analyst Perspective: Revenue Management: The Opportunity for Innovation and Optimization.

Business process reengineering (BPR) was a consulting fashion in the early 1990s that spurred many companies to purchase their first ERP systems. BPR proposes a fundamental redesign of core business processes to achieve substantial improvements in market and customer responsiveness, productivity, cycle times and quality. Those early ERP systems provided a platform to manage cross-functional business processes with much greater flexibility and efficiency than had been possible in the past, partly because it took advantage of the commercialization of relational database technology, the graphical user interface, client-server networks and event-driven programming. ERP and other digital systems support business process reengineering by guiding the step-by-step execution of the redesigned process to ensure that it is performed consistently. They also automate the handoffs between individuals and departments as well as manage approvals and exceptions to accelerate completion of that process and permit supervisory personnel to spend more time focusing on matters that require their judgement and experience and less time on administrivia.

Ventana Research defines intercompany financial management as a discipline for structuring and handling transactions within a corporation and between its legal entities. IFM is designed to maximize staff efficiency and accounting accuracy while optimizing tax exposure, minimizing tax leakage and ensuring consistent tax and regulatory compliance. Today, IFM is an obscure topic, but I assert that by 2025, one-half of organizations with 10,000 or more employees will have implemented intercompany financial management to achieve tax, risk-management and financial close benefits.

The objectives of zero-based budgeting are well aligned with what I call integrated business planning, a technology-enabled approach to managing the forward-looking activities of a corporation including forecasting, planning and budgeting. IBP enables every business unit to plan their business in a way that makes sense to them but also makes the numbers in those plans available for company-wide planning, budgeting analysis and reporting. IBP combines operational planning and financial budgeting using models constructed around the things that managers manage, translating those elements into a financial budget. This approach can compress the time required to create and update operating plans from days or weeks to hours or minutes. Our Next-Generation Business Planning Benchmark Research found that IBP is a superior approach.

Subscription pricing models are no longer new. Many companies have experience with this pricing model even if there has not been complete adoption across their entire product and service offerings. Companies that use this model, or have spent time looking at the approach, understand the approach of a recurring revenue stream based on a repeating flat fee.

Unit4’s Financial Planning and Analysis (formerly Prevero) is a planning and budgeting application designed for the requirements of midsize corporations and the public sector. These organizations are challenged in buying software because they have almost all the requirements of larger enterprises but have a smaller budget and limited technical resources.

FourQ is an intercompany financial management (IFM) Solution-as-a-Service provider. IFM is a discipline for structuring and handling transactions within a corporation and between its legal entities, and is designed to maximize staff efficiency and accounting accuracy while optimizing tax exposure, minimizing tax leakage and ensuring consistent tax and regulatory compliance. Today, IFM is an obscure topic, but I assert that by 2025, one-half of organizations with 10,000 or more employees will have implemented intercompany financial management to achieve tax, risk management and financial close benefits. Here’s why:

The ERP system is at the core of nearly every organization’s record keeping and business process management. Its smooth and uninterrupted functioning is essential to an organization’s accounting and finance functions. 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.

IBM Planning Analytics, formerly known as TM1, is a comprehensive planning and analytics application designed to integrate and streamline an organization’s planning processes. It can support multiple planning use cases on a single platform, including financial, headcount, sales and demand planning. The software automates enterprise-wide data collection to make it repeatable and scalable across multiple users and departments. It supports sophisticated driver-based modeling that enables rapid what-if or scenario-based planning, while its built-in analytics provide deep business intelligence capabilities. This enables senior executives and managers to work interactively to immediately assess their current position and consider the impact of various options to address opportunities and issues rather than laboring through a lengthy process.

Organizations have long sought ways to achieve a fast but “clean” (accurate) financial close. The most widely accepted benchmark is to be able to close within one business week. Organizations that close within a business week are almost always more competent in how they manage the process and therefore use resources more efficiently. Also, organizations that close their books within six days after the end of the quarter are more likely to provide executives with timely information and respond to markets and competitors with greater agility. While there have been some improvements in efficiency from modern accounting systems, our research shows that one-half of organizations still take more than a business week to complete their quarterly close.

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:

Robotic Process Automation (RPA) has emerged as a core digital technology for finance and accounting organizations. It can drive significant gains in productivity and efficiency by automating mechanical, repetitive accounting processes in a continuous, end-to-end fashion. RPA improves efficiency, ensures data integrity and enhances visibility into processes.

Ventana Research recently announced its 2021 market agenda for the Office of Finance, continuing the guidance we’ve offered 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.

Profitability management produces a sustainable competitive advantage but by 2025 only one-third of companies will have implemented a profitability management initiative, explains Ventana Research SVP and Research Director Robert Kugel. This brief video shows why FP&A organizations must be part of a profitability management approach to pricing and costing.

Ventana Research has announced its market agenda for 2021, continuing the tradition of transparency in our efforts to educate and guide the technology market but also our independence as we do not share our market agenda or analyst perspectives with any external party. Each year, we proudly formulate our market agenda that is not biased by clients or the technology industry, focusing on education rather than the prospect of consulting or software revenue. We review and refine our plan throughout the year to ensure we offer the expertise and insights organizations rely on to better understand – and navigate – the direction of the technology industry.

The post-pandemic world will see much returned to normal, but there will also be change. For businesses that faced shutdowns, these changes will include higher taxes to pay for the costs of mitigating the economic impact, and the loss of tax revenue. In addition to imposing higher tax rates, some governments will strive to raise revenue by accelerating their adoption of digital technologies to enhance compliance. Taxes are the largest single expenditure for most corporations, both taxes on their income, and indirect forms of taxes such as value-added taxes (VAT) and sales and use taxes. Minimizing tax expense within the limits of the law must be a priority for CFOs.

BlackLine recently held its first virtual user conference, Beyond the Black, where it detailed numerous additions and enhancements to its applications. Of note was the launch of BlackLine Cash Application, an accounts receivable (AR) processing software based on software originally developed by recently acquired Rimilia. The new application fits the company's product strategy of providing accounting departments with software that automates time-consuming repetitive tasks and substantially reduces the amount of detail that individuals must handle in performing core processes.

Can you imagine a more arcane and boring topic than accounts receivable? Unless you are the CFO, controller, chief accounting officer or treasurer of an organization, maybe not. Anecdotally, as it’s part of the trend to the digital transformation of all things in the department, there appears to be greater interest in this area of the Office of Finance. With populations locked down and the accounting staff unable to work in an office, the need to operate virtually has accelerated the application of technology to finance and accounting departments, which has been long overdue.

One of the oddities of corporate management is that, as a rule, nobody oversees managing profitability. CEOs are accountable for meeting company-wide financial targets and assign responsibility for achieving profitability levels to business unit owners across and down an organization. Sales quotas designed to achieve revenue goals are put in place, and budget owners have cost and margin objectives. But setting profitability objectives is not the same as managing profitability.

In preparing this research note I took the precaution of searching “value-based planning” to see what came up. Over the years, the term has been used in several contexts each with different shadings. By my definition it’s an approach to planning and budgeting that maximizes the long-term value of an organization by considering all its objectives – not just the financial targets. Value-based planning is a more effective management tool for executives because it defines objectives in terms of resources used and outcomes achieved, not just the financial outcome. Value-based planning is only possible when it is fully supported by the senior leadership team and only feasible using software that can integrate operational planning and financial budgeting.

Enterprise resource planning (ERP) systems are central to nearly every organization’s management of operational and financial business processes. They are essential to the smooth functioning of an organization’s record keeping, accounting and finance tasks. In manufacturing and distribution, ERP manages inventory and logistics. Some ERP software vendors incorporate an extended set of capabilities that include managing human resources as well as supply chains and logistics. In the 2020s, technology will drive fundamental change in how ERP systems operate and how companies use the software.

The annual Ventana Research Digital Innovation Awards showcases advances in the productivity and potential of business applications, as well as technology that contributes significantly to improved efficiency and productivity in the processes and the performance of an organization. Our goal is to recognize technology and vendors that have introduced noteworthy digital innovations that advance business and IT.

A couple of years ago, I started talking about a “New Era of Trade.” Its starting point was the world financial crisis in 2007, but the evidence that we were experiencing a shift only became obvious years later. I think “new era” is a better description of what’s going on than calling these bilateral ructions a “trade war.” I avoid that latter term because I believe it should apply to an environment that truly merits such a description, one similar to the period from the late 1920s and well into the 1930s when escalating tariffs, export taxes and competitive currency devaluations caused world trade volume to plummet by two-thirds. Until 2020, world trade growth had only been slowing, not declining.

The last decade has seen exponential growth amongst subscription-based business models. Pioneered in the B2C market with cloud-based SaaS offerings, the last decade has seen exponential growth in the share of the economy that is now subscription based. Increasingly, this modern business model is permeating throughout more traditional style industries and companies. But regardless of whether a company is natively subscription based, or is transitioning, maintaining this growth requires organizations to foster long-term relationships with customers and deliver products and services that get better over time.

An important recent development in software designed for the Office of Finance is the addition of what we’re calling a data aggregation device (DAD) for analytical applications. A DAD automates the collection of data from disparate sources using, for example, application programming interfaces (APIs) and robotic process automation (RPA). With a DAD, users of the analytical application have immediate access to a much broader data set; one that incorporates operational as well as financial data from internal and external sources. The larger data set enables a much more expansive set of analyses than has been feasible in the past because the process of acquiring the data is automated, and the data aggregation is handled in a controlled manner. This control means that data in the system is authoritative, accurate, consistent, complete and secure. The difference between a DAD and a finance data mart is that the former is prebuilt for the specific application, and therefore eliminates this source of implementation costs and offers faster time to value.

In this Analyst Perspective from Robert Kugel, learn how FP&A can redefine its mission to achieve the long-stated goal of making it more of a strategic partner with the rest of the organization. This means fully adopting integrated business planning, 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, and in the face of a very uncertain future, companies have been discovering the value of rapid planning and budgeting cycles. Watch the video to learn more.

Subscription-based business models have seen exponential growth over the last decade. The growth of this recurring revenue business model, where a subscriber commits to repeatedly pay for a good or device for a fixed or indefinite timeline, has been caused by the shift from the one-time selling of physical products to selling digital services on a subscription basis. The first phase of this transformation was led by “digitally native” organizations, typically B2C, that have only ever offered services via subscription. Although a large market in its own right, it is still dwarfed by businesses selling physical products. But this market is also changing, as more and more traditional organizations transition some or all of their revenue to the subscription economy. Ventana Research asserts that through 2023, fewer than half of organizations will have the correct technology in place to support such a transition. This Analyst Perspective looks at some of the key implications of this transition and what it means for technology choices as companies move toward a subscription management approach to overseeing the subscribers and usage of their products and services.

A great deal has changed in how finance and accounting departments operate since the start of 2020. To cope with unprecedented conditions, many departments have found that significant changes to their processes and operating methods are not only possible, they’re necessary. With workers unable to be in office, organizations have learned how to work virtually using videoconferencing, and adopted a variety of new software that make it possible to work under any conditions. Software that automates the close, for instance, smooths the execution of processes by managing hand-offs, reviews and approvals even when face-to-face interaction isn’t feasible.

One of the challenges of being a practically minded technology analyst is squaring the importance of “the next big thing” with the reality of what most organizations are doing. For decades it’s been the case that “the next big thing” in the world of information technology is easily several years ahead of where most organizations are in their use of technology. And before most organizations can realize the benefit of some whiz-bang technology, they frequently need to address a range of more mundane issues, such as data availability and accuracy, employee training and corporate culture, among other impediments. Sometimes, though, advanced technology works to uncomplicate things for organizations.

Over the past several months, I have discussed a wide range of topics that organizations must consider and appropriately prioritize to maintain business continuity during periods of upheaval. But sometimes it’s important to take a step back and reflect on a critical and recurring theme: experiences. The array of experiences across the workforce and business processes both inside and outside of the organization are an essential part of an organization’s success. Leadership must give these experiences the attention they deserve, and this requires visibility into operations and the tools to measure effectiveness, especially during black-swan events. Fulfilling this objective requires the programs, processes and technology designed to meet the needs of what is called experience management (XM).

Business planning is an essential part of an organization’s focus on its future performance and overall potential because it ensures continuous operations, even in black-swan events. Planning across the entire organization needs to be a critical priority and leadership should give it the attention it deserves. In challenging times, a focus on execution tends to take hold — this is not unreasonable but in focusing on satisfying immediate customer and workforce needs and putting out fires, business leaders too often forget that forward-looking continuous planning is essential to achieving desired outcomes. Fulfilling this objective requires technology designed to meet these needs for every business process in the organization.  

The workforce is an essential part of an organization’s overall business potential because it ensures continuous operations, even in black-swan events. The workforce is the core of the organization and should get the attention it deserves. In challenging times, a “customer-first” mentality tends to take hold — this is not unreasonable but in focusing on satisfying customers and opportunities, business leaders too often forget that the workforce experience is essential to achieving desired results. Fulfilling this objective requires technology designed to meet these human capital management (HCM) objectives. An organization’s agility and ability to invest adequate time and resources into the workforce experience is essential to an organization’s sustainability and operational effectiveness.

Workiva recently introduced Chains, a visual workflow tool for the Workiva platform. Individuals use Chains to create and manage linear sequences of tasks that they otherwise would have to execute manually, for example, automatically updating a report with the most current dataset. Chains is like old-style Excel macros in its simplicity; users configure sequences with a drag-and-drop visual interface. There’s nothing to code and it’s easy to follow the sequence and the logic that drives the process. Organizations can take a modular approach to building chains, enabling users to string together a sequence of them. Such an approach makes it possible to standardize process execution and maintaining shorter chains is usually simpler than longer ones.

Marketing is inextricably linked to business success, and digital technology is essential to an organization’s overall marketing potential because it generates interest and brand awareness. In a black-swan event, the marketing department often is overwhelmed by short-term demands, so in these situations it’s of the essence that digital transformation gets the attention it deserves. In challenging times, a “putting-out-fires” mentality tends to take hold — this is not unreasonable but in focusing on satisfying the interest of the moment, business leaders too often forget that a consistent digital experience is essential to engaging consumers, the public and customers in a way that contributes to long-term success. Fulfilling this objective requires technology designed to deliver for marketing to meet this essential imperative. An organization’s agility and ability to invest adequate time and resources into marketing technology that enables a superior digital experience is essential for its sustainability and operational effectiveness.

FP&A and business analysts can make reporting more effective by reimagining how, what and when their company does its reporting. They should provide the users of their reports the information they want in a form they want it. They should be thinking about how they can make reporting more effective by rethinking how data is presented, how interactive it is, and what visualizations are used. Rethinking how to combine narratives, data, charts and graphics to everyday communications. How to add audio and video where it’s appropriate. Reimagine reporting to make it a more effective form of communications designed to improve a company’s performance.

Contact centers play a substantial role in an organization’s success. The customer journey is engaged here, at each moment of interaction. Agents, whether human or machine-driven, are intrinsic to the customer experience and the value of the contact center. Customers are essential to an organizations’ overall business potential because they generate revenue. In a black-swan event, demand for customer service may spike or dip, so in these situations it’s of the essence that agents get the attention they deserve. In challenging times, a “customer-first” mentality tends to take hold — this is natural, but in focusing on satisfying customers, business leaders too often forget that the agent experience is essential to effective customer engagement. Fulfilling this objective requires contact center technology designed for this purpose. An organization’s agility and ability to invest adequate time and resources into agents is essential for its sustainability and contact center effectiveness.

Recent events are forcing corporations to adopt dedicated software for tax provision, transfer pricing and tax analysis. The fiscal damage that the global pandemic is inflicting on countries is likely to result in a more aggressive tax enforcement environment. This will further pressure organizations to establish centralized control and oversight in managing income taxes in corporations. This will also require visibility into tax processes by senior executives, especially for the CFO. Dedicated software for managing tax processes provides greater control and visibility compared to desktop spreadsheets. Our Office of Finance benchmark research finds that 62% of organizations that use a dedicated tax provision application say they can effectively control tax risks compared to 33% of those that use spreadsheets.

Subscriptions are the future of business. Subscribers are essential to an organization’s overall business potential because they generate recurring revenue. In a black-swan event, demand for a subscription may spike or dip, so in these situations it’s of the essence that subscriptions get the attention they deserve. In challenging times, a “subscriber-first” mentality tends to take hold — this is not unreasonable but in focusing on satisfying subscribers, business leaders too often forget that the subscription experience is essential to retaining them. Fulfilling this objective requires technology designed for subscriptions. An organization’s agility and ability to invest adequate time and resources into subscriptions is essential for its sustainability and operational effectiveness.

Partners play a key role in the revenue and growth of every organization. Whether channel selling is in assistance to internal sales or independent, what happens in partnering has ramifications that are simply too important to underestimate. The imperative to maintain business continuity with channel partners becomes painfully clear in a global pandemic, and that imperative demands that organizations cultivate partner excellence and channel performance. This effort should start with partner leadership and operations, with the objective of building channel relationships that can survive the test of time. Effective sales channel partnerships are built on mutual trust and a shared belief in the market opportunity, and recruiting and managing partners must be supported by effective processes and technology. The health of these relationships and the resulting revenue from the channel hinges on an effective partner experience, and this requires technology investments that enable leaders to not just manage channel performance, but help inspire it every single day.

Products and services are the foundation of every organization, regardless of its industry or size. Products are essential to an organization’s overall business health because they generate revenue and engage buyers and customers. In a black-swan event, demand for a product may spike or dip, so in these situations it’s of the essence that products get the attention they deserve as they are marketed, sold, serviced and enhanced with innovations. In challenging times, a “customer-first” mentality tends to take hold — this is not unreasonable but in a rush to satisfy customers, business leaders too often forget that the product experience is essential to fulfilling on the customer experience and satisfying customers and buyers. An organization’s agility and ability to invest adequate time and resources into products is essential for its sustainability and operational effectiveness.

In a recent note on virtualizing the close, I observed that finance and accounting organizations that can operate in a virtual mode are better able to adapt to changing circumstances and overcome obstacles. Having systems that people can readily access remotely to collaborate and execute processes virtually makes it easier for departments to meet their commitments with confidence. The core technology underpinning the ability to work in a virtual mode is the cloud. That’s because the cloud eliminates the constraints of having to be in a specific place at a specific time; work gets done when it needs to be done.

The workforce is the center of any organization, no matter if the workforce consists of employees, contractors or what we call gig workers. It stands to reason that a black-swan event has an immediate impact on a workforce and thus an organization’s overall business health. In challenging times, a “family-first” mentality tends to take hold — a reality that, far too often, business leaders and HR organizations underestimate. But organizational readiness is essential for sustainability and operational effectiveness.

Sometimes it takes a while for technology to fundamentally change how work is done. That’s because several innovations usually have to come together before a transformation can occur. For instance, Karl Benz created the first practical motorcar in 1885, but consumers would have to wait until the 1920s for the modern automobile. Computerized accounting systems originated in the 1950s but it’s only now that technologies have evolved and come together to fundamentally change how work is done.

Suppliers play a critical role in supporting the operations and processes of every organization. Whether direct or indirect, an organization’s relationship with its suppliers has ramifications that are perilous to underestimate. The imperative to maintain business continuity becomes painfully clear in a global pandemic, and that imperative demands that organizations cultivate excellent supplier relationships.  

Supercharging the customer experience (CX) is more than just an opportunity. It’s essential for every organization that looks to optimize engagement at every moment of the customer journey. In times such as these, when business continuity is a top priority, organizations must address the customer experience, especially if it has not been a focal point of the executive team.

The imperative to infuse digital technology into your organization is not new, but it’s more essential than ever that organizations embrace digital transformation and business continuity to improve processes. I have recently written about the need for digital innovation in business continuity, outlining the steps every organization needs to take. These steps involve a close examination of the digital technology they can apply effectively for business continuity during a pandemic, natural disaster, cyber event or geopolitical situation.

The global pandemic crisis was, in effect, an unrehearsed stress test measuring the resiliency of the department. The crisis highlighted the importance of sustaining confidence in the accuracy and control of accounting processes, not just efficiency. Virtualizing the close means using technology to substantially reduce the amount of manual processing and paper involved needed to complete the accounting close. Finance and accounting organizations that can operate in a virtual mode are better able to adapt to circumstances and overcome obstacles. Having systems that can be readily accessed remotely and having the ability to collaborate and execute processes virtually makes it easier for departments to meet their commitments with confidence.

At Ventana Research we’re familiar with the need for digital transformation as we have been researching and providing education on this topic for almost two decades. And recent global challenges make even clearer the sea change at hand: digital innovation is essential for not only success, but survival. Business continuity during a pandemic, natural disaster, cyber event or geopolitical situation requires business and risk mitigation processes, but unfortunately very few organizations had been doing so. We are seeing how quickly organizations are going into survival mode, in how they operate and communicate to meet the expectations of the workforce, customers, stakeholders and potentially shareholders.

The Chief Financial Officer can enable her or his finance department play a more strategic role in company operations by adopting what I call profitability management. In the interest of time I’ve made this a very high-level description that’s intended to be just an introduction to the topic. Profitability management is a cross-functional effort. It integrates finance and sales to achieve an optimal balance of revenue and margin objectives. It’s an analytics-based approach designed achieve higher sales and fatter margins. Why should the CFO drive a profitability management initiative? The main reason is that it will improve the company’s profitability and competitiveness. The bottom line is the bottom line.

For decades I’ve heard people talk about cutting audit costs to reduce administrative overhead but based on my observations, I was skeptical — mostly because, until recently, the documented success stories haven’t been about going from good to great so much as going from awful to average. That’s changing. I recently wrote about a company that had set out to cut its external auditor’s fees. The benefits it had accrued are significant, including a reduction in staff time devoted to the audit. I also explained why cutting audit fees wouldn’t be easily duplicated in every company.

Artificial intelligence (AI) and machine learning (ML) are all the rage right now. Our Machine Learning Dynamic Insights research shows that organizations are using these techniques to achieve a competitive advantage and improve both customer experiences and their bottom line. One type of analysis an organization can perform using AI and ML is predictive analytics. Organizations also need to plan their operations to predict the amount of cash they will need, inventory levels and staffing requirements. Unfortunately, while planning begins with predictions, organizations can’t plan with AI and ML. Let me explain what I mean.

I like Louis Pasteur’s observation that “fortune favors the prepared mind.” So-called black swan events happen regularly and can have a very negative effect on a business. Of course, risk is inherent in any commercial undertaking; organizations don’t succeed by being overly cautious and reckless ones usually fail after awhile. Those that are consistently successful are ones that manage risk intelligently. That is, they correctly identify vulnerabilities, avoid the decisions and situations where risks outweigh the benefits, insure the risks that are economically insurable and quickly mitigate the impact of negative events. They are resilient in the face of change because they are adaptable.

I like Louis Pasteur’s observation that “fortune favors the prepared mind.” So-called black swan events happen regularly and can have a very negative effect on a business. Of course, risk is inherent in any commercial undertaking; organizations don’t succeed by being overly cautious and reckless ones usually fail after awhile. Those that are consistently successful are ones that manage risk intelligently. That is, they correctly identify vulnerabilities, avoid the decisions and situations where risks outweigh the benefits, insure the risks that are economically insurable and quickly mitigate the impact of negative events. They are resilient in the face of change because they are adaptable.

We find in our recent Change in the Office of Finance benchmark research an indication of the value of using automation to execute finance department functions. Our findings reveal an increase in the use of automation by finance organizations over the past five years and a concomitant improvement in performance. For example, 46 percent of companies close their monthly books within four business days compared to 29 percent in our earlier research. Yet the glass is only half full. Finance organizations continue to be laggards in adopting technology that measurably improves effectiveness.

In late February I attended Spark, the Scout annual user group meeting. This was the third and likely the last such meeting, as Scout was recently acquired by Workday. Scout’s users represent a new breed of purchasing managers and executives looking to change the role of the purchasing department. This change is critical for businesses. Saving money is the essential job of sourcing and purchasing departments. But departments can go far beyond that, helping support product and go-to-market strategies that are more complex and innovative. To empower this change, the bulk of conference content included experience-driven advice from practitioners who are pioneering the evolution of sourcing and procurement.

One of the objectives of our recent Change in the Office of Finance benchmark research was to assess the technological capabilities of finance and accounting departments. The research confirms that today we are on the verge of a major technology-led shift. Technology that’s already available can have a greater impact on how the finance department operates over the next 10 years than it has over the past 50. Advances in columnar databases, in-memory processing and artificial intelligence and machine learning, as well as a relentless reduction in the cost of computing resources, will make it possible to substantially redefine how work gets done in the department.  

I was invited to sit on a panel at CFO 3.0 events held in San Francisco and New York hosted by Sage Intacct. This event is about the evolution of the role that started with the archetypal CFO 1.0, the green-eye-shade-wearing bean counter. Lacking usable technology, he or she was limited to keeping the books in good order and simply reporting what just happened. Today’s CFO 2.0 relies on technology developed over the past two decades as well as the broader perception of the role, catalyzed by technology that provides deeper analysis to explain what happened and why. At the next 3.0 level, CFOs will lead an organization that can provide guidance to executives and managers so they can better shape the company’s future, providing insights through rich scenario planning.

Ventana Research recently announced its 2020 research agenda for the Office of Finance, continuing the guidance we’ve offered for nearly two decades on the practical use of technology for the finance and accounting department to help these organizations derive greater value and improve their performance. For decades organizations have discussed transforming Finance from a backward-looking “bean counter” to a more strategic advisory role — yet little has changed. One important reason is that the department is a technology laggard. Our recent Office of Finance benchmark research finds that half (49%) of organizations are at the lowest level of performance in utilizing technology. We also find a meaningful correlation between that level of performance and how well a department performs core processes.

Yes, it’s an easy metaphor, but a worthwhile one to consider. For the Office of Finance, figures are its raw material. They are transformed and assembled into financial statements, forecasts and reports. Like a factory, there are blueprints (accounting standards, models and forms) that show how the parts are to be pieced together. There’s quality control in the form of internal audit. And there are final inspections — external audits — to ensure the end product has been assembled properly.

Host Analytics recently announced it will now go by the name Planful. The change formally signifies a new chapter in an evolution that began with the company’s acquisition by Vector Capital a year ago and the accession of a new CEO, Grant Halloran. Planful executives say the new name better represents its focus, which is on what Ventana Research calls continuous planning, as well as its focus on the associated processes of forecasting, analysis, consolidation and reporting. 

Sage Intacct recently hosted its annual user group meeting, Advantage, and earlier this year met with industry analysts. Both meetings shed light on how the company is addressing two key opportunities. One is building a robust offering to address rapidly evolving technology requirements for the Office of Finance. The other is broadening the scope of its offering to address the financial management and administration needs of its customers.

Here are some insights on Incentive Solutions drawn from our latest Value Index research, which provides an analytic assessment of how well vendor offerings address buyers’ requirements. The Ventana Research Value Index on Sales Performance Management 2019 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated Incentive Solutions and eight other vendors in seven categories, five product-related adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on sales performance management.

Here are some insights on NICE drawn from our latest Value Index research, which provides an analytic assessment of how well vendor offerings address buyers’ requirements. The Ventana Research Value Index on Sales Performance Management 2019 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated NICE and eight other vendors in seven categories, five product-related adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on sales performance management.

Here are some insights on beqom drawn from our latest Value Index research, which provides an analytic assessment of how well vendor offerings address buyers’ requirements. The Ventana Research Value Index on Sales Performance Management 2019 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated beqom and eight other vendors in seven categories, five product-related adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on sales performance management.

Here are some insights on SAP drawn from our latest Value Index research, which provides an analytic assessment of how well vendor offerings address buyers’ requirements. The Ventana Research Value Index on Sales Performance Management 2019 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated SAP and eight other vendors in seven categories, five product-related adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on sales performance management.

Here are some insights on Optymyze drawn from our latest Value Index research, which provides an analytic assessment of how well vendor offerings address buyers’ requirements. The Ventana Research Value Index on Sales Performance Management 2019 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated Optymyze and eight other vendors in seven categories, five product-related adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on sales performance management.

Here are some insights on Anaplan drawn from our latest Value Index research, which provides an analytic assessment of how well vendor offerings address buyers’ requirements. The Ventana Research Value Index on Sales Performance Management 2019 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated Anaplan and eight other vendors in seven categories, five product-related adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on sales performance management.

With the backing of Great Hill Partners and Spectrum Equity, the company Varicent Software launched on Jan. 1st, purchasing IBM’s Sales Performance Management (SPM) assets and hiring employees from IBM’s SPM group. They will join a new team that includes Varicent’s original founders and key leadership.

This set of insights is drawn from our latest Value Index research, which provides an analytic assessment of how well vendor offerings address buyers’ requirements. The Ventana Research Value Index on Sales Performance Management 2019 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated IBM, now Varicent, and eight other vendors in seven categories, five product-related adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on sales performance management.

Here are some insights on Xactly drawn from our latest Value Index research, which provides an analytic assessment of how well vendor offerings address buyers’ requirements. The Ventana Research Value Index on Sales Performance Management 2019 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated Xactly and eight other vendors in seven categories, five product-related adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on sales performance management.

For years I’ve viewed with skepticism the claim that one technology or another will reduce audit costs. For one, there’s rarely a silver bullet. An array of moving parts drive audit fees. For example, the complexity of the corporation, accounting data management and the audit staff’s familiarity with the industry and the company all affect the time auditors must spend. Also, most of the time I’ve found that achieving significant savings was not the result of going from good to great, but from fixing deep-seated issues. If a company’s books and accounting practices are a mess, it can achieve considerable savings simply by cleaning up its act. In this circumstance, technology can play a part of a broader initiative that addresses the people, process and data management elements that are behind the mess.

Ventana Research recently published benchmark research findings on the Office of Finance, many of which show a trend in the right direction. Organizations are closing the books sooner; financial planning and analysis has improved; and companies are more frequently establishing Finance IT groups to manage the increasingly technological requirements for effectiveness.

The financial planning and analysis (FP&A) group is the linchpin of any transformation effort in the Office of Finance. Our recently completed Office of Finance benchmark research was conducted against the backdrop of the idea that finance organizations must play a more strategic role in the management of the modern organization. This transformation envisions a finance department that’s more of a partner to the rest of the company — one that is less focused on “bean counting,” instead directing its resources and energy to providing more insightful analytics, facilitating transactions of value and communicating actionable data analyses that enable managers to make better decisions more consistently. The research uncovered advances in how corporations handle analytics as well as budgeting and planning. Yet the research also indicates that there is much left to be done in most companies.

I am happy to share some insights from our latest Value Index research, which rates how well vendors’ offerings meet buyers’ requirements in seven categories, five relevant to the product (adaptability, capability, manageability, reliability and usability) and two related to the vendor (TCO/ROI and vendor validation). The Ventana Research Value Index: Sales Performance Management 2019 is the distillation of a year of market and product research efforts by Ventana Research. Drawing on our benchmark research and expertise, this research-based index is the first such evaluation to assess the full business value of sales performance management software. You can learn more about our Value Index as an effective vendor selection and RFI/RFP tool here and participating vendors can learn more about how to use the Value Index here.

Configure, price and quote (CPQ) software has been around for decades. Lately, I’ve been using the term “Dynamic CPQ” to apply to a variant of this software category that explicitly aims to produce a quote that optimizes the trade-off between the profitability of a deal and the probability of closing a sale. Dynamic CPQ software is a hybrid of price and revenue optimization (PRO) software and CPQ, providing companies with the ability to better execute their market share and pricing strategies. It’s designed especially for business-to-business (B2B) relationships that involve sales agents in the pricing process.

Ensuring that the sales organization contributes as fully as possible to the success of the organization — to revenue, growth, prof itability and the overall customer experience — requires not only dedication but effective strategy and planning. A well-developed strategy and plan to utilize current and future sales talent is essential for the best possible sales performance. To carry out this mission, organizations need a set of coordinated sales-related activities, processes and systems that enable the sales organization, from leadership and operations to the manager and sellers, to operate in a coordinated and collaborative manner. We call this sales performance management.

The traditional office of finance has five main organs: accounting keeps the books; financial planning and analysis (FP&A) analyzes performance and manages the forward-looking activities of the company such as planning, budgeting and forecasting; corporate finance raises outside money; treasury takes care of the cash and bank accounts, and tax. The modern office of finance requires a sixth: Finance IT (FIT).

A quarter century ago the “fast, clean close” became a key measure of a finance and accounting department’s effectiveness. Since then there has been general agreement that companies should be able to close their books within a business week. Our research on the accounting close has consistently shown that companies with very similar characteristics (measured in terms of revenue, number of employees, location and industry) vary considerably in the number of days it takes them to complete their accounting cycle. The lack of connection between the structural conditions of a corporation and the time it takes to close the books suggests that the obstacles to a faster close are not innate, but the result of poor process design and execution, insufficient automation of the process as well as choices made by finance executives. One of those choices is deciding — for whatever reason — not to close sooner.

What’s the easiest way to completely immobilize a 500,000-ton ship?

Lose a sheet of paper.

The paperwork that accompanies international trade is a serious source of friction, inefficiency — and therefore cost — in supply chain execution. Trade documentation requires massive amounts of paper that today can be replaced by digital data. In 2018, Maersk, the world’s largest shipping company, teamed up with IBM to create TradeLens, a digital platform that utilizes blockchain technology as a secure, unified source of trade transaction data used by businesses, financial institutions and government authorities. TradeLens is designed to enable all participants to connect, share information and collaborate, providing them with a comprehensive view of the data they need to transact trade. The system makes it possible to digitally collaborate in handling their global supply chains.

Infor recently held their Innovation Summit at Infor corporate headquarters in New York. At this annual event, they spend a good deal of time talking about progress on current initiatives and the exciting parts of the development roadmap.  A key focus this year was AI and machine learning with Infor Coleman.

“Platform,” as used in the world of technology, originally referred to an operating system on which one could construct software applications. More recently, its usage has been expanded to apply to two types of business models. One enables third parties to create products and services that are complementary to a company’s core technology. For instance, both Apple and Salesforce have attracted a wide array of third-party software developers whose offerings greatly increase the value of each software vendor’s platform to its customers. The second, such as Amazon’s marketplace, Facebook, Twitter and Uber, facilitates transactions and interactions. This latter type adds value by reducing transaction frictions and increasing efficiency and, in attracting large numbers of people to the platform, enables innovative business offerings to take advantage of Metcalf’s law — the “network effect.”

Identity management is an old problem that has taken on new dimensions in the digital world. In 1993, at the dawn of the World Wide Web (WWW), The New Yorker ran a cartoon featuring two dogs talking, one perched in front of a computer. The caption reads: “On the Internet, nobody knows you’re a dog.” The phrase quickly evolved into a meme highlighting the issue of identity uncertainty in the new digital environment.

Business planning in most companies is a relic, a process hemmed in by obsolete conceptions of what it can be. “Business planning” encompasses all of the forward-looking activities in which companies routinely engage, including marketing, sales, customer, supply chain and workforce planning as well as budgeting. In our view companies today can fundamentally change how they plan thanks to the maturation of information technology. Current systems can support better business planning as well as traditional budgeting. Dedicated software can increase the business value of the time spent planning and budgeting by enabling all parts of the business to share their plans. It can substantially cut the time spent creating and updating plans. And it can allow senior executives to see a consolidated view of the plan and quickly explore alternatives and contingencies.

From my perspective there were two significant takeaways from this year’s SuiteWorld. The first is that, almost two years on from the announced acquisition of NetSuite by Oracle, the combination has achieved its immediate objectives in growing NetSuite’s business, especially in Europe and Asia, and accelerating product development efforts. The second takeaway is that, at least for now, the unit appears to continue to operate as if the combination were a private equity investment by a public company.

Prophix is a financial performance management (FPM) suite from Prophix Software offering statutory financial consolidation, planning, budgeting and reporting capabilities designed expressly for midsize companies and divisions of larger corporations. The chief financial officer of a midsize company faces a different set of challenges than those in larger corporations or small businesses. A midsize company typically has grown to the point where it must have capabilities similar to those of a large corporation but lacks the staff or financial resources that larger companies can afford. And when experiencing rapid growth, midsize companies typically will make investments in information technology that will allow them to scale without having to add administrative or support headcount.

Last week, Scout RFP held their 2nd annual user conference, Spark 2019. Scout’s software is designed to manage sourcing and procurement processes in companies. Even with a very targeted focus, there was one key aspect that stood out compared to all the other conferences I usually attend; Spark 2019 mainly focused on customer success with little time devoted to promoting the software itself. Strategically, this fits in with Scout RFP's customers and target audiences. Scout’s users represent a new breed of purchasing managers and executives. They’re looking to change the role of the purchasing department.

IBM’s THINK conference, just held this February in San Francisco, is IBM's annual user conference. THINK is designed to showcase upcoming product updates and releases from IBM, along with provide best practices on a wide range of topics. While many technologies were on display, there is one topic in particular I wanted to cover this year: Blockchain.

We’re in a new era of trade, the result of converging issues that have been building for at least a decade. Structurally and politically, the liberal ethos that drove the trade environment through the second half of the 20th century and into the 21st has changed. There will be a new equilibrium in the future; getting there, though, will be a bumpy ride. Adding to the challenges posed by a shifting trade environment are commodity and currency market volatility and the impacts of ongoing legal, regulatory and taxation changes.

New rules governing revenue recognition for contracts have gone into effect for larger companies and are about to go into effect for smaller ones. The Financial Accounting Standards Board (FASB), which administers Generally Accepted Accounting Principles in the U.S. (US-GAAP), has issued ASC 606 and the International Accounting Standards Board (IASB), which administers International Financial Reporting Standards (IFRS) used in most other countries, has issued IFRS 15. The two standards are very similar and will require fundamental changes in revenue recognition for companies that use even moderately complex contracts in their dealings with customers. These include, for example, contracts that are structured using tiered pricing or volume discounts or ones that routinely involve modifications, such as subscriptions that add or drop users and services or allow seasonal changes or promotional discounts.

“Straight-through processing” (STP) is a business process and data architecture methodology. Technology advances have made STP increasingly feasible for any business process, allowing companies to design and execute them from inception to completion in a more automated fashion, minimizing or eliminating human intervention in the process. The associated data also progresses automatically end-to-end through the process, preserving its integrity. Because there is no human intervention, data is more accurate and less prone to manipulation.

Workiva recently introduced Wdata, a cloud facility for centralizing financial and non-financial information from multiple sources. It frees up time for finance organizations, especially financial planning and analysis (FP&A) groups, to explore conditions and trends in their business because they need to spend less of it gathering data and preparing it for analysis and reporting. Ventana Research recently awarded Workiva our Digital Innovation award for Wdata because of its transformative potential.

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), subscription-based or recurring revenue services. FinancialForce’s key point of differentiation is that it is built natively on the Salesforce platform. Thus, 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.

This year’s Workday Rising, the company’s annual user group meeting, offered details of the company’s latest release, Workday 31, and provided a roadmap for the next several semiannual releases. To put these plans into a broader context, I’ve commented before that information technology is on the verge of delivering capabilities that will enable finance and accounting organizations to transform how they work. Technology will have a more profound impact on accounting and finance over the coming decade than it has over the past 50 years. Workday Financial Management, along with the company’s Prism Analytics and recently acquired Adaptive Insights, is evolving to provide to finance and accounting departments the technology underpinnings that can help them redefine how they do their work.

Financial analysts typically classify real estate as a fixed cost. Strictly speaking, that’s correct, but looking at it this way leads many organizations to overlook opportunities to more carefully manage their real estate and other occupancy expenses. The changes in lease accounting that are going into effect have caused some organizations to reexamine their leasing policies and how they organize their lease accounting processes. They should take an even broader approach and consider ways to improve how they manage those leases.

PROS Holdings is a software vendor with two distinct but related sets of products. The company began in 1985 offering revenue management software to airlines, hospitality and rental car companies. More recently it added price and revenue management software focusing on B2B services, chemicals and energy, consumer goods manufacturers, food and beverage, healthcare, insurance and technology. This note focuses on the B2B portion of the business.

Was accounting ever cool? Well, yes, in a nerdy sort of way. Double-entry bookkeeping, codified in the 15th century by Fra Luca Pacioli, a Franciscan friar and pal of Leonardo Da Vinci, was essential for the expansion of trade and the creation of the modern corporation. Bookkeeping and accounting were as important to economic development as two other financial inventions – insurance and fractional reserve banking. Double-entry bookkeeping is an elegant system, simple yet powerful. It supports the accurate recording of transactions and the economic condition of a business as well as analyses of its performance. That’s cool.

A quarter century after a “fast, clean close” became a key measure of a finance and accounting department’s effectiveness, companies continue to take too long to close their books. Our Office of Finance research finds that 60 percent of companies take more than six business days to complete their close despite widespread agreement that it should be done within a business week. Closing sooner provides executives with financial and management accounting data sooner. A faster close also promotes agility in responding to markets and competitors, frees up departmental resources to enable CFOs to fix process issues that hamper the effectiveness of the department and allows extra time to concentrate on more valuable analytical tasks. Moreover, it’s likely that by focusing on issues that are delaying the close, the department will uncover the root cause of other issues that diminish its performance. “We’re too busy to figure out how to save time” is a common problem in these finance organizations.

OneStream XF from OneStream is a financial performance management (FPM) platform offering planning, budgeting and forecasting, statutory consolidations and reporting. The company was founded in 2010 and has been self-funded, which means that until recently its marketing and brand recognition efforts have been limited. I reviewed the company’s statutory consolidation capabilities earlier this year.

Longview Solutions provides tax departments with a full suite of tax software to manage direct (income) taxes. This includes tax provision and reporting, tax analysis and planning as well as operational transfer pricing and country-by-country (CbC) reporting. A dedicated tax application suite speeds the tax process, enhances control, reduces the chance of errors and ensures consistency in provision, reporting, analysis and planning.

Budget season is about to begin for many companies. I’ve spent a few decades doing research into – as well as thinking and writing about – the planning and budgeting processes in corporations. I’ve closely examined the role of the Financial Planning and Analysis (FP&A) group, which is usually charged with managing the corporate budget process. About seven years ago, I published a research note, “Putting the ‘A’ Back in FP&A”. In it I made the point that the time saved by using dedicated planning and budgeting software and therefore not having to deal with spreadsheet machinations would enable people working in FP&A to do what they were hired to do: Analysis.

Workday will acquire Adaptive Insights for $1.55 billion in cash, with the transaction scheduled to close in the third quarter of this year. The combination adds Adaptive Insight’s well-developed cloud-based financial performance management software to Workday’s workforce and financial management suite. Workday says Adaptive will operate as a standalone business and continue with its current product strategy.

Blockchains are attractive because their built-in security and trust factors make them useful for almost all business interactions involving organizations and individuals. Blockchains have two basic functions. One is as a method for handling transactions involving property such as land deeds, trademarks or other assets. The second involves exchanges of data such as identities of individuals or businesses, the location of an object at a point in time or weather conditions. All interactions involving property or assets include the transfer of data as well, of course, but some blockchain use cases are informational only.

Workday recently presented a technology summit for industry analysts. The presentations focused on Workday’s ongoing product advancements as well as its approach to employing emerging technologies. These technologies include artificial intelligence (AI) and machine learning (ML), robotic process automation (RPA) and bots utilizing natural language processing. Ventana Research uses the term “robotic finance” to refer to these technologies when used in the office of finance. In our view, they will have a profound impact on the nature of white-collar work over the coming decade. Financial management and ERP software vendors are focusing on these technologies because they will disproportionately affect finance and accounting departments: I estimate that their adoption has the potential to eliminate one-third of the accounting department’s workload within a decade.

Advancing the potential of any business requires continuous improvement in the processes and technology that support it. Many companies have embraced attempts at a digital transformation, and it’s become a goal to which organizational resources and budgets have been dedicated around the globe.

OneStream XF from OneStream Software is a financial performance management (FPM) platform available on-premises or in the cloud. The company is a relative newcomer (it started in 2010) but its founders are industry veterans and it has a long list of referenceable customers. Being self-financed, it only recently began to raise its market profile. Its SmartCPM system consists of software for statutory financial consolidation, planning, forecasting, budgeting and reporting that’s used primarily by midsize and larger corporations, including large multinationals with complex ownership structures. Designed as a platform, OneStream XF fits into the company’s strategy to offer an array of financial applications developed by itself or third-parties that use a single authoritative source of data.

Accountants love electronic spreadsheets – and for good reason. They’re a powerful and versatile personal productivity tool and just about everyone knows how to use them. Spreadsheets are the default software tool for accountants because they enable autonomy (you don’t need to ask IT for anything) and they’re free (so you don’t have to make a business case to authorize buying something). Some accountants humorously (but earnestly) invoke the line “you’ll have to pry this spreadsheet from my cold, dead hands” whenever somebody suggests eliminating them.

Pricing is an issue that almost every for-profit company confronts – and usually agonizes over. Organizations’ approach to pricing can range from centralized to decentralized and from highly disciplined to lax. Whether pricing is best handled in a centralized or decentralized fashion depends a great deal on the markets the company is serving as well as its organizational structure and culture. However specific pricing policies are established, though, a disciplined approach to price setting and negotiation is always superior to an ad-hoc process. Discipline is key to preventing margin “leakage” caused by unnecessary price concessions. Configure, price and quote (CPQ) software is a critical component in any leakage-prevention strategy.

SAP recently held a teleconference to highlight its blockchain strategy. Lately, the major business software vendors have been calling attention to their blockchain initiatives. While the focus on this technology might seem premature to those who still equate it with cryptocurrencies, evidence is pointing to a future pace of adoption similar to the rapid take-up of the internet in the 1990s. That blockchain is useful for a wide range of business functions isn’t news – just google “blockchain use cases.” Payment, provenance, testament and efficiency are four main themes driving a multitude of applications of the technology. That said, blockchain isn’t technology in search of a mission but is something more like the internet, both in its broad utility and in value multiplication through network effects.

Prophix is an established provider of financial performance management (FPM) software for planning and budgeting, forecasting, analysis and reporting, and managing the financial close and consolidation process. Its eponymous software is designed specifically for midsize companies or midsize divisions of larger corporations. These organizations are a distinctive segment of the market in that they have almost all the functional requirements of large enterprises but have fewer resources to apply to these critical tasks. Fortunately, the evolution of information technology over the past decade has been especially beneficial to midsize customers, bringing them expanded capabilities, substantially better performance and greater automation of routine tasks at an affordable total cost of ownership.

Oracle OpenWorld is a fall event that sprawls over a lot of territory – figuratively in terms of the IT landscape and, if you’re in San Francisco, literally. My focus here is on the ERP portion of the company’s software portfolio.

Sage Intacct recently held its annual user group meeting. The cloud financial management software service provider targets rapidly growing small- and midsize services companies. Within this broad category, Sage Intacct focuses on verticals including software, financial services, healthcare, nonprofits, wholesale and franchisers.

The application of artificial intelligence (AI) and machine learning (ML) to business computing will have a profound impact on white collar professions. This is especially true in heavily rules-based functions such as accounting. Companies recognize the transformational potential of AI and ML, but the progression and pace of the adoption of these technologies is unclear. Some applications of AI and ML are already in use but others are a decade or more away from replacing human tasks.

Fra Luca Pacioli, a 15th-century Franciscan friar living in what’s now Italy, is credited with codifying double-entry bookkeeping, which is the foundation of accounting. Pacioli, a polymath, was well acquainted with his contemporary and fellow polymath Leonardo Da Vinci. So, given they were at times collaborators, it’s fitting that one of the most important applications of SAP’s Leonardo technology will be in helping to disrupt finance and accounting organizations in corporations.

In 2016 Unit4 acquired Prevero, a financial performance management software company. The acquisition reflects a trend toward the convergence of transactional and analytical business applications. ERP and financial management software vendors increasingly are adding analytic capabilities – especially in financial performance management (FPM) – to the core functions of transaction processing and accounting in order to broaden the scope of their offerings. The integration of transaction processing and analytical software is especially valuable to Unit4’s core customer base of midsize organizations, which we define as those with 100 to 1,000 employees. Midsize entities have almost the same systems requirements as larger ones but lack the resources the latter enjoy.