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.
Topics: Office of Finance, Recurring Revenue, Continuous Planning, Financial Performance Management, Price and Revenue Management, Inventory Optimization, Operations & Supply Chain, Enterprise Resource Planning, Sales and Operations Planning, ERP and Continuous Accounting, Sales Planning and Analytics, revenue recognition
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.
Topics: Office of Finance, Recurring Revenue, Continuous Planning, Sales Performance Management, Financial Performance Management, ERP and Continuous Accounting, Sales Planning and Analytics, Billing and Recurring Revenue, revenue recognition
“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.
Topics: Sales, Customer Experience, Office of Finance, Recurring Revenue, Data Governance, Financial Performance Management, Digital Commerce, ERP and Continuous Accounting, Billing and Recurring Revenue
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.
Topics: Office of Finance, Recurring Revenue, Continuous Planning, Data Governance, Data Preparation, Financial Performance Management, Price and Revenue Management, Enterprise Resource Planning, ERP and Continuous Accounting, Sales Planning and Analytics, revenue recognition
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.
Topics: Sales, Office of Finance, Recurring Revenue, Cloud Computing, Financial Performance Management, ERP and Continuous Accounting, Billing and Recurring Revenue, revenue recognition
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.
Topics: Office of Finance, Recurring Revenue, Continuous Planning, Financial Performance Management, Price and Revenue Management, ERP and Continuous Accounting, revenue recognition
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.
Topics: Office of Finance, Recurring Revenue, Continuous Planning, Financial Performance Management, ERP and Continuous Accounting
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.
Topics: Office of Finance, Recurring Revenue, Cloud Computing, asc 606, Enterprise Resource Planning, ERP and Continuous Accounting, revenue recognition
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.
Topics: Office of Finance, Recurring Revenue, Cloud Computing, asc 606, Enterprise Resource Planning, ERP and Continuous Accounting, revenue recognition
Longview recently completed the acquisition of Tidemark Systems, a planning software vendor. Longview Plan powered by Tidemark is a suite of cloud-based applications that enable corporations to plan, assess performance and communicate results more effectively. The software facilitates what Ventana Research calls “continuous planning.” This is a highly collaborative, action-oriented approach to planning that relies on frequent, short cycles to rapidly create and update integrated company-wide operational and financial plans. This structural approach makes it easy for individual business functions to create their own plans while enabling headquarters to connect those plans to create a unified view. Viewed in the long term, this acquisition provides Longview with a platform that will enable it to apply its existing on-premises intellectual property to a broader suite of web-based performance management and tax applications.
Topics: Mobile, Office of Finance, Recurring Revenue, Continuous Planning, Analytics, Business Intelligence, Financial Performance Management, Price and Revenue Management, ERP and Continuous Accounting, Sales Planning and Analytics
I recently attended SuiteWorld, NetSuite’s annual user conference. In the opening keynotes and throughout the event speakers emphasized benefits for NetSuite users resulting from the merger of NetSuite and Oracle, completed last fall. I wrote about this at the time. NetSuite users are likely to benefit from Oracle’s sales and core technology infrastructure. Before the merger, NetSuite’s R&D spending was constrained by being a public company. The amounts needed to rebuild and extend its software on an accelerated timetable likely would not have been acceptable to stock market investors.
Topics: Human Capital Management, Office of Finance, Recurring Revenue, Cloud Computing, HRMS, Enterprise Resource Planning, ERP and Continuous Accounting
Ventana Research defines financial performance management (FPM) as the process of addressing the often overlapping people, process, information and technology issues that affect how well finance departments operate and support the activities of the rest of their organization. FPM deals with the full cycle of finance department activities, which include planning and budgeting, analysis, assessment and review, closing and consolidation, internal financial reporting and external financial reporting, as well as the underlying information technology systems that support them.
Topics: Mobile, Human Capital Management, Office of Finance, Recurring Revenue, Continuous Planning, Analytics, Business Intelligence, Financial Performance Management, Price and Revenue Management, ERP and Continuous Accounting, Sales Planning and Analytics
Anaplan recently held Anaplan Hub, its annual user group meeting. The company 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 as a central source. Companies typically use Anaplan software for financial planning or budgeting, sales, workforce, marketing and IT planning. These are the types of plans in which companies often need to create models that incorporate their specific requirements, their strategy and their business systems.
Topics: Customer Analytics, Human Capital Management, Marketing, Marketing Performance Management, Office of Finance, Recurring Revenue, Continuous Planning, Analytics, Business Intelligence, Cloud Computing, Collaboration, HRMS, Sales Performance Management, Workforce Management, Financial Performance Management, Price and Revenue Management, Work and Resource Management, Operations & Supply Chain, Sales Enablement and Execution, ERP and Continuous Accounting, Sales Planning and Analytics
Aria Systems provides companies with software for managing subscription or recurring revenue business models. A recurring revenue business models includes three types of selling and billing structures: a one-time transaction plus a periodic service charge; subscription-based services involving periodic charges; or a contractual relationship that charges periodically for goods and services. Aria’s cloud-based software addresses key requirements of users in the marketing, sales, operations and accounting functions in this type of business.
Topics: SaaS, Sales, Sales Performance, Customer Engagement, Customer Experience, ERP, Marketing, NetSuite, Office of Finance, Recurring Revenue, customer life cycle, Customer Performance, Operational Performance, Business Analytics, Business Performance, Cloud Computing, Customer Service, Financial Performance, Business Performance Management (BPM), Sales Performance Management (SPM), billing software
Revenue recognition standards for companies that use contracts are in the process of changing, as I covered in an earlier perspective. As part of managing their transition to these standards, CFOs and controllers should initiate a full-scale review of their order-to-cash cycle. This should include examination of their company’s sales contracts and their contracting process. They also should examine how well their contracting processes are integrated with invoicing and billing and any other elements of their order-to-cash cycle, especially as these relate to revenue recognition. They must recognize that how their company structures, writes and modifies these contracts and handles the full order-to-cash cycle will have a direct impact on workloads in the finance and accounting department as well as on external audit costs. Companies that will be affected by the new standards also should investigate whether they can benefit from using software to automate contract management or in some cases an application that supports their configure, price and quote (CPQ) function by facilitating standardization and automation of their contracting processes.
Topics: Planning, Governance, Office of Finance, Recurring Revenue, Reporting, Revenue Performance, Budgeting, Tax, Business Performance, Financial Performance
For most of the past decade businesses that decided not to pay attention to proposed changes in revenue recognition rules have saved themselves time and frustration as the proponents’ timetables have slipped and roadmaps have changed. The new rules are the result of a convergence of US-GAAP (Generally Accepted Accounting Principles – the accounting standard used by U.S.-based companies) and IFRS (International Financial Reporting Standards – the system used in much of the rest of the world). Now, however, it’s time for everyone to pay close attention. Last year the U.S.-based Financial Accounting Standards Board (FASB, which manages US-GAAP) and the Brussels-based International Accounting Standards Board (IASB, which manages IFRS) issued “Topic 606” and “IFRS 15,” respectively, which express their harmonized approach to governing revenue recognition. A major objective of the new standards is to provide investors and other stakeholders with more accurate and consistent depictions of companies’ revenue across multiple types of business as well as make the standard consistent between the major accounting regimes.
Topics: Planning, Customer Experience, Governance, Office of Finance, Recurring Revenue, Reporting, Revenue Performance, Budgeting, Tax, Customer Performance, Business Performance, Financial Performance
As I noted in a recent analyst perspective note the recurring revenue business model is gaining increasing use worldwide. Our recently completed recurring revenue benchmark research shows that companies are using this business approach because they find that it can convey a strategic advantage in creating additional sales opportunities, making future revenues more predictable, enhancing their customers’ experience and increasing customer loyalty. However, recurring revenue businesses have unique challenges, especially in finance and accounting departments because most ERP systems (the ones that handle the accounting function) are not designed to manage the specific requirements of a recurring revenue businesses.
Topics: SaaS, Customer Experience, NetSuite, Office of Finance, Recurring Revenue, Zuora, Customer Performance, Operational Performance, Business Performance, Cloud Computing, Customer Service, Financial Performance, billing software, Intacct
Recurring revenue is a term applied to business models that involve three types of selling and billing structures: a one-time transaction plus a periodic service charge; subscription-based services involving periodic charges; or a contractual relationship that charges periodically for goods and services. Telecommunications was the first major industry to use it, but recently the model has gained popularity in others. It is a major trend in information technology as an increasing number of companies offer software and hardware technology accessed as a service through cloud computing. Recurring revenue also has been transforming the entertainment business, as customers subscribe to rent movies, music and other creative digital products instead of owning them; this is part of the so-called “sharing economy” whose social impacts are wide-ranging.
Topics: SaaS, Customer Experience, NetSuite, Office of Finance, Recurring Revenue, Zuora, Customer Performance, Business Performance, Cloud Computing, Customer Service, Financial Performance, billing software, Intacct
Most people in business management admit that sales is more an art than a science. Organizations have long struggled to find the right mix to improve its effectiveness, and few get the most out of available technology. For many the default is still to use sales force automation (SFA) and spreadsheets to manage processes and try to increase the productivity of sales staff. In our view they should take a holistic approach to sales processes from contact to close and support everything from sales forecasting to pipeline management to compensation with applications designed for these purposes. Those in sales operations need to apply analytics to understand and fine-tune sales activities. Those in sales management need applications that can help recruit, engage and retain the best talent. Even more than elsewhere in business, in sales people matter, and the organizations that most empower their teams are likely to get the best results. Optimizing people and processes requires a balance of information and technology to support the various needs of the sales organization.
Topics: Sales, Recurring Revenue, Sales Compensation, Sales Forecasting, Customer Performance, Business Collaboration, Business Mobility, Cloud Computing, CRM, SFA