Analyst Perspectives

I’ve been using spreadsheets for more than 30 years. I consider this technology tool among the five most important advances in business management of the 20th century. Spreadsheets have revolutionized many aspects of running an organization. Yet as enthusiastic as I am about them, I know the limits of desktop spreadsheets and the price we pay if we fail to respect those limits. The essential problem arises when people use desktop spreadsheets for purposes beyond what they were originally...

As most employers are aware, the Patient Protection and Affordable Care Act (PPACA or Affordable Care Act) goes into effect in January 2014 which I recently assessed the need to be technology ready. The new law was signed into law on March 23^rd 2010 and with the Supreme Court decision in June of 2012 which upheld the law and the re-election of President Obama in November, the law complex regulatory requirements that businesses need to understand before then. Those that don’t prepare may incur...

For four years Adaptive Planning has been building out its cloud-based financial software. Starting with budgeting, planning and forecasting, it added analytics, data visualization, dashboards and alerting as well as flexible reporting and collaboration tools. It recently announced the general availability of consolidation functionality in its cloud-based suite. This addition eliminates a notable gap in the company’s functionality, giving it a more complete financial performance management...

Ventana Research recently completed an in-depth benchmark research project on long-range planning. As I define it, long-range planning is the formal quantification of the more conceptual strategic plan. It makes specific assumptions and expresses in numbers how a company expects its strategy will play out over time. Almost all (95%) of those participating in the research see a need to make improvements to their long-range planning process. The research shows that one useful improvement is ...

To comply with the Patient Protection and Affordable Care Act (PPACA or Affordable Care Act), which survived a Supreme Court test and a presidential election, all employers with more than 50 full-time employees must be ready by January 2014 to deal with the lion’s share of the law’s employer mandate requirements. Our recent benchmark research on governance, risk and compliance indicates that many of those employers have significant concerns about compliance issues: 53 percent of participants...

A recent news release by Robert Half, a staffing company that specializes in accounting and finance personnel, covered what it sees as the most important attributes required for auditors in the 21^st century. “7 Attributes of Highly Effective Internal Auditors” covers the people dimension of the profession and focuses on the non-technical requirements of the role, including relationship-building, teamwork, and diversity. No doubt these skills are a must for just about anybody working in a modern...

SAP recently announced its new Fraud Management analytic applications. Currently in “controlled” (limited) release, it’s a promising start for the product and a good example of the type of business process revolution that’s possible when companies can execute complex analytics on big data sets using in-memory and other advanced processing techniques. Over the next several years a wide swath of basic corporate processes will be transformed by the shift to in-memory processing and big data...

ParAccel is a well-funded big data startup, with $64 million invested in the firm so far. Only a few companies can top this level of startup funding, and most of them are service-based rather than product-based companies. Amazon has a 20 percent stake in the company and is making a big bet on the company’s technology to run its Redshift data warehouse in the cloud initiative. Microstrategy also uses ParAccel for it's cloud offering, but holds no equity in the company.

This is annual report season, the time of year that a majority of European and North American corporations issue glossy paper documents aimed at investors, customers, suppliers, existing and prospective employees as well as the public at large. (Some countries have different conventions; in Japan, for instance, most companies are on a March fiscal year.) In reviewing some of the annual reports that are available on the Web, I was struck by the absence of advanced reporting technology used on...

One of the most important IT trends over the past decade has been the proliferation of ever wider and deeper sets of information sources that businesses use to collect, track and analyze data. While structured numerical data remains the most common category, organizations are also learning to exploit semistructured data (text, for example) as well as more complex data types such as voice and image files. They use these analytics increasingly in every aspect of their business – to assess...

I’m wondering whether the rapid rise in earnings restatements by “accelerated filers” (companies that file their financial statements with the U.S. Securities and Exchange Commission that have a public float greater than $75 million) over the past three years is a significant trend or an interesting blip. According to a research firm, Audit Analytics, that number has grown from 153 restatements in 2009 to 245 in 2012, a 60 percent increase. What makes it a blip is that the total is still less...

Ventana Research completed an in-depth benchmark research project on long-range planning recently. As I define it, long-range planning is the formal quantification of the strategic plan and how that strategy is expected to play out over a period of time. The benchmark demonstrated that there’s room for improvement in almost every aspect of the long-range planning process. Almost all (95%) of those participating in the research see the need to advance their process. The research confirmed that...

Ventana Research recently completed an in-depth benchmark research project on long-range planning. As part of the research we had discussions with CFOs and those involved in financial planning and analysis about their company’s strategic and long-range planning processes, which pointed to the need for clarity in using the terms “strategic planning” and “long-range planning.”

I was discussing the United States Securities and Exchange Commission’s (SEC) eXtensible Business Reporting Language (XBRL) mandate with a former head of investor relations at a Fortune 100 company. His take on it is much the same as that of everyone else involved with corporate reporting: it doesn’t produce much value and costs a bundle to comply. I related to him my thoughts on the lack of progress I saw in making the XBRL mandate more useful to corporations and investors alike. Making XBRL...

Our recent benchmark research project, Spreadsheet Use in Today’s Enterprise, demonstrated that some companies have made modest progress in addressing spreadsheet issues, but there’s still much left to be done. Desktop spreadsheets can be an important source of productivity but, as I’ve noted, you need to understand their limitations and understand the practical alternatives. Users underestimate the impact of spreadsheet problems on their productivity because they tend to overlook the myriad...

I’ve been using electronic spreadsheets for more than 30 years. I consider this technology among the 20th century’s top five most important advances in business management. Spreadsheets have revolutionized every aspect of running any organization. A spreadsheet (specifically, VisiCalc) was the original “killer app” that made business people feel the necessity to buy a personal computer.

Profit Velocity Solutions’ PV Accelerator is an analytic application designed to enable capital-intensive companies to consistently achieve substantially wider margins and higher return on assets (ROA). Companies in industries such as specialty chemicals, building materials, integrated steel mills and silicon chip fabrication (to name just four) routinely fail to make the right decisions about pricing, production and sales management because they use analytic methods that, from an economic...

One of the important lessons company executives should have learned over the past 15 years is that it’s dangerous not to do contingency planning, a subject that I’ve written about before. By this I mean real, think-outside-the-box contingency planning (not just extrapolating), which is especially important when doing long-range planning. The past decade or so has been punctuated by periods of elevated volatility in financial and product markets, and there’s a good probability it will occur...

To mark the fourth anniversary of the Securities and Exchange Commission’s (SEC) interactive data mandate, Columbia Business School (my alma mater) and its Center for Excellence in Accounting and Security Analysis (CEASA) published a review of the current state of eXtensible Business Reporting Language (XBRL) that notes the manifold issues that plague this promising technology. From its perspective, three key issues hamper greater use of XBRL. The first is the high error rate in the tagging...

You would think that all organizations would want to maximize the value of every customer relationship, but my research over the last couple of years suggests otherwise. Three particular insights stick in my mind. My research into customer analytics shows that overall customer lifetime value ranked only sixth most important customer-related metric, compared to the highest-ranked, customer service costs, which was selected by 54 percent of respondents versus 31 percent for customer lifetime...

The electronic spreadsheet is among the top five most important advances in business management to come along in the last hundred years. It revolutionized almost all aspects of running an organization. It was the original “killer app” that made it necessary for people to go out and buy a personal computer. Yet our recent benchmark research project Spreadsheet Use in Today’s Enterprise confirmed advice we have been giving for the past decade: Spreadsheets are a fabulous tool but they have...

Taxes – both indirect (sales or value added taxes, for example) and direct (income taxes) – are one the largest expense items on the corporate income statement. In recent years it has become common for large and even midsize companies to automate their indirect tax management process, but direct tax management has remained a bastion of manual processes built on a heap of desktop spreadsheets. In previous blog posts I discussed this issue and the role of the tax data warehouse as a necessary...

Managing payroll has long been viewed as an administrative task, time-consuming and focused on ensuring that everyone is paid correctly and on time. In fact, in the American Payroll Association’s most recent annual study, the main metrics tracked for payroll performance are payroll cost per employee, payroll processing accuracy rate and dollar value of overpayments – all of which focus only on cost or accuracy. So payroll management is rarely viewed as having any strategic value to the business...

Banking giant JP Morgan raised eyebrows in 2012 when it revealed that it had lost a substantial amount of money because of poorly conceived trades it had made for its own account. The losses raised questions about the adequacy of its internal controls, and broader questions about the need for regulations to reduce systemic risk to the banking system. At the heart of the matter were the transactions made by “the London Whale,” the name given to a JP Morgan’s trading operation in the City by its...

Human capital is most organizations’ largest investment and one of their largest differentiators against the competition. So it follows that those that take advantage of the compelling, game-changing technology now available in human capital management (HCM) will place themselves at a competitive advantage.

Hi; pleased to meet you!  I’m tremendously excited to be joining the team here at Ventana Research, and I’m looking forward to adding my experience, observations and opinions to this team of very talented industry analysts!  Let me start by telling you a little about my background, and then why a chose to come to work here and what I will be covering at Ventana Research.

Businesses always see a lag between when technology makes some advance possible and when a majority of companies actually adopt it. There’s even a longer lag between the emergence of an advance in a business process or technique and the time it takes to become mainstream. When we write our research agendas at the top of each year, we have to strike a balance between focusing on the new and different, which is still many years away from general acceptance, and the mainstream, which has been...

As I’ve noted before, it’s common for CFOs of companies that are transitioning from being a small to a midsize business (that is, when they grow past about 100 employees) to find that the entry-level accounting package that they have been using no longer fits their needs. This software may be inexpensive to purchase and easy to use but it lacks many of the customization and business process management capabilities that become increasingly important as organizations grow. The transition from...

Ventana Research does benchmark research that assesses the maturity of organizations across four dimensions: people, process, information and technology. We examine business issues along those dimensions because we recognize the interconnected relationships among them. Especially in larger companies, data issues such as accuracy and accessibility are often a root cause of poor performance of a core function. It may be a factor in such areas as poor customer service, sales execution or...

This is the third in a series of blog posts on what CEOs (and for that matter, all senior corporate executives) need to know about IT and its impact on running a business. The first covered the high-level issues. As I noted, it’s not necessary for a CEO to be able to write Java code or master the intricacies of an ERP or sales compensation application. However, CEOs must grasp the basics of IT just as they must understand basic corporate finance, the production process and – at least at a high...

Quantrix recently unveiled Quantrix 5, an updated version of its financial modeling software designed to fill the gap between spreadsheets and business intelligence (BI) systems. Quantrix provides users with many of the capabilities of an enterprise system and addresses shortcomings of desktop spreadsheet software without requiring extensive training.

When they were first introduced three decades ago, electronic spreadsheets provided a major advance in corporate planning compared to the paper spreadsheet-and-adding-machine systems they replaced. However, time passes and, as our research shows, desktop spreadsheets often hamper productivity because they were designed for personal productivity, not for managing repetitive, collaborative, enterprise-wide processes such as financial planning. The finance organization at the University of Central...

Businesses need to simplify HR and compliance processes to save time and reduce risk. Talx, which helps employers address concerns in hiring, pay and compliance, has now assumed the name of its parent company and become Equifax Workforce Solutions [PDF]. HR and finance professionals should recognize the parent company’s brand from its work in the consumer credit industry. The company hopes these professionals will see that Equifax Workforce Solutions offers a better approach to governance, risk...

Effective planning has always been a challenge for companies, and it’s all the more so today. Even when companies deploy dedicated planning applications, they often do not or cannot use them to full advantage. I had a chance to learn more about 3M Corp. use of business planning in our recent 2012 Leadership Awards, who is the diversified global manufacturer of consumer and industrial products, several years ago acquired a dedicated planning application, but because the system could not scale to...

Earlier this year we published our Trends in Developing the Fast, Clean Close benchmark research findings. The most significant was that, on average, it takes longer for companies to close their books today than it did five years ago. In 2007, nearly half (47%) we closing their quarters within five or six days, but now only 38 percent can do it as quickly.

I’ve been examining how corporations plan and budget for more than decade. One clear pattern that has emerged is the difficulty that using desktop spreadsheets imposes on the process. Ventana Research recently published findings from our trends in business planning benchmark research, and the research once again confirms this observation. It shows that companies that use dedicated applications are consistently more satisfied (and much less dissatisfied) with the software they use than users of...

Many people enjoy mystery stories or crime thrillers; in the same vein of savoring the whodunnit and howdunnit, I like a good accounting scandal. My fascination with cooking the books started when I was young with the “great salad oil swindle”, which wound up causing losses in excess of $1 billion in today’s money and even threatened a Wall Street collapse. This disaster was averted by the assassination of President Kennedy, which kept markets closed on Monday, November 25, 1963, and gave the...

People have been complaining about the budgeting and planning processes in their organizations for decades. If you’re old enough, you may recall President Carter’s failed attempt to use something called zero-based budgeting to impose discipline in federal outlays. (In his first year in office the federal government reported a whopping $54 billion deficit.) Some complaining is almost inevitable, but some reflects the one-way nature of the process. People spend time on creating a budget and don’t...

Organizations engage in a range of forward-looking activities. Sales organizations have pipelines to forecast sales. Manufacturing organizations set and reset demand plans and near-term production schedules, often in response to longer-term production plans that determine what they will make and where and how they will make it. Logistics people plan inbound and outbound shipments. Marketing departments plan advertising and promotion campaigns. HR departments project staffing requirements and...

SAP has inaugurated a new series of business applications it calls Enterprise Performance Management (EPM) OnDemand as a cloud-based subscription service. The applications are part of SAP’s EPM version 10 suite, which it introduced last year. It’s a first step in what is likely to be a portfolio of general-purpose, lightweight and relatively low-cost apps designed to be used on mobile devices. Using HANA on the back end, the applications can deliver high performance in accessing masses of...

There weren’t any headlines (or even many tweets) about Oracle Fusion Financials emanating from this year’s Oracle OpenWorld (#OOW12) conference. Maybe that’s by design, because it’s not in Oracle’s best interest to kick up a lot of dust about ERP migration. The financial applications software market is mature, and market share leaders such as Oracle have less interest in getting customers to upgrade than they did a decade ago. For a software vendor with a large installed base, cashing rich...

Unless you have some combination of a very strong credit rating, a high income-to-debt payment ratio and a relatively low loan-to-value ratio, it’s not especially easy to refinance a mortgage these days. That’s a shame, because there are plenty of people who have stayed current in meeting their credit obligations and whose mortgages are comfortably below current market value who could benefit from today’s record low interest rates. One major reason they can’t refinance is the collapse of...

Effective capital planning and capital investment are vital to a company’s long-term success. The choices a company makes – how much to invest and in which facilities or projects – have a profound effect on its long-term success. For that reason, companies take pains to ensure that these decisions support their long-term strategies and are made as rationally as possible. Because Ventana Research is frequently involved in software acquisition discussions, return on investment is a topic we...

I cover the meat-and-potatoes aspects of corporate computing. I also pay attention to the special needs of midsize companies (by our definition, those with between 100 and 999 employees), which are unlike those of either small business or large corporations. After attending this year’s Dreamforce conference, Salesforce.com’s annual user meeting held this week in San Francisco, I can appreciate how difficult it is for executives and people who work in back office functions to cut through the...

Budget season is about to open at most companies that operate on a calendar year, so this is probably as good a time as any to rethink the process. Almost all companies will undertake the construction of a budget this year the same way they did it last year, despite widespread complaints that it is a monumental waste of time. One major reason why budgeting never changes is that it isn’t important enough to be worth serious rethinking. Another reason is that too many vested interests are aligned...

If you’re considering purchasing a financial performance management (FPM) suite, you shouldn’t overlook a recent entrant in the category, Tagetik (which sort of rhymes with “magnetic”). The company, which was founded in 1986 and is based in Lucca, Italy, began by focusing mainly on Europe, but has extended its efforts in the United States in the past two years. Tagetik 4.0 is an elegant implementation of a financial performance management suite running on Microsoft’s SharePoint infrastructure.

Midsize businesses “pay” for their use of entry-level accounting systems by not having the essential information they need readily available and by using up valuable time that could be better spent generating business, finding issues or responding to opportunities sooner or simply enhancing the efficiency of the organization. Nevertheless, the transition from an entry-level accounting package such as QuickBooks to an on-premises system can be daunting for companies whose entry-level software no...

For the past several years Ventana Research has focused more on analytics and their importance to improving business performance. We’ve done extensive benchmark research in business analytics, detailing how they are used generally in business and in major functional areas of companies as well as their application in specific industries. We adopted this focus because technology advances are changing the landscape of analytics. Its use in business management, for example, is getting new scrutiny...

People used to use the phrase “the last mile” solely to refer to a condemned prisoner’s path to execution. Then the telecommunications industry picked it up to describe that part of a circuit between a major trunk line and a subscriber. Later still a defunct software company, Movaris (now part of Trintech), used the phrase in an analogy to refer to the set of activities that take place between when a company closes its books and the point where it finishes its external reporting activities,...

What does it cost to run an IT department? That’s an easy question to answer, but for most companies, why it costs that amount is not. IT departments often complain that most of their budget is devoted to funding daily operations and basic maintenance (“keeping the lights on”), but often, one big overlooked problem is the chargeback process that most companies use to assign IT department operating costs.

For several years the U.S. Securities and Exchange Commission (SEC) has mandated that filers apply eXtensible Business Reporting Language (XBRL) tags to their financial statements. XBRL was developed to make it easier for investors to use a company’s financial information. Now XBRL US has kicked off its second annual XBRL Challenge, a contest designed to encourage development of open source analytical tools that can use XBRL-formatted corporate financial data from the SEC’s EDGAR database....

Usually, just figuring out how to start the process of change is a major barrier to improvement in business. I think that’s especially true when it comes to integrated business planning (IBP). I started using that term six years ago to differentiate that process from financial budgeting and the many other forward-looking activities used in companies. IBP applies to a longstanding objective: bringing together the disparate strands of forward-looking activities across a corporation to foster...

Planning portfolio risk follows the same basic tenets as other sorts of business planning. It must be done in the context of a time dimension. In business, short-term plans are developed with a lot of givens or constraints. For example, capacities are fixed, because it’s impossible to wave a magic wand and bring a new factory on line, stuff more machine tools into already jammed facilities or source more raw materials in a capacity-limited supply chain. Short-term plans also incorporate...

We recently issued our 2012 Value Index on Financial Performance Management (FPM). Ventana Research defines FPM as the process of addressing the often overlapping people, process, information and technology issues that affect how well finance organizations operate and support the activities of the rest of their organization. FPM deals with the full cycle of finance department activities, which includes planning and budgeting, analysis, assessment and review, closing and consolidation, internal...

CODA’s Financials has a specific target market, from companies in the upper half of the midsize range to the lower end of the large range (that is, companies with 500 to 2,500 employees) in services (not manufacturing) businesses. CODA, the company, started in the 1990s and differentiated itself by designing ERP and accounting software to run on a multidimensional database rather than the more common relational databases of the day. This has proven to be an elegant approach, because businesses...

I’ve written frequently on issues that confront desktop spreadsheet users, such as business modeling and capital investment, as well as the risk and control issues spreadsheets pose and their contribution to paralysis by analysis. I focus mainly on the technology aspects of organizational challenges, and I usually recommend replacing stand-alone desktop spreadsheets with more appropriate tools. Yet there are many instances where spreadsheets work well, and in other cases people continue to use...

It’s clear that certain customers generate more profits than others, just as some products offer greater economic returns than others, as I’ve noted before. For this reason, efforts to improve customer profitability are not a new trend. Good managers have always looked for ways to achieve the highest sustainable margins. However, at some point, almost all businesses realize that increasing sustainable profitability can’t be achieved simply through increasing revenue or cutting costs. Those...

What’s a fast, free and reasonably reliable way of gauging the effectiveness of a finance department’s management? It’s the number of days it takes it to close the books. Companies that take six days or fewer after the end of the period to close their monthly, quarterly or semiannual accounts demonstrate a basic level of effectiveness that those that take longer do not. In my judgment, finance executives should regard a slow close as a negative key performance indicator pointing to...

A main reason why desktop spreadsheets are pervasive in midsize companies (which we define as those with 100 to 1,000 employees) is that these organizations do not have the financial and manpower resources to implement and maintain traditional enterprise business intelligence and performance management systems. To address this gap in the market, several years ago IBM Cognos launched Express, a business intelligence and planning software package designed specifically for midsize companies as...

I recently spoke with Oversight Systems, an operational intelligence analytics company that uses predictive analytics and optimization to help companies save money, reduce the risk of loss and fraud, and reinforce corporate governance and compliance efforts. Ventana Research views operational intelligence as an emerging technology with the potential for a high return on investment. By continuously monitoring activities in a company’s IT systems, Oversight’s Web-based software continuously,...

I recently attended Vision 2012, IBM’s conference for users of its financial governance, risk management and performance optimization software. I reviewed the finance portion of the program in a previous blog. I’ve been commenting on governance, risk and compliance (GRC) for several years, often with the caveat that GRC is a catch-all term invented by industry analysts initially to cover a broad set of individual software applications. Each of these was designed to address specific requirements...

JDA Software is an established vendor of (among other categories) accounting software for the retail sector. So it is a bit ironic that the company is in the process of restating its earnings for 2008 through 2010 because of revenue recognition practices that led it to book some revenue sooner than it should have. The issue centers on certain transactions the company linked to service agreements and license revenue. As well, in 2009 and 2010 some of its license contracts included a clause...

For at least a couple of decades completing the financial close within five or six business days after the end of the period has been accepted as a best practice. As such, that creates an expectation that finance organizations that take longer should work to reduce their closing intervals. In updating our last benchmark research on the closing process, Ventana Research has found this not to be the case. In fact, the latest research shows that many companies are taking longer to close today than...

I recently attended the 2012 Global Pricing Forum hosted by Nomis Solutions, a provider of software and services to banking and finance companies. This annual event brings together thought leaders and practitioners in the area of pricing and revenue optimization (PRO). This technique uses analytics to sift through large data sets to tease out customer behavior characteristics, identify customer segments and quantify their price sensitivities. These complex calculations require software designed...

One of the new products that Infor announced at its recent Inforum user conference (which I covered here) is Local.ly, which is designed to facilitate localization of its applications (that is, adapting them for languages, units of measure, statutory requirements, customary processes and other specific features of the places where they will be used). Local.ly is scheduled to be released in the third quarter of this year. Infor points out that among other tasks the software can be used to...

The mandate by the U.S. Securities and Exchange Commission (SEC) that requires its filers to apply eXtensible Business Reporting Language (XBRL) tags to their financial statements has been in effect for several years. (XBRL is a core element of our Office of Finance Research Agenda for 2012.) One of the most important ideas behind this “interactive data” requirement was to make it as simple as possible for investors to be able to consume and analyze corporate financial data filed with the SEC....

Recently I was introduced to Aria, which provides a billing and subscription management system in the cloud. Its target customer is any company that offers subscription- and/or usage-based services. Its core module allows users to set up a product catalogue that consists of plans (such as subscription charges or recurring use charges) and inventory items. Usage-based charges can be based on a scale; for example, the first 10 occurrences are charged at one rate, the next 10 at another rate and...

The evolution from United States Generally Accepted Accounting Standards (US-GAAP) to International Financial Reporting Standards (IFRS) has been under way for more than a decade. I’ve commented on IFRS adoption before. It’s a hot topic for accountants and auditors because it goes to the heart of how companies keep their books.

Ventana Research recently completed an update to our last benchmark research on the financial closing process. It shows that many companies are taking longer to close today than they did five years ago. Whereas nearly half (47%) were able to close their quarter or half-year period within six business days five years ago, just 38 percent are able to do so in our latest benchmark. Similarly, five years ago 70 percent of companies were able to complete their monthly close in six days; today only...

Ventana Research’s new financial close benchmark research reveals that many companies are taking longer to close today than they did five years ago. Whereas nearly half (47%) were able to close their quarter or half-year period within six business days five years ago, just 38 percent are able to do so in our latest benchmark. Similarly, five years ago 70 percent of companies were able to complete their monthly close in six days; today only half can. The research confirms that most companies...

The most intractable issues that face finance departments are those that “everyone” knows must be addressed but somehow never muster the collective urgency to do so. Many couch potatoes know they need to watch their diet and exercise regularly. If asked, they would say it’s important or even very important. Yet there they sit. Based on our newly completed benchmark research “Trends in Developing the Fast, Clean Close”, it appears that closing falls into this category. This is especially true...

For me, the most significant announcement to come out of the recent SAPinsider conference was the company’s formal release of Business Planning and Consolidation (BPC) running on HANA, SAP’s in-memory computing appliance. For me, HANA is a potential “game changer” for planning, statutory consolidation and other analytics-supported financial processes because of the substantial reduction it enables in processing time from loading to reporting. In-memory systems provide a substantial edge in...

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 and miss opportunities to more carefully manage their real estate and other occupancy expenses. In industries where occupancy or ownership costs account for more than 20 percent of total business expense, taking a more active approach to managing real estate and occupancy can improve a company’s profitability. But in most cases...

Investing wisely in sales-related people and processes is a key to business success. In 2012, helping sales staff perform at their highest levels should be a top priority for management. That may take some effort, according to our benchmark research, which indicates that only 14 percent of sales organizations operate at the highest level of innovation and competitiveness. In recent years, most organizations merely discussed moving beyond using only their sales force automation application and...

One trend in business software that’s still in its early stages but gathering momentum is the availability of modeling tools that fill the gap between desktop spreadsheets and enterprise systems. Granted this “early stage” has been under way for quite some time, but the technology has finally progressed to the point where I expect it to get increasing market traction.

The melding of the world’s two main financial accounting standards – United States Generally Accepted Accounting Standards (US-GAAP) and International Financial Reporting Standards (IFRS) – continues apace. Initially, the idea was to converge the two into a single, global standard. Although there was general agreement that the concept was a noble one, there were enough differences to produce practical concerns about implementing these changes, especially in the United States. Then, in December...

I recently got an update from Workday that focused mostly on its Financials software. This part of the company’s business management suite has received less development attention than the HR aspects since the company’s founding in 2005. The bulk of Workday’s development investment has aimed at making its human capital management applications an industry leader and adding related capabilities such as payroll. It’s hard to argue against this strategy, if only because Workday is the spiritual...

One of the major issues IT executives face is how to charge their departmental costs back to each part of the business according to their usage. It’s a touchy issue that can be the source of end-user disenchantment with the performance and contribution of the IT organization. Ultimately, charge-back friction can hobble IT’s ability to make necessary investments in new capabilities and become the primary cause of misallocated IT spending. The two risks are related: Unless an IT department can...

I recently had a briefing from Vertex on its tax data warehouse (TDW), a key component of its tax technology platform Vertex Enterprise. The TDW concept has been around for decades, but the earliest versions were custom-built and hampered by the technology limitations of their day. This made them expensive to deploy and maintain and constrained their ability to adapt to changing corporate requirements. The basic idea behind a TDW is straightforward: a data store that makes all tax data readily...

Risk has always been an integral part of business, but as I’ve noted, companies deal with risk with varying degrees of effectiveness. A complex, ongoing process, operational risk management identifies risks to support successful operations of an organization, estimates the monetary and other measurable impacts if a risk event occurs, establishes methods for mitigating the severity of impacts should they occur, continuously measures the probability of a risk occurring within a relevant period of...

Management decision-making typically involves a three-step process of inform, analyze and act. In the earliest days of what came to be known as business intelligence, developers created decision support systems that provided information and analytics to help executives and high-level managers choose the best course of action. Working with numbers rather than gut instinct still is viewed as a best practice. After all, a pilot who doesn’t trust his or her instruments is heading for an accident.

At its annual Influencer’s Summit in Boston, SAP offered multiple perspectives on where the company’s strategy and products are heading. Overall, I was struck by the essential similarities to its message on its strategic direction a decade ago. The overarching objective in its roadmap now, as then, is to have information technology increasingly adapt to the needs of individual users and how they choose to execute established/repetitive or ad-hoc processes, rather than forcing them to adapt to...

ERP systems not only collect information about transactions, they also automate processes. The latter includes managing the handoffs between roles and enabling electronic document creation and management associated with that. Indeed, it was the promise of improving process management and process execution that spurred companies to adopt ERP in the 1990s.

I thought of writing a note on this topic when multinational corporations started to withdraw their deposits from eurozone banks, but the pessimism that event engendered was short-lived. Now, as the monetary crisis deepens in Europe, it’s perhaps time to ask what your company would do if parts of its financial system implodes. You may think that your company will not be affected because it doesn’t do business with the eurozone. Or you may believe that it’s unlikely to happen and therefore not...

Doing one’s homework is vital in buying business software. However, unless you’re replacing a relatively simple application, it’s hard to know exactly what to evaluate. Indeed, if people in a company given this task don’t have experience in using a specific type of business application or don’t understand how new or improved functionality will help execute business processes better, they may do a poor job of assessing the available alternatives. Third-party consultants may be helpful, but their...

I believe that one of the more important analytical applications that a company can implement is profitability management. IBM Cognos offers Profitability Modeling and Optimization as part of its Cognos 10 offering that my colleague has assessed. As I’ve noted, most people in a corporation are focused on profitability, but not necessarily in a way that optimizes results across the organization in a day-to-day, consistent fashion. Those responsible for each component piece that contributes to...

Right after I posted my blog about the dearth of useful content for the line-of-business and finance audience at this year’s Oracle Open World, I attended a truly useful session. (Of course, it had been shunted to the next-to-last time slot on the final day of the event.) It was a case study presented by AT&T’s tax group, discussing its use of Oracle Hyperion Financial Management to manage the corporation’s tax data.

Risk has always been an integral part of business, but dealing effectively with risk is a progression. Indeed, history shows businesses adapting and coping better with risk through innovation. The importance of using information technology to manage risk is growing because today’s systems can automatically measure and analyze a much broader set of risk factors than individuals can, and do so more reliably. But a key challenge companies face in implementing enterprise risk management is...

As Workday continues to expand and the likelihood of its IPO becomes a more frequent topic of discussion, so does the movement of ERP systems to the cloud. Thus far, only a minority of companies have chosen to put their ERP and accounting systems in the cloud, but the numbers are growing and there’s evidence of success. NetSuite, for example, reported a 26 percent increase in its revenues to $145 million in the nine months up to Sept. 30, 2011. To be sure, this is not close to Salesforce.com’s...

At first thought, it seems as if having a mountain of cash to manage is a problem most companies would like to have, but it’s a real problem nevertheless. To be sure, the large majority of companies are able to deal with their cash and short-term and longer-term monetary investments because the amounts are small enough to be manageable. Indeed, many companies, especially smaller ones, face the opposite problem and spend more time focused on their uncertain funding requirements. Still, over the...

As its name suggests, demand-based pricing is a method that uses the buyer’s demand, based on an estimate of a good’s or service’s perceived value to the buyer, as the central element in setting price. Pricing strategies are most important because they can have a disproportionate impact (positive and negative) on a company’s bottom line. Managing prices has always been an activity of keen interest, but it has become even more so over the past decade as a result of the constrained pricing...

I recently attended Kinaxis’ users’ group meeting and learned some interesting things. The company, which has been around since 1995, provides software for large corporations with complex supply chains. Over the past decade its product has evolved well past its roots as a material requirements planning (MRP) support tool. It is now an analytics suite that facilitates supply and demand planning, analysis and optimization with a focus on sales and operations planning (S&OP). This is a discipline...

In today’s economy, all companies are contending with a dynamic business environment characterized by volatile commodity prices and exchange rates, a shaky global financial system and slow growth in many countries. Many of them rely heavily on desktop spreadsheets to support the data collection and analysis related to their capital-asset planning. However, spreadsheets have inherent limitations that make them the wrong choice.

I hadn’t thought about the exact definition of “driver-based planning” until the question came up in the context of our planning benchmark research showing that only 6% of companies with more than 100 employees do driver-based planning. Broadly defined, the term could be applied to the use of any spreadsheet-planning model because these almost always have built-in volume-times-price formulas, which are components of driver-based plans. However, this is not what most people have in mind when...

My colleague Mark Smith and I have frequently commented on the artificiality of the emerging software category governance, risk and compliance (GRC). To be sure, once stand-alone categories of software (IT governance, audit documentation and industry-specific compliance management, to name three examples) have started what I expect to be a long convergence process. Moreover, since just about all controls and risk management efforts require a secure IT environment to be effective, there is a...

I was reminded by a recent piece in InformationWeek about the need to manage the mounting cost of software more carefully that this issue never seems to become old news. I have read variations of it in IT trade publications for two decades now, reminding me of the quip attributed to Mark Twain: Everyone talks about the weather, but nobody ever seems to do anything about it. (Like many of Twain’s “quotes,” he wasn’t the author of this one either.) I believe that at the heart of this issue is a...

Alight has announced that it is partnering with Scope Systems to provide the mining industry with planning and financial reporting systems tailored for extraction companies. Scope creates ERP solutions for companies engaged in mining, drilling and natural resource exploration.

As the third calendar quarter draws to an end, most companies will be preparing their financial close, which is part of the ongoing accounting cycle. Periodic closing is a core finance function. Since companies found they could substantially shorten their closing intervals with computer-based accounting systems in the 1990s, there has be an ongoing focus to keep shortening the time it takes to close, and for good reason. For companies that must file financial statements with investors, closing...

The globalization of business is having a profound impact on corporate taxation worldwide, which shouldn’t surprise anyone who covers international tax laws. The impacts on corporations operating in multiple national jurisdictions (which today, especially in Europe, includes a large number of midsize companies) are both positive and negative. Positive in the sense that corporate tax rates, tax benefits, reporting and other aspects of tax regulation are subject to competitive moves by countries...

I recently participated in a panel discussion about the rise in the use of rolling forecasts in corporate planning. I’m not surprised by this trend; I have encouraged it. Ever since the financial crisis started three years ago, I’ve been writing that companies should rethink how they plan and budget to respond to increasing business volatility. Rolling forecasts are useful because they continually extend the formal planning horizon out more than a year rather than having it stop abruptly at the...