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Besides blogs on Enterprise Performance Managment, you'll find lots of other stuff on accounting and finance.

Zions Bancorporation enjoy the benefits of 'closing the loop'

As yet few companies are using performance management solutions in tandem to deliver closed loop performance managment and those that do, such as Zions Bancorporation, are well ahead of the curve and gaining benefits that their peers have yet to enjoy. Zions Bancorporation uses the SAP® BusinessObjects™ Planning and Consolidation application for planning and budgeting and the SAP BusinessObjects Profitability and Cost Management application for modeling costs. It feeds the costs, together with interest spreads calculated in the bank’s funds transfer pricing solution, into the “profitability mart,” and calculates net profits at the individual account level. Knowing how different products and different types of customers create value for the bank is critically important to many commercial decisions that executives and managers have to make. It helps them determine, for example, where best to spend marketing dollars and how to price individual loans.

But the bank gets much more from its implementation of SAP BusinessObjects Planning and Consolidation and SAP BusinessObjects Profitability and Cost Management than simple best-of-breed deployments. It can take trended volumes and activity unit rates from the latter application and combine them with data on interest spreads and fee income from its shareholder value model, which summarizes the data in the profitability mart. It can then auto-populate many of the important line items in its budget. This means that business managers no longer have to forecast expenses themselves and can simply review and amend the figures generated for them.

This has resulted in budgets that are both quicker to produce and more accurate. But a specific transformational benefit is enabling the bank to keep resources and capacity tightly aligned with demand during the current period of uncertainty. That benefit is the ability to manage the business with quarterly rolling reforecasts rather than the traditional annual budget and half-yearly review.

Below are the video testamonial of Walter Young discussing their implementation and the Business Transformation Study.


Walter Young of Zions Bancorporation talks about SAP EPM from Richard Barrett on Vimeo.
Zions is a $51 billion US based financial services company. This interview was conducted with Walter Young, SVP of Zions Bancorporation. The group is unique in that it comprises 8 individually named and autonomous banks. In Walter’s words, they have moved from a 1,000+ spreadsheet “excel mess” to an efficient and streamlined budgeting cycle. Zions are using SAP BusinessObjects Profitability and Cost Management in addition to other SAP BusinessObjects solutions such as Xcelsius.

Zions mfp

View more documents from SAP.

Is Driver Based Budgeting Picking Up Speed?

In a recent survey of planning and budgeting practices, analysts Aberdeen Group, found that the ‘Best in Class’ - the 20% of respondents who had shorter budget cycles, more accurate budgets and who had actually improved their year-on-year profitability by 20% or more, were roughly twice as likely to use methodologies such as zero-based budgeting and driver-based budgeting – the majority sticking to tweaking the previous year’s actuals.

Driver-based budgeting is something close to my heart in that I wrote a book on it back in 2007 – Planning and Budgeting for the Agile Enterprise. Other than receiving a few metaphorical pats on the back from the folk who make their living by writing or lecturing about performance management, the book languished on the Amazon listings where it has stubbornly remained for the last few years, while I moved on to travel writing which is both more enjoyable and more lucrative. But clearly driver-based budgeting hasn’t gone away. In fact, Aberdeen found that the ‘Best in Class’ enjoyed some considerable benefits in that they were more able to perform ‘what-if?’ analysis and re-forecast as market conditions change. Given that many people talk about rolling re-forecasts, but few can actually achieve the frequency they desire it looks as though driver-based budgeting is on the ascendant; an idea whose time has finally come.

Now the interesting thing is that the Aberdeen research didn’t find much difference in the type of software used for budgeting between the ‘Best in Class’ companies and the industry average. So although enterprise applications may help improve productivity in finance and make the data easier to manage, it’s not the technology that is making the difference here. It’s the simple step of moving away from traditional budgeting, (little more than the collection and collation of line item expenses to my mind), and adopting a driver-based methodology that makes the difference.

Being a numbers business, telecoms is an ideal industry in which to implement a driver-based approach to planning and budgeting and I’ve written before about how I sat through a breakfast meeting at SAP Sapphire in Orlando earlier this year and was gladdened to hear to Sandy Rogers, Director of Financial Systems at Qwest Communications talk on their adoption of driver-based planning and budgeting that consulting organization Column 5 Consulting helped them implement in SAP BusinessObjects Planning and Consolidation. Sandy shared some of the benefits of the approach as well of some of the change management issues in helping financial analysts and business folk move away from the ultimately false security that comes from a traditional approach to budgeting with its endless line item detail. It was compelling stuff. Who knows; if this momentum continues then that book might just begin to pay back on the time and effort invested in writing it!

Reinventing the Ritual – Get beyond budgeting

Jack Welch, who ran General Electric, one of the world’s ‘Best Run Businesses’ for many years, wrote an inspiring book that is a must read for every manager- ‘Winning’. One of the chapters, called ‘Reinventing the Ritual’, is a critical discussion of how budgeting is often done in a company. He says ‘It (budgeting) sucks the time, energy, fun and big dreams out of an organization’. Jack mentions ‘Budgeting’ as the backbone of the management system - and getting it right in a non tradition way can get better results.

Jack’s two concepts that describes the traditional budgeting are:

Negotiated Settlement
What is this? This is the long drawn exercise of ‘bottom-up’ planning that takes several months to prepare before it gets reviewed by headquarters. But what do the numbers that make up the budget actually mean? In preparing the budget, every manager will be aware of setting goals and targets that jeopardize the prospect of earning any performance related bonus. As Jack put its ‘their underlying galvanizing mission is to come up with the targets that they absolutely, positively, think they can hit.
So what is the negotiated settlement? On the one hand, every business manager builds in sufficient buffers and cushions to produce a budget they are confident of delivering. On the other hand, headquarters are looking for growth in revenue and profits that will drive the stock price. The marathon budgeting meetings begin, finally resulting in a negotiated settlement that is acceptable to both parties. But typically the discussion never captures the potential opportunities the company may have; nor is there any explicit link between the strategy and the budget, (execution).

Phony smile
As part of the budgeting process, business managers may have identified some new opportunities and ideas that they have spent a significant amount of time to develop and are eager to discuss with head office. All too often, such new ventures are often greeted with the response ‘very interesting’ as head office staff have already decided where to allocate investment capital and have their own idea of what each business unit can deliver. So all the ‘very interesting’ comments are nothing but a ‘phony smile’.

The outcome of this is that the business manager becomes de-motivated and allocates the money assigned without any firm goals in mind or indeed any feeling of ownership, most likely felling little more than post room clerk passing budgets backwards and forwards. The biggest issue here is not about the allocation decided by the head quarters team, but the lack of transparency to explain why it was done in a certain way and not giving time to the review the proposals and ideas put forward by the business managers.

Jack recommends replacing all this with a planning and budgeting process that works towards common objectives, identifies opportunities for growth and thrashes out inherent obstacles (read risks) in pursuing them to come up with a plan that has stretch targets - but doing it all in a transparent way. For Jack, the planning and budgeting process should be structured to answer two fundamental questions – How are we going to beat last year numbers? How are we doing vis-a-vis competition and how are we going to outperform them? – The very things that drive total shareholder returns.
But successfully delivering on stretch targets requires a robust Enterprise Performance Management framework to be in place, particular in the area of strategy management so that objectives can be clearly set out and cascaded down the organization with well thought out initiatives identified at every level. Ideally these business critical initiatives need to be linked to detailed budgets that can be reviewed and amended whenever results start to drift off plan. So going ‘beyond budgeting’ doesn’t mean throwing away performance management solutions. In fact it’s the exact opposite. If you want to set the bar high and manage performance with stretch targets and dynamic resource allocation, having a robust performance management framework such as SAP Business Objects Enterprise Performance Management solutions that covers Strategy Management and Budgeting/Planning is imperative. These solutions help Best Run Businesses to reinvent the ritual by getting beyond budgeting.

How to win?

Sky British Cycling, the first UK team to compete in the Tour de France for nearly a quarter of a century, is managed by David Brailsford, who carried away a hoard of eight gold track medals from the Beijing Olympics in 2008. Brailsford intends to put a British rider on the podium by following his already proven philosophy of the aggregation of marginal gains. Put simply that means being as good as you possibly can in as many areas as you can so that cumulatively 1-2% improvements in areas that matter add up to a considerable gain in performance.

In practice this means digging into the detail to identify all the elements that drive performance then experimenting to deliver improvements. For Sky, this resulted in using fabrics in the team’s cycling jerseys that minimize the weight of perspiration absorbed in the fibres and developing cycling helmets with less air vents giving less drag and an advantage of about one second per kilometre. I guess when you know exactly what you want to achieve, there is less ambiguity about what needs to be done to get there. Brailsford also knows about risk management too bringing along a team chef and their own food to minimize the chance of riders picking up a debilitating stomach bug from eating hotel food – and carrying every rider’s favourite duvet and pillows so they get a good night’s sleep.

No doubt Brailsford would get on well with Drs. Kaplan and Norton, who developed the concept of the balance scorecard to help companies become more effective in communicating and executing their strategy. But having spent last week listening to how some of Europe’s largest companies are rolling out performance management, it’s clear that all too often strategy management is the one piece of performance management that companies choose to ignore leaving the organization without a map of the margin improvements that would accumulate into a superior performance.

Having a good strategy management process and a solution such as SAP BusinessObjects Strategy Management in place to deliver it will not automatically guarantee success as team Sky discovered on the opening prologue when they misread the weather and sent out their star rider Bradley Wiggins during what turned out to be the worst rain of the entire afternoon. Now four minutes adrift, he is facing an uphill task to get back among the leaders. But knowing Brailsford, they’ll know how and when they're going to close the gap.  

Prioritizing and Investing in Performance Management

At SAPPHIRENOW today SAP customers including Steelcase, Forest City Enterprises, Dow Corning, Under Armour and USDA came together with leading industry analysts from IDC and Aberdeen for a lively and interactive debate about the performance management market looking at why EPM is important to them, how it helps drive value and what the future holds for this exciting growth market.

One element of the debate focused on the economic climate with customers focusing on why they invested in EPM during a period of economic uncertainty. Steelcase, a manufacturer of office products open the debate explaining how their business is one of the first to be impacted and last to recover from an economic downturn. They explained how their investment in SAP BusinessObjects Spend Performance Management was the only software investment allowed during the recession as part of a wider project to increase visibility and lower costs. Dow Corning, a joint venture between Dow Chemical and Corning, implemented SAP BusinessObjects Planning and Consolidation to insure greater visibility which was critical for them during this period. Under Armor who was seeing huge growth chose to implement SAP BusinessObjects Planning and Consolidation version for SAP NetWeaver to drive greater visibility and model new business opportunities. The US Department of Agriculture (USDA) added that for all federal government organizations the key words are “accountability” and “transparency”. This has become even more important where funding is at a premium in a tight economy but also where government mandates increase the focus on these areas. They explained how SAP BusinessObjects Profitability and Cost Management is used to help them comply with the mandates and demonstrate value to key stakeholders.

Aberdeen’s Cindy Jutras commented on the importance of investments suggesting that organizations are showing greater optimism and that is now feeding back into their planning processes. She cautioned that the recovery may take longer than people think which may require them to be ready adjust plans and have the mechanisms to cope with this if and when required.

IDC’s Brian McDonough took the debate one step further to look at how companies are looking to expand beyond a point EPM investment into a broader portfolio of solutions. Forest City Enterprises suggested that this is about doing things in the right way for the business. Moving beyond SAP BusinessObjects Planning and Consolidation they see their EPM expansion moving toward SAP BusinessObjects Spend Performance Management and SAP BusinessObjects Strategy Management. Dow Corning added that today it’s even more important to bring together investments as part of a broad EPM and BI strategy and see how these assets can be leveraged together. This prompted a quick survey of where investment priorities lie and the results speak for themselves – expanding beyond planning to support Strategy Management and Profitability and Cost Management, the continued inclusion of BI and a new focus on sustainability. All good news for SAP then.

Is Now the Time for Driver Based Budgeting?

Although the publication of ‘Budgeting for the Agile Enterprise – a driver-based budgeting toolkit’ a couple for years ago was met with enthusiasm from the advocates of new ways of budgeting, it gently sank without trace. However the uncertainty of the last couple of years, during which many companies have been frustrated at their inability to re-forecast with the speed or frequency they would like, seems to have given new impetus to the search for a better way of budgeting.

So during this morning’s EPM breakfast meeting at SAP Sapphire here in Orlando, it was a plesaure delight to listen to Sandy Rogers, Director of Financial Systems at Qwest Communications talk on their adoption of driver-based planning and budgeting that consulting organization Column 5 Consulting helped them implement in SAP BusinessObjects Planning and Consolidations. Being a numbers business, telecoms is an ideal industry in which to implement a driver-based approach to planning and budgeting and Sandy shared some of the benefits of the approach as well of some of the change management issues in helping financial analysts and business folk move away from the ultimately false security that comes from a traditional approach to budgeting with its endless line item detail.

With Sandy and other like minded folk sharing their success, who knows, this common sense idea may finally gain the wider adoption it deserves.

Real Value Lies Beyond Numbers

One of SAP’s best kept secrets is its Value Engineering team, a group of specialists who work with customers to build business cases for investments in technology and software. Ultimately this hidden jewel seeks to demonstrate the value of an investment through the use of an extensive library of benchmark data and their experience of working with other SAP customers in similar verticals.

The fact that a group like this exists underlines the importance that prospective customers place on the business case for their project and ultimately their ability to demonstrate long term value and return on investment (ROI). In highly competitive and rapidly maturing solution areas, like the Enterprise Performance Management (EPM) market, this becomes even more important as customers seek not only to build a business case but lower perceived risk by understanding the value of a given solution by learning from peers who have already deployed the same solution.

Gartner highlighted this when in May of 2009 it published a report titled “Finding the Fast Path to Corporate Performance Management Value” which examined the sort of ROI and payback customers could expect from an investment in EPM solutions. While the report provides some very valuable data it struggles to provide real specific examples citing for example ROI in a range of 50-200% for one particular EPM domain. This highlights that there is no better alternative than talking to one’s peers and hearing about their experiences.

If there was ever an event which provided a forum for this then it’s SAPPHIRENOW which takes place this week in Orlando and Frankfurt. This event is the perfect venue for customers and prospective customers to come together and learn about SAP solutions, the value they create and how best to leverage them. By way of a few examples then SAP EPM team will be hosting approximately 100 customers for a special interest group breakfast on Enterprise Performance Management and organizations like the Campbell’s Soup Company will present on how they achieved better planning and budgeting processes using SAP BusinessObjects Planning and Consolidation version for SAP NetWeaver.

This is great if you’re one of the lucky people that were able to be in Orlando and Frankfurt but what if you’re not? Well to start with, SAP is making the event accessible online but it’s also committed to sharing customer experiences through as many channels as possible and making this accessible all year round with case studies, webcasts and customer videos. For example you can learn about customers like DWP, Tesoro, Swiss Post and Desjardin’s and how they use SAP’s EPM solutions directly on the SAP website.

It’s through customers stories like this and a forum like SAPPHIRENOW that real leadership is demonstrated. It’s not about broad sweeping statements about vague numbers of customers which are almost impossible to prove or and even harder to disprove but about providing real tangible stories of how customer use a given solution, their experiences and the value they were able to realize.

Lessons from 'Church Tower' Management

Last week over dinner with a group CFO’s from some of Sweden’s leading companies after SAP’s Butterfly Event, we got to discussing banking and the fact that Handelsbanken is rumoured to be increasing their presence in the UK by acquiring some of the branches that the UK government has asked the Royal Bank of Scotland to sell off as a condition of their refinancing.

Handelsbanken are frequently cited as best practice by the Beyond Budgeting Round Table for their practices of only rewarding staff for outperforming peers, driving continuous improvement rather than simply delivering against a pre-negotiated annual budget and for devolving responsibility and decision making to the front line. One executive at the dinner table related that all performance related pay is paid into the Handelsbanken pension scheme and that the bank’s time-served employees retire with an enviable pension – and we all sighed enviously.

But another executive quipped that “they manage with the church tower philosophy”. Probing for more insight, he explained that the bank preferred to do business only with those clients that branch managers can personally keep an eye on – meeting them face to face at local events; able to see comings and goings and presumably quickly picking up on any local rumours. This approach has certainly stood them in good stead for the past couple of decades; outperforming their peers on virtually any metric you care to choose. See the BBRT Newsletter for November 2009, which shows them top of the table yet again!

For me, their success clearly shows that no matter how pervasive your business intelligence platform or how integrated you performance management suite, you are less likely to deliver top quartile results unless you align your remuneration policies to produce the desired behaviour and devolve decision making to front line managers. Clearly the CFO and CHRO in other banks - and indeed most companies in other sectors - should be talking more.

Driving Value Through Industry and Line of Business Solutions

When SAP’s acquisition of BusinessObjects was first announced in October 2007, one of the things that I heard people saying most often was that SAP was going to spend the next 5 years integrating a bunch of acquired technologies and would do so at the expense of innovation. Having been party to at least 5 previous acquisitions in the preceding 8 years it won’t be a surprise to many that it was not exactly the first time I’d heard that. It’s fair comment after all…when you acquire a technology you need to integrate it in order to extract value but when SAP designed its current enterprise performance management (EPM) roadmap innovation was at the heart of it.

By designing a roadmap which delivered integration it also factored in a healthy dose of innovation not least of which is the ability to enable a complete closed-loop performance management process which it announced in January of this year and which attracted significant attention with a subsequent certification by Kaplan and Norton. This built upon its visionary and unique integration between its EPM and governance, risk and compliance solutions which it has continued to progress still further with exciting announcements expected later in the year. However one area of innovation which is often over-looked is the value that it’s creating through new line of business and industry solutions. BusinessObjects had a long history of delivering such solutions on its core EPM applications. Solutions to support planning processes in healthcare, banking and retail proved extremely popular with customers, as did its IFRS and US-GAAP starter kits designed to speed time to value for consolidation implementations.

Since the acquisition this has not gone away and SAP has been heavily investing to deliver additional solutions in this area including new solutions for planning in the public sector and Consumer Products built on SAP BusinessObjects Planning and Consolidation, Retail Store Profitability based on SAP BusinessObjects Profitability and Cost Management and new solutions for Banking and Retail based on SAP BusinessObjects Strategy Management.

Its latest showpiece was unveiled this week at the SAP Insider Financials event in Orlando and in an effort to further help organizations streamline the entire capital-expenditure planning process SAP announced a starter kit for capital planning also built on the planning and consolidation application. The new starter kit provides an automated way to request, plan, model and evaluate large, complex projects as well as smaller, simpler ones. Developed in collaboration with SAP partner Aster Group, the starter kit is especially helpful for organizations in capital-intensive industries like automotive, chemicals and oil and gas. Pre-built templates and content Its also features embedded analyses of investment returns using industry-standard methodologies such as internal rate of return and payback period.

By all accounts this is not the last we will hear from SAP in this domain and the latest version of its EPM roadmap highlights this as an area of continued focus. In the keynote at SAP Insider Financials this week it gave us a glimpse of this as it demoed a forthcoming solution for Customer Value Analysis built on its Profitability and Cost Management solution. This focus is it seems at the heart of its EPM vision and rightly so. By taking its core applications and delivering these solutions it’s leveraging its assets in the form of the technology but also the domain expertise it has acquired. Good for SAP but also good for the customer who is able to take this content, speed time to value and ultimately deliver a higher return on investment than it would have done if it had started with a blank canvass. ROI being a topic to which I intent to return to in this blog very shortly.

U.S. SEC clarifies its position around IFRS adoption

Yesterday, the Securities and Exchange Commission (SEC) provided their much anticipated announcement on the adoption of International Financial Reporting Standards (IFRS) in the US.

You may remember that back in 2008, the then SEC chairman Christopher Cox published an outline roadmap for US transition to IFRS with likely adoption in 2014. However since then much water has passed under the bridge – much of feedback on the roadmap both good and bad, leadership changes at the SEC with Mary Schapiro taking over from Christopher Cox and, of course, a global economic crisis! So it’s perhaps understandable that it’s taken the SEC some time to follow up on their plans for IFRS... well until yesterday that is when they announced the work plan with 2015 as the earliest likely date for public companies to report in IFRS with a final decision to be taken in 2011. The workplan also introduces a checklist which includes steps to ensure that the global standards themselves will be suitable for U.S. use. – effectively “convergence” between IFRS and US GAAP. You can read the full press release here.



So what should we take away from this announcement?

For me it can be interpreted as SEC Chairman Mary Schapiro clearly setting a stake in the ground to confirm that adoption of a single set of independent global accounting standards remains firmly on the SEC’s agenda. Clearly there is pressure on the respective standards setters (IASB for IFRS and FASB for US GAAP) to ensure that IFRS is fit and ready for adoption in the U.S before the transition finally takes place. However the move to a single set of global standards unequivocal. The train is at the station, so to speak, it’s simply a question of ensuring it’s properly provisioned and scheduling an appropriate departure time.

It’s tempting to focus on the fact the SEC have effectively introduced a delay. We won’t now know whether IFRS will finally be adopted until at least 2011 and even then adoption won’t be before 2015. This seems far into the future – so why not relax and take our foot off the pedal? This would be a mistake, 2011 is less than 12 months away and any adoption of the new standards is likely to involve dual reporting for a couple of years during a transition period as was outlined in the original roadmap. So actually there isn’t that much time at all!

So what single piece of advice or guidance can I offer to folks impacted by the transition to IFRS? Quite simply, get your house in order! IFRS is coming – this has now been confirmed. Ensure that the systems and processes you have in place will be ready to easily adapt when the time to transition comes. Your first steps should be to carefully assess your situation, do some advanced planning, and assemble cross-functional teams from accounting, IT, and your auditing partner. You will need to understand the impact that IFRS reporting will likely have on your organization, your financial reporting procedures, and your staff. With the right planning and the right people, you will be able to choose a path that fits your needs — and the process will be straightforward.

If you’re interesting in discovering more about IFRS and in particular the associated technology challenges please do take a moment to read my White Paper. I’d also love to hear your feedback on the SEC announcement… feel free to add your comments to this blog entry or drop me an email.

Quick wins with intercompany reconciliations

In difficult economic times it’s always easy to focus on the bottom line and simply slash costs. However it’s also possible to achieve quick wins that require little investment whilst laying the groundwork to support future growth for when things do pick up again. A good example of a quick win and one which a number of customers have been investigating in recent months, is that of intercompany reconciliation.

Dealing with intercompany transactions is an essential aspect of the group financial close process and can be split between two key tasks – reconciliation, (sometimes known as matching), and elimination. The two are often confused so let’s first be clear about what these terms represent.

Reconciliation is the process whereby reporting units agree their respective intercompany amounts. For example, if reporting unit A provided $1000 of services to Reporting Unit B, they both need to agree on this in their respective books – intercompany accounts receivable of $1000 for unit A and intercompany accounts payable of $1000 for unit B. The counterparty reporting unit should also be recorded. It sounds simple. However in many organizations there can be hundreds of reporting units with literally thousands of invoices between them. To further complicate things amounts don’t always match exactly as, for example, there may be differences in VAT rates for reporting units in different countries. Often the “matching” is agreed to be within reasonable monetary threshold with narrative provided to explain the why the amounts do not match exactly.

Elimination is the process of ensuring that the reconciled intercompany balances are treated appropriately when consolidating the local accounts of each reporting unit into the group as a whole. Accounts such as revenue are aggregated across reporting units. However intercompany amounts should not as this would result in double accounting – they need to be eliminated. The elimination process can only start once all intercompany amounts have been reconciled and agreed.

In the traditional intercompany matching and reconciliation process employed by most companies, the responsibility for resolving discrepancies in the intercompany balances declared by reporting units often falls on corporate headquarters. Generally this means that staff members in the central finance function are involved in checking balances, correcting errors, and contacting reporting units to resolve issues and intervene in disputes. This process results in an inefficient vertical flow of information between headquarters and reporting units and back again, as shown in the diagram below. The process is also hindered by the means of communication employed which typically involve telephone calls, e-mails and faxes, all of which are is time-consuming and delay the corporate close.





A more direct approach, one based on best practice, is where reporting units adopt a peer-to-peer reconciliation process to communicate and resolve differences directly with each another. This transfers responsibility for getting things right from the central finance function to the reporting units themselves. At the same time, the units could use any improvements in process automation as a catalyst to eliminate errors from the process, thus improving the accuracy of reported figures as well.

The bottleneck slowing down the reporting process is the time taken at headquarters to participate in the reconciliation process. If reporting units could deal directly with one another in a peer-to-peer fashion, this obstacle would be eliminated, and the intercompany process would fall away from the group financial close’s critical path. Such an achievement would free central finance staff from time spent on non-value-added tasks, enabling far more time to analyze data rather than just gathering and reconciling it, as shown below.

While many financial consolidation and reporting systems available today do provide functionality that supports the intercompany reconciliation and elimination processes, they are strongly oriented towards elimination and serve to maintain the status quo where corporate headquarters is the bottleneck. However, dedicated peer-to-peer intercompany reconciliation systems also exist and can be deployed alongside any consolidation application to gain that much needed quick win.

If you’re interested in learning more about peer-to-peer intercompany reconciliation, download our white paper Improving Intercompany Reconciliation for a Faster Close which also includes cost/benefit examples that allow you to estimate the type of ROI you can expect.

SAP Performance Management Event - Tuesday 23rd February, London

The CFO's influence within a business has increased amid economic uncertainty as demands for closer attention to be paid to expenditure have taken precedence. CFOs are now being asked to provide more detailed intelligence and performance insight across their businesses, a role commonly referred to as the "Chief Performance Officer."

But are some CFOs already performing this vital dual role without realising it?  You can be amongst the first to hear the results of a recent study undertaken by Financial Director Magazine entitled "Super CFO - are you also a Chief Performance Officer?", revealed by its Editor, Melanie Stern.

Click here for details

Accelerated insights into profitablity reports

Having spent the last few months working with a team to develop an accelerator that customers can use to expedite the analysis and reporting of data generated in SAP BusinessObjects Profitability and Cost Management, I’ve come to realize that the hours I waste bird-watching are actually well-spent. I’m not a ‘twitcher’ travelling all over the country at the drop of a hat on the off chance of bagging some rarity that I haven’t seen before. I just leave the house and wander down the marsh with a pair of binoculars and a spotting scope, happy to see what’s around. Part of the enjoyment is the process of identifying exactly what it is you’re looking at. The shape, size, markings and movements of a bird all help towards a positive identification - along with other other information about whether the specie is likely to be found in such habitat at this time of year. But unless you get a clear view of the particular features that leads to a positive identification, you typically end up undecided between a couple of possible species and quite often you just have to tag it as a ‘LBJ’ – little brown job – and move on. Seasonal and age-related changes in plumage don’t make it any easier and some genera such as warblers can be very confusing – for me at least.

Business managers are presented with many of the same challenges when it comes to actively managing customers in order to optimize profitability. If they used an accurate and reliable costing methodology then they can be pretty sure whether an individual customer is profitable or not, but that’s only half the battle. Often the biggest challenge is to identify the underlying factors that make a particular customer unprofitable in order to take actions that moves them into profit. It could be that they are enjoying more favourable discounts than other customers or they are only buying low margin products, but even this might escape your notice unless you had adopted best practice and analysed profitability across multiple dimensions. A more likely scenario is that the way certain customers are doing business with you is resulting in an abnormally high cost to serve; things such as placing a high number of small value orders, generating a high level of returns or needing special processing that results in additional costs. But until you have identified exactly what it is that makes certain customers unprofitable, you cannot possibly take corrective action.

The Customer Value Accelerator that our team has developed does all the hard work for you and contains pre-formatted profitability reports and analysis of the factors that are the typical discriminators between profitable and unprofitable customers and products in a specific industry. Needless to say, it’s not exhaustive, but others can be easily added in. The net result is that you get rapid insight into where the issues really lay and what actions need to be taken to improve the bottom line. That way there’s no indecision, - just crystal clear focus that tells you everything you need to know. Surely birdwatching would lose most of its appeal if it was that easy!