SAP

Fast close is often thought to be synonymous to the speed with which Financial close is completed. This is a misconception, as Speed is just one attribute of a Fast Close. The other two attributes are Data Quality and Transparency.

Fast close benefits those who are able to achieve it by providing faster and reliable reporting. In addition there are several other business drivers behind Fast Close,

 

(a)    Competitive Advantage

Fast close ensures faster reporting and that reporting data is transparent and reliable. Reporting is a controlling and monitoring tool to run businesses more efficiently. Instead of spending time on preparing the report, fast close provides more time for data analysis and decision making. In today’s context, faster decision making is a big competitive advantage.

(b)   Stakeholder Trust

Periodicity of external reporting has undergone a paradigm shift over the years. Stakeholders take the Quarterly reports more seriously compared to a few years back when annual statements were considered significant. After so many named and famed corporate debacles, Stakeholders are increasingly looking at financial numbers, qualitative information and even the time frame in which they get this information. Faster and reliable availability of data not only empowers the stakeholders, but it also helps in establishing trust. Timely reporting is considered an indicator of a good corporate governance practice.

(c)    International Accounting Standards

US GAAP, IFRS and even the local GAAP requirements are very stringent in terms of the timelines in which the quarterly filing needs to be completed. These statutory requirements build a strong case for Fast close and have associated penalties for non-compliance.

(d)   Sarbanes- Oxley

Sarbanes-Oxley has strong emphasis on the data reliability and transparency of processes. Fast close ensures this with a strong emphasis on data validation using audits.

Fast close sounds beneficial and definitely has a business case for it. However, most of the corporations today take more than a week for financial close. Theory is often simple compared to implementation. There are many business challenges that make fast close a snail close. But then there are accelerators provided by SAP to overcome these challenges. I will discuss these in more detail in my next Blog.

Posted by Akhilesh Mittal at 4:18 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

In my previous blog, I have discussed pros and cons of SAP BusinessObjects Planning and Consolidation as a unified tool for planning and consolidation vs. multiple planning applications. In this blog, I will further illustrate benefit of using SAP BPC for planning and consolidation. SAP BPC as a single application for planning, budgeting, forecasting, consolidation, and reporting functionalities, eliminates the need  of multiple applications that require manual integration.SAP BPC offers  following features and functionality from a single enterprise scale application.

Strategic planning
Budgeting
Forecasting
Statutory consolidation
Reporting & analysis
Predictive analytics

Following are the key benefits of using SAP BPC as unified tool for planning, budgeting, forecasting & consolidation
Aligning strategic goals with Business planning
As 90 % organizations fail to align their strategy, business planning and execution. It is important for an organization to develop timely and accurate plans and budgets that are in line with organization strategic goals. SAP BPC offers centralized data repository contains both actual and plan data results in giving holistic view of the current organization performance and future expectations.
SAP BPC as a strategic planning tool
SAP BPC can be implemented effectively for strategic and operational planning across the functions of the organization. It seamlessly integrates financial and operational planning. It is well suited for sales planning (top down & bottom up), driver based planning, salary planning, financial planning etc.
Budgeting & forecasting
SAP BPC quickly model business scenarios, and re-forecast to meet rapidly changing business environment. What if modeling and scenario-planning functions enable assessment of budgeting.
SAP BPC as a consolidation engine
SAP BPC is used for both legal and management consolidation. It enables us to save days by quick closing of books.  It also provides inbuilt functionality of currency conversion, inter-company elimination and journal entries.
Statutory reporting & electronic communication in XBRL format
SAP BPC enables financial reports in multiple formats (US GAAP, IFRS, and SEC etc).For statutory reporting requirements, SAP BPC 7.0 M offers International Financial Reporting Standards (IFRS) starter kit.  UBmatrix is required for electronic communication of financial statements using extensible Business Reporting Language (XBRL) format.
SAP BPC  as a Unified EPM application
SAP BPC is an unified Enterprise Performance Management (EPM) application leveraging  centralized performance database, common user interface (Excel), and single sign-on across the whole of the EPM processes. It can easily integrate with Xcelsius, Profitability and cost management, strategy management etc.
Shortening of cycle
SAP BPC also helps to reduce cycle time. Business need not to wait for actual, planned or budgeting data to start consolidation process as all of them (actual, plan, budget data) is available in one application (SAP BPC).
Data quality & data consistency
SAP BPC as a unified planning and consolidation engine ensure data quality and data consistency as no custom development is required to interact between departmental planning. Data flows seamlessly from planning application to consolidation application.
Integration with SAP and Non SAP systems
It integrates seamless with existing SAP and non-SAP source systems. It leverages investment in existing operational system by feeding data into SAP BPC.
Data audit and activity audit
SAP BPC offers both data audit and activity audit .Audit trails are enabled to track changes in data, user activity and administration activity. Audit reports available in BPC to analyze changes by dimensions, tasks and other parameters.

Posted by Aalok Kumar at 12:59 PM | Permalink | Comments ( 3 ) | TrackBacks ( 0 )

In my previous blog posts, I spoke about how volatile economic cycles, the ensuing regulatory requirements and thus evolving business expectations, are leading to a shift in the epicenter of the CFOs office - towards business strategy and growth alongside financial stewardship. Thus, the CFO's office, as some would like to believe, now has to be enabled using new technology(s) to cater to these new priorities. But, with such fast changing regulatory requirements a CFO can't afford to change/upgrade his existing landscape time and again. Thus, the need is for a weapon(s) (read: applications) which offers such flexibility and robustness that not only encompasses the ever-changing expectations (business and regulatory) but also empowers the CFOs knights to a low cost - sustainable - self service platform.

Hence, this weapon should be a best in class solution that can tightly integrate some of the financial processes, provide Business Insights while satisfying compliance needs.Thus, many analysts have upped their market estimates for EPM/CPM/BPM suites, especially due to the current economic conditions under which organizations are increasingly feeling the need for applications to help their management teams make the right strategic decisions. One of the leaders is SAP's new product suite for Enterprise Performance Management which offers an entire gamut of financial performance management tools for Planning, budgeting & forecasting, Profitability & cost management, Financial & management consolidation and Strategy management.

However, in this blog series, I would like to bring to your notice the capabilities of their Financial & management consolidation offerings (SAP BusinessObjects Business Planning & Consolidation and SAP BusinessObjects Financial Consolidation) especially for meeting the global and domestic regulatory requirements. The primary aim of these financial consolidation tools is to reduce the compliance costs of an organization by reducing the time to financial close (thus, freeing up resources for value add activities) through automation of financial processes (thus, reducing manual intervention and increasing transparency with accuracy).

The recent flavor in the financial accounting regulatory space is IFRS with most of the developed and developing nations mandating its adoption by (or before) 2015. While some of the financial executives are taking this as an opportunity to improve the effectiveness and efficiency of their financial processes and systems for financial accounting, reporting, statutory consolidations etc., others are having sleepless nights just thinking about the most cost effective way for dual reporting and transition.

Having set the perspective, I will signoff for now only to come back soon to delve further into the aspects of transitioning or convergence with IFRS and the crucial role SAP Financial consolidation offerings can play in it. I'll also talk about another fast emerging regulation in the financial reporting space, called XBRL, that promises to make the life of regulators (like central banks, exchanges etc.) easier, but, what's still to be seen is how it would weigh on our CFOs knights?

(To be continued)

Abbreviations used - BPM, EPM and CPM stand for Business/Enterprise/Corporate performance management; IFRS - International Financial Reporting Standards; XBRL - eXtensible Business Reporting Language

Posted by Bharat Chadha at 5:20 AM | Permalink | Comments ( 3 ) | TrackBacks ( 0 )

In the previous blogs I have tried to explain what SAP means by Support and Maintenance, and the commercial importance of this function to SAP. Having set that context, I want to bring up a few issues which I think will determine the future of this business line for companies like SAP. 

The first point is whether customers have options to sign Maintenance contracts with companies other than the product vendors?
No, they do not. In spite of what Riminy Street and other similar companies may come up with, I strongly believe there are reasons why customers will not, actually cannot, terminate their AMCs. In the current circumstances, doing otherwise (signing an AMC with another service vendor) would definitely be a massive risk – imagine putting your complete SAP landscape maintenance in the hands of a service provider who does not have access to SAP’s future roadmap, who will not have access to patches and security updates, and if I assume correctly will be violating copyright laws by attempting to change SAP code, etc.

(However this option maybe realistic if customers decide to let go of their current IT landscape and plan a complete revamp one or two years down the line.)

There has been much written about service vendors like Riminy Street offering this alternative. Questions to think about – How big are these companies? What is their experience in such a business? How many large enterprises are their existing customers? What is their knowledge of the product? What is their local presence in the country you are located in? What is their knowledge of the local laws of this country? I can go on and on but you should get the gist. I believe that SAP / Oracle support cannot be replaced.

On the topic of the now-erstwhile rumor about Siemens canceling its AMC with SAP;I do not know what the reality was but if this was not a bargaining strategy and there was some truth in this then product vendors like SAP should have some concern, given what is mentioned in the earlier blogs. If and this is a very big if, a company like Siemens could find a service provider who can satisfactorily answer all the questions in the previous paragraph, it will not only create a huge impact and start a trend among all large customers who could be paying in excess of 10 Million USD annually for Maintenance, but it will also suddenly put at risk approximately 50% of high-margin, erstwhile guaranteed, ‘economic downturn–proof’ annual revenue for SAP.

A company like Siemens would be taking a huge risk even considering such an option. Was it a bargaining strategy? Again no one can say without knowing the facts. However, if SAP considers this move a threat, it means that SAP thinks that it can be replaced, which I find really hard to believe. There was an announcement on October 21, which said that Siemens has renewed its support contract with SAP for 3 years and also selected SAP SRM, thus expanding its relationship with SAP.  

What I would be interested in are the factors driving customers to even think of alternate maintenance providers. When does the AMC come into effect? When licenses are bought or when they are used? If the latter, does it mean that I can buy 10 Million USD licenses on 1 Jan 2010, take 12 months to implement these products but still pay 2.2 Million USD (22%) in 2010 for Support which was not absolutely essential? Am I paying annual maintenance for my shelf-ware – licenses which I bought but currently have no use for? If so, can I give those unused licenses back to the product vendor and will it make economic sense to do so? Am I paying the 22% Maintenance on the catalogue price of the licenses or on the price I pay with the discounts, etc? And seeing current trends that that SAP and Oracle are giving heavy discounts on licenses, does it even make sense to avail these discounts when I end up paying 22% on the catalogue price?

However, given the fact that none of the customers have canceled their AMCs, it is obvious that they feel that the value of these AMCs is more or equal to what they are paying for it. But there may come a time when cost pressures and other factors may force these customers to relook at options, however risky they maybe. The time is definitely not now – is it going to be anytime soon? I don’t know. But things will definitely change – that’s certain. Till then – is this a supplier’s market?

Posted by Shiraz Mishra at 12:49 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

What exactly constitutes Software-related Services? [Sourced from the SAP Annual Report 2008 - On Form 20F - The SAP Portfolio]

SAP categorizes software-related services into four buckets; Custom development, Support services, On-demand software services and Managed services.

Custom development as the name suggests implies building new developments, extensions and enhancements on the SAP platform to address unique customer requirements which otherwise cannot be met by the standard offering.

Support services include support to the customer through the complete lifecycle of the implementation – before, during and after. This involves round-the-clock technical support, as well as proactive and preventive support services. It can vary from SAP Enterprise Support (involves holistic IT landscape support with the aim of optimizing operations, based on defined service level agreements), SAP Product Support (provides day-to-day support needs), SAP Safeguarding (aims to mitigate technical risks during implementation and upgrade) and SAP Max Attention (includes technical account management from SAP).

On-demand software services enable the customer to choose between different deployment models (on premise, off premise) and commercial models (license fee based, recurring subscription fees, transaction based pricing). This gives added flexibility to customers who do not wish to invest in and own infrastructure, software licenses, etc. SAP expects gradual movement to on-demand models leading to a hybrid landscape with standard deployment (on premise) for mission critical functionalities and on-demand for other functionalities.

Managed Services, depending on the customer contract can come either under software-related services or professional services and other services. Either ways, the idea is the same – SAP provides application management services, hosts and runs solutions for customers.

(As an addendum to the previous blog – 1.1 Looking into the financials – one should also note the high margins that this line of business generates – According the Q3 2009 report the margin from Software and Software Related Services revenues is more than 78%) Next up – What options do customers have?

 

 

 

Posted by Shiraz Mishra at 12:26 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )