Finance System

Best Automated Forex System For Big Profits

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Having the best automated forex system can mean big profits for your trading account. Trading with one of these programs can also free up a lot of your time if you're currently trading manually.

An automated forex system is a software program that automatically enters and exits trades in the forex market with the intention of turning a profit. When these systems first came out they weren't very profitable, so many traders took them as a scam and continued with their manual trading.

Lately however, the forex robots have been proving themselves greatly among the forex community, and have been making daily profits that manual traders can be jealous of. This has caused a big rise in the amount of positive reviews for these programs, and ultimately the amount of traders using them.

There are now traders that are making profits from the forex market solely from using a forex robot. So now on to the original question of, what is the best automated forex system?

Well if you would like a detailed answer to that question then you're welcome to follow one of the links below. As of writing this article however, I would have to say that the current best automated forex system is the Ivybot. This forex robot really stands out above the rest in the way that it works. It is actually four robots in one, which allows you to diversify your trading to different currencies, and it also receives regular updates from the owners to keep it trading at peak performance.

One of the best ways to figure out which forex robot is the best is to check out a forex robot reviews page [http://www.dailyforexinformation.info/forexrobotreviews.html]. These pages give unbiased reviews on the best forex robots currently on the market. One of the best sites known for doing this is http://www.dailyforexinformation.info [http://www.dailyforexinformation.info/forexrobotreviews.html]

You can always be sure that they will keep up to date on the best forex robots.

Benefits of the Automated Trading System

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An automated trading system is an automated software program which is designed to conduct trade in the forex market on behalf of the trader who has installed it. In such a situation, it is not always possible for a single individual to monitor the market single-handedly and therefore, the need was felt for a program which would solve this problem faced by individual traders.

Since the advancements in computer technology have spurred the growth of the forex market, assistance in this matter was sought from the field of computers itself and the result was the development of the automated trading system. Since this system entails the upload of the software into one's computer, it is preferred by forex traders all over the globe due to the benefits reaped by investing a minimum amount. Being a global phenomenon, the forex market is open for the entire twenty-four hours as the closing bell in the oriental countries coincides with the opening bell in the western countries and vice versa. In such a situation, a trader who is dependent on the forex market for a living would have to be on a constant watch so as not to miss a profit-making opportunity which is not physically possible for any individual. Therefore, the ideal alternative would be to have a program which could act as a substitute and could be relied upon to follow the instructions provided and this alternative evolved in form of the automated trading system.

An automated trading system entails that the forex trader should fill in certain specific details pertaining to the transaction like the personal account number, the desired nature of trade and the verification of funds and the instructions are explicitly carried out. This not only results in the accuracy of the transaction but also represents the practical aspect of trading as it eliminates the crucial human element.

An automated trading system is available in a number of formats and it depends on the personal choice as well as the requirements of the user as to which should be selected and installed in the computer. A word of caution in this regard is that since the automated trading system functions like a robot, it cannot possibly react to sudden fluctuations which may occur due to a change in the political or the economic conditions. Therefore, the onus of keeping abreast of the latest news and instructing the system accordingly lies with the forex trader himself.

Forex System Information Guaranteed To Make You Rich!

2011-02-17T22:18:00.003-08:00

Trading in the foreign exchange market is a business that can be highly profitable. Experts in this industry have developed systems that allow trading to be done by anyone virtually anywhere in the world. Anyone who wants to earn from trading forex can do so by learning how each forex system works.

There are three types of forex systems that can help traders make trading decisions. There is the trend-based forex system that follows the path that a particular currency is taking and advises the trader when there is a change in the currency's direction. Then, there is the signal-based forex system. This type of system is a bit complex since it is based on the designer's personal take on the forex markets. Each signal-based forex system varies from one system to another. This system is often used with the trend-based system. Lastly, there is the formula-based forex system that uses sophisticated mathematical computations and algorithms that use existing currency data to calculate the recommended trading decision.

Any one of these forex systems can help traders profit from their forex trading business. These forex systems give traders information that are essential to maximize the earnings potential of any forex trading business. Traders can formulate their trading strategies based on indicators shown by these systems. No single indicator can tell whether a trading strategy will succeed or not. It is often a combination of these indicators that are weighed carefully to come up with a successful strategy.

The very basic elements to making a trading decision include support and resistance as well as the market direction. The indicators are then evaluated in line with these elements to determine forex buying and selling decision. Some of these indicators include simple moving averages, Bollinger bands, relative strength index, and stochastic. Any one or a combination of these indicators can be used to make profitable trades.

Simple moving averages play a part in determining long term trends in trending markets and in deciding to enter into fresh positions directed towards the path of the trend. Bolliger bands indicate market volatility and gives indications as overbought and oversold scenarios, entry points, and targets. Both these indicators set up areas of trade.

Other indicators as relative strength index and stochastic influence market timing. These information are called momentum indicators. Relative strength index indicate good entry points when it is strong or within existing trends. When it diverges from trends and is overbought or oversold, it is best to enter into contrary trades. A simple and effective way to signal an entry point is the stochastic. The stochastic is considered by experts as the ultimate indicator to trigger trades.

Good information given at the right time makes for a profitable trading strategy. Forex trading is a timing game. And to be able to make the right decision at the right time, traders have to be equipped with the right information. Traders armed with forex system information are almost guaranteed to make big bucks. With a reliable and efficient trading system that has a track record of having positive results, traders can expect to see upticks in daily income from trading forex.

There is a common feeling amongst many financial analysts, accountants, philanthropists and sci-fi fantasy novelists that in the future we will be abl

2011-02-17T22:18:00.001-08:00

The international Forex market has evolved in recent years to provide access to millions of people around the world. Due to the technological advances seen in just the last ten years, people with a small amount of money can now take advantage of the enormous around-the-clock trading opportunities and liquidity offered by the Forex market.

While a basic understanding of currency trading is not required if you choose to use some of the automated Forex trading software packages, the fact remains that the more knowledge you have of the Forex market, the better off you'll be when you begin to trade with your own money.

While you may be able to educate yourself about the Forex market from information available on the Internet, you would probably make much more progress in a shorter amount of time if you buy Forex system software and study its features. Most programs currently on the market come with detailed explanations of market mechanisms as well as a general overview of the Forex market.

What follows are some of the top ten reasons to buy Forex system software to learn to trade:

1. The hard work is already done. Forex system software incorporates knowledge distilled over a long period of time by many people, giving you the benefit of their research.

2. You can learn technical analysis. Most Forex system software used for trading comes with educational material. If you download MetaTrader for example, a total of thirty technical indicators are included in the MetaTrader terminal.

3. By studying the particular trading system used by an expert advisor software package, you can learn how the software determines entry and exit points in the market.

4. Learn how to chart. Although it may not be necessary for you to undertake manually, the principles involved in charting prices and identifying technical chart patterns can be invaluable to any Forex trader.

5. Enjoy greater peace of mind. By being informed and educated on the trading process and understanding your trading system, you will have much more peace of mind.

6. Learn from a dispassionate teacher. Forex software packages rely on objective market conditions to generate trading signals and avoid human psychological issues.

7. Prevent costly mistakes. Once you have gained the knowledge necessary to trade by studying your software that was programmed by a Forex expert, you can avoid costly mistakes that beginners commonly make when they start trading.

8. Develop your trading acumen. By studying the software's parameters, you can broaden your understanding of the currency market giving you more confidence when trading.

9. Gives you original trading ideas. Learning a particular trading system will help you set up your own system once you have an understanding of the process the software uses to evaluate market data.

10. You won't have to take expensive courses or attend a costly specialized school to begin to learn the intricacies of trading the Forex market.

Basically, once you buy Forex system software, you can begin educating yourself as a Forex trader in combination with researching the market on the Internet. Getting an education in Forex trading was formerly only available to those lucky enough to apprentice on a Forex trading desk at a bank or other financial institution or who could afford to take a costly course. Thanks to Forex expert advisor software, the world of Forex trading will never be the same.

Forex Currency Trading System

2011-02-17T22:17:00.005-08:00

Trading in financial markets has become very trendy and the international foreign exchange market is the largest and the most liquid market.

In the forex market, buying and selling of currencies in the forex market of various nations yields more profits although a high risk is also involved. Profit occurs when differences in exchange rates among various markets are used and the selling rate exceeds the buying rate.

Although the foreign currency trading system is considered risky and too complicated by many, experts reveal that it is a very rewarding option for traders. It is imperative to have the best trading system in place in order to make financial gains. However, to have the best system, one must first know enough about the forex market itself.

Initially the forex market was developed to provide a boost to the world economy after the World War 2. It now serves as a major investment avenue for private investors, banks and large corporations. Many factors affect the foreign currency market such as the price of tea, oil, political changes, military conditions, terrorist presence etc. The best foreign currency trading system is one that manages all transactions in the wake of all these factors.

Every factor happening in the world must be weighed and analyzed carefully before any transaction is carried out. For this purpose, it is not merely enough to carry on marginal trading through a broker. Instead, every trader must know outside factors and their impact on foreign currency prices and they must have the ability to understand the various charts and graphs that directly reflect and show the foreign currency trading patterns and the price movements.

It is important for a trader in foreign currency to follow the daily movements of prices of foreign currencies. The most actively traded currencies in today's world are the US Dollar, Euro, Japanese Yen and the British Pound Sterling. Gaining more importance today is the relationship between the USD and Euro as these are the currencies of the world's major countries.

A number of sources are available that record and display in simple and graphic terms, the price movements of foreign currencies. The exchange rates of major currencies and the relationship between them are analyzed carefully and thoroughly. Exchange rates indicate the price of one currency in terms of another. When a country's home currency is quoted in terms of one unit of a strong foreign currency, it is said to be a 'Direct Quote'. Conversely a foreign currency quoted in terms of one unit of a local currency is called the 'Indirect Quote'.

Today's traders can also get information on any forex news that would affect the foreign currency trading system so that the impact of the same is analyzed properly. Traders can accordingly predict the rise or fall of a certain currency and decide whether to buy or sell the currency. Thus, the foreign currency trading system is the avenue for making huge profits with the proper analysis!

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All About Non-Banking Financial Companies (NBFCs)

2011-02-17T22:17:00.003-08:00

A non-banking financial company (NBFC) is defined as a company registered under the Companies Act, 1956 and indulges in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by the government or any local authority or other securities of marketable nature, leasing, hire-purchase, insurance business, and chit business. However, it does not include any institution whose principal business is that of agricultural activity, industrial activity, and sale/purchase/construction of immovable property. An NBFC basically does work similar to that of a bank without actually meeting the legal definition of a bank.

So, if NBFCs function in a way similar to a bank, then how are they any different? Here's a list of their different aspects:

i. NBFCs cannot accept demand deposits, which are funds deposited at a depository institution that are payable on demand, much like your current or savings bank accounts.

ii. Deposit insurance facility of DICGC (Deposit Insurance and Credit Guarantee Corporation) is not available for NBFC depositors, which is not in the case of a bank.

It is mandatory under Section 45-IA RBI, 1934 for every NBFC to register with the RBI as it regulates the working and operations of NBFC within the framework of the RBI Act, 1934 and the directions issued under this Act. A company that registers as an NBFC under the RBI should have a minimum net owned fund of Rs. 2 crore. Registering with the RBI involves the submission of an application by the company in the prescribed format along with necessary compulsory documents. If and when the bank is satisfied that the conditions are fulfilled, it issues a 'Certificate of Registration' to the company. Once an NBFC holds a valid 'Certificate of Registration', it can hold public deposits. However, the NBFCs that accept public deposits should comply with the Non-Banking Financial Companies Acceptance of Public Deposits Directions, 1998, as issued by the Bank.

There are four different types of NBFCs, each having different functions:

• Equipment leasing companies
• Hire-purchase companies
• Loan companies
• Investment companies

Rules and regulations are part of every firm and deal. It is always important to read the fine print of any document before signing it. NBFCs have their own set of regulations. The following regulations are considered important to the depositor at the time of investment.

• NBFCs are allowed to accept or renew public deposits for a minimum period of 12 months and a maximum period of 60 months. They cannot accept deposits repayable on demand.
• NBFCs are not allowed to offer gifts/incentives or any other additional benefits to the depositors.
• Deposits with NBFCs are not insured.
• The repayment of deposits by NBFCs is not guaranteed by the RBI.

Pharmacists As Models: Medicine, Technology and Finance

2011-02-17T22:17:00.001-08:00

Students who are making college and career decisions should know that working with medicine, technology and finance are respectful ways to make a difference in his or her community. In fact, proficiency in these three areas allows workers to better support patients by providing better services at lower costs through easier access to information. It can also bring comfort to a community as word gets out that a certain professional with these blended skills is offering help to his or her community. Students planning to enter health care can learn much about the total industry by studying pharmacists.

Pharmacists are important for a variety of reasons including their ability to keep patients aware of medical supports that are available. They also assist in ensuring that appropriate medications are dispensed and reducing prescription errors. Technology helps pharmacists keep track of patients and their medical needs. It also helps track all the medications a certain patient might need.

In neighborhood pharmacies, pharmacists dispense medicine, advise customers on the use of various medications, and actually advise doctors about medication therapy. Pharmacists are also very important researchers as pharmaceuti¬cal manufacturers develop new drugs. Pharmacists are often involved in testing the effects of drugs before they are approved for widespread distribution. Others work to promote products, providing customers with advice on use, effectiveness, and possible side effects.

To E or Not to E? That Is the Question

Today's students are naturally compelled to use technology. This could be beneficial to the future of health care. "Despite the spread of increased internet availability, e-commerce, and a whole system of global communication made available by the internet, many doctors seem reluctant to offer online services to their patients" (Hodai, 2007). There are many people (not just doctors) who don't use technology routinely. This may be because some haven't prioritized technology as a necessary tool for work in everyday life. They may prefer sticking with basic applications that they consider to be helpful in performing routine tasks.

"According to a 2006 survey conducted by Manhattan Research, only 25 percent of doctors said that they had any internet communication with their patients. Some doctors are reluctant to conduct an online relationship with patients because they fear that they will be inundated with patient e-mails..." (Hodai, 2007). Doctors and patients can have appropriate relationships supported by the use of technology that creates, organizes, manages, and contains patient information. Doctors should be a part of organizations of other medical professionals that create and follow specified controls and procedures to limit security breaches or irritating situations such as being overwhelmed by e-mails and other information.

New Requirements for the Future

The federal government has recently initiated efforts to modernize processes used to maintain medical information in the United States. According to Pat Arlotto (n.d.), there are seven strategies healthcare organizations should adopt to prepare for the implementation of the Health Information Technology for Economic and Clinical Health Act (HITECH):

• Build HITECH awareness (i.e. HITECH requirements should be reflected in the organizations plans, staff members and systems should be aligned with HITECH, and procedures for training staff and measuring effectiveness should be in place.)
• Invest in a transformation infrastructure (i.e. the organization's leaders should lead transformation from old systems)
• Build clinical informatics expertise (i.e. train practitioners to understand the new relationships among reimbursement, better quality, and clinical systems)
• Develop a business intelligence strategy (i.e. creating new knowledge by collecting, managing, analyzing, applying data)
• Invest in physician business services infrastructure (i.e. revenue management, human resource management, practice management, credentialing and EHR deployment, and operations support)
• Explore a medical trading area health information exchange (i.e. CEOs, CFOs, CIOs, and chief medical officers from key MTA provider organizations share information and lessons learned to optimize system-wide functioning)
• Design an e-strategy for engaging patients (i.e. building a culture of patient health self-management via the new technology)

Following the lead of Medicare and Medicaid, some commercial payers plan to develop pay-for-performance programs that base payment to providers partly on whether they demonstrate appropriate use of electronic health records (EHRs).

It is important for administrators, technology staff, and finance staff in hospitals to work as a team to implement new systems that use technology to maintain records. If only one person or department is assigned responsibility for the EHR process, there is a greater chance of poor communication, ineffective organization, and problematic data quality. This translates into higher costs and waste. Ultimately, all of this affects the quality of patient care. In some health organizations, however, the CIO is solely responsible for HITECH readiness. Given the long-term implications of efficient use of EHRs on revenue, however, many organizations require that the CFO also understands and is involved in HITECH readiness.

Pharmacists are Pioneers

As stated earlier, patients have benefitted from ways in which pharmacists have already linked technology to record keeping and quality care. Most pharmacists already maintain confidential computerized records about patients' prescription histories. This prevents harmful drug interactions that many times doctors are unaware of. Pharmacists ensure the accuracy of every prescrip¬tion that is filled, but often rely on pharmacy techni¬cians who assist in dispensing medications. Due to pharmacists demonstrating the three skills discussed, patients perceive an immediate and full effect of quality health care. Good relations among pharmacists and patients give patients confidence in not being over-medicated or over-charged. They also feel that having one pharmacist as the reviewer of prescriptions (that could come from several doctors) reduces the risk of taking medications that may be harmful to them. Today's technologies more strongly enable pharmacists to be advocates for patients in these ways. HITECH can make this happen throughout the health care industry, and tech-savvy and business savvy students will fit well in this new environment.

HITECH is of significant importance within the ranks of health care administrators. Pharmacists can inform HITECH policy in valuable ways. Pharmacists, naturally, have a broad view of health care administration. Pharmacists "advise their patients, physicians, and other health practi-tioners on the selection, dosages, interactions, and side effects of medications..." (U.S. Bureau of Labor Statistics, n.d.). In hospitals, pharmacists sometimes advance to supervisory or administrative positions.

Many people believe there are benefits to improving health care management through the use of technology because of the efficiencies in managing funds and patient records. With new technologies and procedures, patients and those who care for them will benefit from more informed relationships and improved quality of care. HITECH paints a clear picture of things to be expected of those entering the health care industry in the future.

Wealth Building - Secrets to Financial Freedom: Is Saving Money Overrated?

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If you're after financial freedom, you've probably already heard a lot about how important it is to save money. But is saving an overrated and outdated strategy? You might have heard that Robert Kiyosaki claims that inflation has made savers into losers. Is there any value left in saving money or has that forever changed? In this article, we'll be looking at the simple way to use a "saving" strategy in order to accomplish financial freedom.

The Purpose of "Saving" Money

In the four bucket financial system, one of the main categories for directing your cash flow is the category of cash reserves. This is where you put your money so that in case you have an emergency, you'll have a lump sum of cash to draw upon instead of having to go into debt. The other purpose of cash reserves is for planned purchases so that you, again, don't have to borrow money or put your purchases on a credit card.

This is the closest thing to saving money that you'll ever need to do, the rest of your strategy is either focused on building wealth or you'll end up losing money to inflation. By having money set aside for emergencies, you eliminate a LOT of the money stress from your life and also eliminate the need to plunge yourself into debilitating debt in order to handle an unexpected financial event. Then you'll be able to focus all your attention on building financial security and increasing your personal wealth.

Beyond the Saving Step

Another place to direct your money in the four bucket financial system is towards investments. This is essential and it needs to be a priority. I've found that one of the major differences between people who are broke and those how have financial security and even wealth, is that the financial secure people invest their money before they pay their expenses. It's typical of human beings to think that they have less money than they do and to be afraid that if they invest (or save) first that there won't be enough left over to pay their bills.

I would challenge you to start spending your money like this: invest 10% first, give 10% second, save 10% for cash reserves third, and use the leftover 70% to take care of your expenses. If this is too much of a leap for you, then invest first, and pay your expenses second. As you do this, you'll realize that you have a lot more money than you think you do to pay your expenses. Then, you'll have the confidence to start making your saving and giving a priority as well, and that's when you can really start building financial freedom.

The Environment of the EU Banking System

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Banks are defined as a business organisation that performs services in relation to money. Specifically is the process of keeping money for customers and paying it out on demand, in the form of deposits, borrowings and exchanges. It has become a cliché to note the revolutionary impact of information technology (IT) upon any industry, but the real upheaval lies just ahead. As experts back in the 90s stated, "If the number-crunching mainframe computers of the 1970s formed the childhood of IT, and the flowering of personal computers during the 1980s marked its youthful adolescence, then the 1990s seem likely to see the passage of IT into adulthood". As it has been foreseen, during the 21st Century, technology became directly related to almost every single activity and function of a bank. Deposits, withdrawals, loans, transfer of capital and updating are just some of the functions that are carried out electronically, as computers support communication networks or ATMs.

In the late 1990s, banks have come to realise even more and understand better the importance of technology since they have tried to take advantage of its progress. The computer sciences and all aspects in telecommunications, with particular emphasis on the Internet capabilities, constituted one of the most profitable areas banks decided to invest. These two fields of technology have had the greatest potential for growth and profitability. Currently, as the banks anticipate the rapid IT growth potentials, they continue to give a lot of emphasis on the technology of e-banking-the transactions with banks through Internet-and e-commerce of products and services. Noticeable is the fact that almost every bank in the globe currently offers e-banking services via their Internet links.

During the past ten years, a trend has emerged as major banks or groups of banks have formed alliances with companies in the telecommunications and computer sciences fields, or in other diverse industries. For example, in the UK, two Scottish banks have joined up with major supermarket chains in order to provide an outsourced banking function for the so-called supermarket banks. The motive for such kind of strategic decisions was the profit from a dynamic field that showed revenues increasing in a rapid rate.

Furthermore, it is true that the Banking Sector throughout Europe has gradually restructured itself in order to be able to meet the challenges provoked by the unification that has recently reached the milestone of twenty-five member states. Operating in this new environment, banks have to confront some major issues, such as the intensification of competition, the technology breakthroughs referring to transactions, the globalisation of capital and money markets, the development of management and administration, the extensive use of derivatives, the development of international transactions and the introduction of financial innovations. Thus, EU banks in order to cope with the fundamental forces mentioned above, are trying to find ways to improve their productivity and effectiveness, reduce their costs, upgrade the quality of the services they provide, intensify their presence in new markets, reduce the exchange risk, and finally achieve great macroeconomic stability.

Experts state that the upcoming changes will also force banks to reconsider their position in terms of effective bank size, economies of scale in the new environment, creation of a new powerful capital base, globalisation of the activities as well as of the wide variety of product/service lines they provide to customers. According to the estimations of "International Monetary Fund" and the "Organisation for Economic Co-operation and Development", it is a fact that the banks have already invested significant capitals to new technology applications, while most have already introduced "personalized" services for their European or global customers.

How to Explain the Credit Union System of Saving & Borrowing to Children

2011-02-05T04:53:00.003-08:00

Visit your credit union with your child to reinforce your financial explanations.

Even children in their formative years benefit from learning lessons about how financial systems work. If you're particularly keen to explain the workings of a credit union, start the process by making clear how a credit union differs from a bank. Banks are owned and operated by a board of directors and they're in the of making a profit. Credit unions, on the other hand, exist to serve the financial needs of their members, which is why a saver must be a member in order to deposit and borrow funds.

How to Create a Simple Financial Record Keeping System

2011-02-05T04:53:00.001-08:00

Have you ever been late on a payment because you misplaced a bill and forgot about it? Are you constantly hunting down receipts or other financial records such as tax returns or bank statements? Do you pay for everything with cash or money orders to avoid bouncing checks and lack an adequate record keeping system? Perhaps you are so overloaded at work that when you get home, you find it difficult to deal with any "paperwork."

There are many reasons why someone might struggle to maintain adequate financial records. Regardless of the reason, there is a simple solution that is not only easy to create & use, it is effective.

Global Finance Systems Broker Training Review

2011-01-19T02:20:00.001-08:00

Global Finance has developed a broker training system that teaches the business owner how to make business loans between $25,000 to $3,000,000 and receive up to 15% commission. It is estimated that some 90% of all companies who apply for a loan will be turned down by this countries financially troubled banks and lending institutions. But there is a tremendous pool of private lenders who have liquid money to lend, but no way of connecting with those who need it.

This is where you, the prospective loan broker, comes in. Global claims they will teach you exactly everything you need to know to run your own home-based finance company. From working part-time to working full-time, they say they will tell you that making a Six-figure income is easily attainable. With a start-up cost of just under 20k, one must understand that this is not a franchise. This is a business opportunity where you will be paying for(and hoping for), Global's ongoing marketing training and support.

Now, the one thing that raises a red flag for me, is their statement that you'll be approved and accredited immediately with premium lenders upon completion of their training course. No waiting the 3 year period most states require in order for one to act as a licensed Loan Broker. But, even if this is truly the case, this business opportunity is still based upon a network marketing platform. The finance company owner, although receiving Global's continued marketing training, must still become proficient in the ever-changing techniques that network marketing and internet marketing require. You must be able to effectively "brand" yourself in order to insure success in these ever-changing and difficult economic times.

Global Finance and their Loan Broker Training System may very well be legit, and be as easy to complete as they profess, but one should definitely perform their due diligence, and research, to see if their claims are true. Whatever the case, this is a NEW age of home-based business entrepreneurship. There IS a new model for success in Business ownership and opportunity that has emerged, creating massive success for individuals every day.

Learn more about the power behind this business model by visiting Intermax2010.com.

Make Use of the Automated Bill Pay System of Your Personal Finance Software

2011-01-19T02:19:00.004-08:00

With the internet explosion and the popularity of the online resources, many of the credit and debt settlement companies have grown into the internet. Online personal finance is a multi billion business every year. In the beginning this service was limited to helping small businesses in budgeting and calculating tax effectively. Later it grew to personal finance management for each person.

Thousands of online tools have been developed that helps each individual in their finance management. The best feature of the system is the facility providing automatic bill pay. This is very helpful as you need not always wait for your payment date and remember them manually. This can be of the great help. This helps an average person not to forget his bill pay dates in his busy life. You can specify which bill is required to be paid when in your online personal finance software. You can include your telephone bills, cable and internet charges, credit card payments etc in your finance tool.

The variable expenses can also be paid off easily with the options available in the system. This system also helps you be reducing the charges that may have to be paid as late fee. This is very significant as many of the people lose a huge amount like this as they pay the bills after the date of payment. This can be completely avoided.

So if you can learn to make use of the automated payment system in the online personal finance software, you have grown a very good lesson in finance management. This can make a huge difference in your finance management.

Credit Card Debt Settlement - A Legal Loophole in the Financial System

2011-01-19T02:19:00.003-08:00

How do you feel if you can eliminate 50% of your debts without damaging your credit report and reporting it as a 'payment made in full'? I can imagine your response. You can either laugh in a sarcastic manner, or can be surprised or else can think that it is not going to work and it is another scam you have got caught to a fraudulent company. Well, I will not judge your response. The attitudes display your experience. However, you need to know that there are legitimate options available in the market.

The financial experts consider 'debt settlement program' to be a financial loophole because it helps the debtors to settle their debts for less than they owe without trying bankruptcy. This method safeguards the consumer against public aggression. The consumers are expected to meet two requirements in order to enjoy the benefits of this program. Firstly, the consumers should have more than $10 000 amount of outstanding balance in their accounts. Once this hurdle is passed, you can go to the second stage; that is, you should stop paying your minimum monthly payments and convince the creditor that you are on the verge of bankruptcy. In fact, you can use bankruptcy as a strategy to obtain a big discount. If a consumer files a bankruptcy case, it legally stops all the actions against the creditor. In simple terms, none of the creditors will be able to touch the debtor anymore. The Supreme Court accepts the fact that the debtor is financially disabled. The creditors' perspective is to make profits. Therefore, they do not like to eliminate debts 100% (this is what happens when a debtor files a bankruptcy case). Instead, they can recover at least half of their money through debt settlement programs. That is why they are willing to negotiate.

So why do not take advantage of this excuse? Knowing the advantages, what you should do is to locate a reliable debt settlement company. If you are confident to handle this negotiation session on your own, you can save more.

The Automated Bill Pay System of Your Personal Finance Software

2011-01-19T02:19:00.001-08:00

With the sudden increase in the usage and popularity of the internet, most of the credit companies and debt settlement organizations have started using the internet as a medium to market themselves. The field of personal finance on the internet is a full-fledged multi billion business every annum. The personal finance in the initial stages was limited to offering tax calculations only. But now all the financial services like budgeting and personal finance management plans are available on the internet itself.

Hundreds of tools have been developed online to help the people to get their proper finance budget easily and make good finance plans for themselves. The best feature of personal finance management tool is the automated bill payment system. You can enter the details of all your monthly and weekly bills into this system and it will pay your bills automatically. So there is no more tension of forgetting your pay by dates for your bills. So you will make extra saving from the late fee that otherwise you will have to pay when you make your bill payments late.

The most significant factor of your automated bill pay system is that will have no worries regarding the bill payment. You can be completely free of any fear about not paying your bills on time. The automated system is capable of doing it all. The system will automatically pay your bills every month and you can surely have a stress free life full of enjoyment. Start using your automated bill pay system today.

Integrating Financial Education Into The Education System - Part 4

2011-01-19T02:18:00.002-08:00

With financial mistakes continually repeating itself, many might wonder why this is the case. One reason I deem possible for this could be the fact that schools have not kept up with times, causing them to train out students who keep making these same mistakes. To help further enhance the quality of education, 1 more lesson should be included, apart from the other 6 which are already addressed in part 1 to 3.

Today, besides the 6 key concepts mentioned, I believe it is definitely an ever-green idea to teach students to know what asset is best for them. Schools should teach students the main asset classes available and provide analysis for these investments to allow an optimal and fruitful learning experience.

The below would be examples schools could adopt to analyze the different asset classes which are business, real estate, commodities and paper assets. We shall now plough through them one by one.

For business, schools could say that owning them gives investors benefits like tax advantages, leverage for them to increase cash flow and the ability to control their operations. However, the downside would include the fact that it needs good people, dynamic leadership skills and the presence of talents who are willing to work as a team.

For real estate, the benefits would be high returns because of leverage from using other people's money like those from the bank. Also, they give tax advantages like depreciation and provides steady cash flow. However, real estate is management intensive and illiquid. Here, because of its low liquidity, real estate should be taken as an asset investors must do extra due diligence for.

For commodities, the main benefit would be the fact that it provides sturdy protection against inflation as commodities tend to rise along with it. This would help investors profit even in tough times like high inflation which can destroy many lucrative investments. However, commodities have storage and security problems.

For paper assets like stocks, their main advantages lie in the ease of entry into market and the fact that it usually requires less money to get in when compared to other investments. However, because of its high liquidity, it can be volatile, causing people to lose money very easily. Also, given the fact that it is affected by wild market swings, they require continual monitoring and can thus be time-intensive.

After giving all these overviews, schools can then proceed to say that to succeed financially in life, students ought to study the asset class they are interested in and learn their language.

For example, in real estate, know terms like cap rate or NOI while for stocks, P/E or EBITA. This will help increase mastery of language used in the asset class, thus improving returns and reducing risk. Also, they can end with a final note that this can be achieved because the greatest asset is the human mind where students who master it can achieve anything in life.

In conclusion, I believe readers have gained another important lesson they ought to have obtained in school. Nevertheless, knowing it now will still give them an edge over majority who are currently in the dark.

Impact of Basel III on the Financial System

2011-01-19T02:18:00.001-08:00

The global financial system created a vacuum of financial regulatory reform and transformation. With the growth in housing defaults and the impact of sub prime loans and CDOs on the economy, the international community focused on forming a united banking front / regulation. Defined as the Basel III accord, the system was first devised in 1988 by leading central bankers in the top 10 nations. The first step in the Basel Accord, this laid the groundwork and liquidity requirement for banking institutions in the largest nations. Sprung from the liquidation of a leading German Bank, the system was built to alleviate the pressures of one banking weakness on the entire system. Stipulating that international banking organisations were required to hold 8% liquidity with respect to the total assets on balance sheet, the reform brought about significant change in the13 member states who adopted it.

Basel II was the second round of regulatory reform on the banking industry. Designed in 2004, the accord focused on three main pillars of risk, which included credit, operational, and market/liquidity. Banks were categorised based on both Tier 1 and Tier 2 capital ratios and their propensity to possible liquidity crunches. Tier 1 capital is sometimes viewed as the key measure of a banks health, defining the overall degree of assets it has on the balance sheet (ie cash/ assets from earnings, common and preferential stock). Tier 2 capital on the other hand focuses on the other assets which could include hybrid investments, sub ordinate debt, and overall general provisioning.

The Basel III Accord has recently become a topic of hot debate as it provides a new bar for banking regulation and reform. Spurn from the recent credit crunch, the Basel III will look at a number of key measures to ensure the sustainability of the banking industry. These include:

Installation of a new measure of leverage control, which will maximum the risk both a bank or hedge fund will be able to take
Credit risk limitations. Organisations are limited to amount of credit they can borrow based on their assets. It will ensure that Banks and other financials do not take on too much risk.
Liquidity Ratio changes. To alleviate the possibility of a credit crunch, firms will now need to pledge a section of movable cash or credit to ensure borrowing or lending is not hindered.
Banks will be required to have a 4.5 percentage of common equity by 2015. This level will be extended to 7% past this date.

The new Basel III accord has come under scrutiny by leading economists, and industry analysts as being too restrictive. Economically, the debate over the how much of an impact the new Basel reform will have on both developed and emerging markets is leading to a significant divide between both corporations and regulators.

The Four Bucket Personal Finance System - The Simple Budgeting Alternative

2011-01-19T02:17:00.002-08:00

The four bucket personal finance system is a simple and practical alternative to personal budgeting. Think about this: how many times have you heard the advice that you need to get on a budget to start managing your money better? How many times have you attempted this strategy, kept it up for a couple weeks and found that budgeting just does not apply to the dynamics of real-life? This is why more people are choosing the four bucket personal finance approach as a practical alternative to living by a complicated budgeting system.

The Four Bucket Personal Finance Approach
Picture your personal finances as four buckets sitting in front of you. On each of these buckets, there is a label which tells you what the money in that bucket is going to be used for:

1. Expenses

2. "Pay Yourself First"

3. Contributions

4. Reserve

That's the four simple personal finance categories. Your objective is to put a predetermined amount into each bucket whenever you are paid. A recommended allocation percentage is not more than 70% of disposable income for expenses, and 10% or more for each of the three remaining buckets. However, you can change the allocations according to your personal convictions for managing money, but an amount is to be put into each bucket each time you receive a paycheck.

An example, if your monthly living expenses are $2,800 and you are paid $1,000 a week, using the recommended allocations, $700 are for expenses, and $100 to each of the remaining buckets. The "Pay Yourself First" capital will be used exclusively to create new wealth. The reserve amount is used to build an emergency fund and funds for special events such as investing in personal business or education, and savings towards a family vacation or the purchase of something which would just add more enjoyment to your life

Finally, the amount in your contributions bucket can be used to purchase gifts for your friends or family members or to give to charitable causes.

Keeping it Simple

As you can see, the four bucket personal finance system is a simple alternative to budgeting which can easily fit within the context of your real-life. Making the management of your personal finances simple and practical will make it much easier for you to stick with it until you get the results you want. So if you are worn out with trying to live your life according to a personal budgeting system, try the four bucket personal finance approach instead.

Personal Finance - The Four Bucket System of Cashflow Control - Financial Freedom Made Simple

2011-01-19T02:17:00.001-08:00

The four bucket personal finance system is the simplest way to control your cashflow and to begin building financial freedom. Many of us think that financial freedom is about having more money, and that certainly does help. However, it's not until we begin to control the money that we have now that we get on the path to achieving financial freedom. Otherwise, we'll make more and more money that we end up putting into a purse (or wallet) with holes in it. The problem is that many of us over complicate the task of controlling our cashflow, but the four bucket personal finance system makes it simple.

Here's how: Why Simplicity is the Key to HUGE Success

The most effective systems in the world, those which empower people to achieve success on a large scale, are never complicated...they are simple. However, they do require a lot of work and discipline, which is the reason why so many of us chase after complicated and crafty solutions which will help us achieve success with little or no effort. Just think about the last time you read an advice book about success and said to yourself: "Okay, I must not be getting the whole story because that just sounds too simple."

And off we go in search of something more sophisticated, which we think will get us there with a lot less work....in other words, the shortcut. What you'll find is that the moment you stop looking for shortcuts and agree to take the simple path of hard work, you start building momentum and moving towards your goal faster. You see, the shortcut is the longest and most disappointing route to take when it comes to your personal growth and achievement.

So let's look at the four bucket personal finance system and how it can make your journey towards financial freedom simple and rewarding.

What is the Four Bucket Personal Finance System?

The four bucket personal finance system divides your spending into four categories or "buckets" by which you prioritize your spending:
• Giving
• Investing
• Expenses
• Reserves (for future spending or emergencies)

Now, what makes all the difference in the effectiveness of the four bucket personal finance system is the priority of these four categories (this is where the hard work comes in). By putting expenses first, you can be assured that you'll always be living and working JUST to pay your expenses. However, if you make investing or giving a priority, you'll further increase your capacity to do both.

So no more shortcuts! You're making WAY too much work for yourself. Use the four bucket personal finance system and make your achievement of financial freedom a reality.

Canadian Financial System

2011-01-19T02:16:00.002-08:00

In order to properly understand the system of Canadian finances, it is absolutely necessary to comprehend the nature of the Canadian tax system. Prior to World War I, the majority of government revenue originated in the form of taxes on imported and exported goods, known as tariffs; however, in order to fund the First World War, the government instituted a federal income tax, an idea that was originally meant to be temporary, and it has since evolved into a progressive tax system that, along with a sales tax, produces around 70 percent of the federal bureaucratic revenue. In addition to these federal taxes, every province institutes its own forms of income, property, and sales taxes, and the average middle class family with two children pays approximately 32 percent of its total income to the government, federal or provincial.

A report from the World Economic Forum in 2008 named the Canadian banks as the safest and most prolific banks in the world; though this is largely accredited to the early precedent of minimal government interference in the banks, the Canadian bureaucracy still lightly regulates nearly every aspect of the country's chartered banks to prevent economic meltdowns such as the recent U.S. subprime mortgage crisis. Of these banks, the Royal Bank of Canada is the largest and wealthiest, but banking is only one of this institution's multiple financial programs as it also offers investment and mortgage services. Founded in 1864 as the Merchants Bank, the firm slowly evolved and changed its name to the Royal Bank of Canada after receiving a federal charter, and, now with over 17 million clients worldwide, this bank offers various financial services to almost any Canadian who applies and many internationals.

When calculating total income for federal and provincial taxes, only half of the income earned from capital gains, as in dividends payed on investments, is accounted for. This lowered tax on dividends facilitates investments in real-estate, government and corporate bonds, and the stock market, and, in turn, it stimulates the economic prosperity of the entire nation. The Canadian economy continues to flourish because of their comparatively low tax burden, and the Toronto Stock Exchange, or TSX, is evidence of this. The TSX is the most extensive stock exchange in Canada, and it is the world leader in the trading of stock in companies that mine oil, natural gas, or other precious natural resources. This exchange currently has the eighth largest total market capitalization in the world, and it continues to grow with the increasing value of oil and natural gas in the international economy.

Conclusively, the system of Canadian finance offers multiple opportunities through investment and personal entrepreneurship because the tax system has been designed to facilitate these economic practices and, through this, stimulate the economy. Additionally, competent banking prevents the continuation of irresponsible practices, and it thereby creates a stable atmosphere for fiscal investment and nationwide growth.

The Four Bucket Personal Finance System - The Simple Budgeting Alternative

2011-01-19T02:16:00.001-08:00

1. Expenses

2. "Pay Yourself First"

3. Contributions

4. Reserve

Finally, the amount in your contributions bucket can be used to purchase gifts for your friends or family members or to give to charitable causes.

Keeping it Simple

New Data Triggers for International Supply Chain Finance

2010-10-01T03:15:00.001-07:00

Global Business recently interviewed over one hundred major retailers and manufacturers, global transportation and logistic companies, financial institutions, and global trade vendors to assess existing and emerging trade data and document solutions. As part of that exercise, we discussed, with each segment, their views on international supply chain finance.

There are four transformative forces driving corporate global supply chains:

* Globalization

* Outsourcing

* Security and regulatory mandates, and

* Technology

Our discussions with corporation after corporation indicated that many have drastically changed their global supply chain models in a relatively short time. The degree of international sourcing or third-party manufacturing in most industries is forcing the redesign of processes, partner relationships, systems, etc. to improve cycle time, delivered costs, order fill rates, and on time performance. In virtually every industry, companies operate their supply chains on a global basis to compete.

By using arm's length contracts to source product, engineer, manufacture components, or sub-assemble products, companies have now put themselves in a position to be much more concerned about managing inventory and working capital.

The Forces at Work

We see many driving forces behind the opportunities in international supply chain finance, but will focus on three dominant ones:

Force #1: Companies are rapidly increasing their planned direct imports and global procurements over the next five years.

This has major balance sheet implications, as many companies are accruing in-transit inventory at some point overseas. In the past, buying domestic enabled companies to smooth out demand (their domestic suppliers held extra inventory at a cost, in order to mask the difficulties of forecasting and bad behavior on both sides). Now companies must incur additional lead times, transportation transit times, and associated bottlenecks. This can add forty-five days or more to the order. Additionally, companies are using letters of credit (LC) less and less to finance these imports.

Force #2: The number of consumer brand manufacturers using third parties to manufacture outside the US has exploded.

The automotive and high tech sectors have been most progressive in sharing information (designs, forecasts, etc.) with contract manufacturers, and other industries are following suit, given the aforementioned transformative trends. In some cases, brand companies no longer pay tier one and two suppliers directly. Instead, the consolidating manager or third party logistics (3PL) providers manage and pay these suppliers, adding layers and additional time in the supply chain.

Force #3: Internet-based technologies enable the real-time exchange of information about product data between trading partners.

Determining how much banks would lend against your receivables was once a manual effort; now technology has changed the landscape. Banks used to look at boxes of aging reports to prepare their borrowing-based reports, and then credit analysts would take these reports and eliminate ineligibles to come up with the lending amount. Today the process can be automated, so the borrower can capture all key receivable and payment information to create all these reports on the fly.

In addition to these main forces, various others are at work, and they are demanding a new way for banks and logistic providers to work together.

Supply Chain Finance Trigger Points

In our research, we found the market is in the early stages of migrating to data triggered finance. Our study found six trigger points in international supply chain finance, defined as lending to a party based on a relationship to another party.

(click here for larger verison)

A brief discussion of each trigger follows.

The Six Triggers

Trigger #1: Purchase Order Issuance

While suppliers desire more access to offshore funds, traditionally pre-shipment finance has been seen as a pure supplier responsibility and in the domain of local Asian banks. There are some banks that are playing in this space using buyer master purchase orders for working capital facilities for key suppliers.

Trigger #2: Work in Progress Payments

We found a small number of large (usually regional or global) banks with buyer support programs and master purchase order contracts with medium to large tier one and two suppliers who have performed well and contract over many years. These suppliers are critical to the buyer in product and design and are therefore dedicated and usually a part of a long-term relationship. For example, Ford will identify suppliers and provide performance history to the bank to assist in provision of pre-shipment facilities.

Trigger #3: Vendor Managed Inventory

Many high tech manufacturers in the made-to-order business are using vendor managed inventory programs with overseas suppliers to provide a more cost-effective and efficient flow to inventory management. Lead logistic providers and major third-party logistics providers are behind these programs, and as a result, there will be a growing interest in trigger finance and payment when inventory is pulled from a warehouse.

Trigger #4: Inventory In-transit Financing

There are a select few vendors that are going beyond the GT Nexus, Inttra, and Tradebeam supply chain visibility models to enable international in-transit inventory to be funded on a non-recourse basis to emerging market suppliers.

Trigger 5: Proof of Delivery via Forwarder Cargo Receipt and Other Documents

In our survey group, we did not find any banks involved in receiving electronic forwarder cargo receipt (FCR) or inspection certificates to trigger finance. We believe that to date, traditional collection products emulate having FCRs and other documents, such as certificate of origin (CofO), inspection certificates, etc. But as more cargo is exported with electronic messages such as FCRs and advanced shipment notices, then there will be more opportunities to develop liquidity off these messages. This trigger remains to be explored and developed.

SOURCE:
http://www.technologyevaluation.com/research/articles/new-data-triggers-for-international-supply-chain-finance-18048/

Integration and Consolidation of Business Intelligence within Business Performance Management

2010-10-01T03:14:00.002-07:00

Widespread confusion still persists over the difference between business performance management (BPM) and business intelligence (BI). The difference is best described this way: if BPM is the goal, then BI is the way to reach that goal. Combined, they assess performance management, which helps organizations align strategies by tracking and analyzing key performance indicators (KPI). BPM is the dashboard of the enterprise; it helps decision makers by providing accurate, detailed, and timely information on the status of the enterprise. BI, on the other hand, turns data into information, and BPM uses that information for accurate decision-making. BI technologies and analytics have enabled performance management to mature significantly in recent years. As a result, organizations are currently using performance management components such as financial consolidation and management reporting, planning, budgeting, dashboards, and scorecards to map their strategies.

Financial management systems are a core part of any performance management strategy. According to some analyst reports, between 60 to 70 percent of performance metrics are based on financial measures. Due to this heavy demand, a new application area is growing: financial performance management. Financial performance management integrates data from disparate financial areas, such as human resources, budgeting, and forecasting systems, to conduct analyses and develop reports.

The integration of enterprise-wide BI tools with financial management is increasingly becoming important for producing accurate budget and financial reporting, which is crucial for c-level managers like CEOs, and CFOs. BI focuses on the nature and trends of business and business transactions, rather than on business operations or processes. For example, BI also focuses on finance, rather than business operations, much the same way it functions in the financial services industries such as banking, securities, and international finance. Thus, integration between BI and financial management is important for better performance management. Major software vendors like Cognos, Hyperion, and Systems Union have been expanding into this new arena of financial performance management.

Systems Union's Consolidated or Best-of-breed BI Solutions

Europe-based Systems Union Inc. is a global company, headquartered in Hampshire, England, with a portfolio of financial management, performance management, and BI applications. The company has two operating divisions: financial management and BI. The financial management division includes the subsidiaries Pegasus Software, RED Technology, and Sun Systems. In 2003, the company started its BI operation by acquiring MIS, headquartered in Germany. It expanded its BI division in 2004 by acquiring Lasata, based in Australia. Currently Systems Union has offices in 19 countries and operates with 500 resellers from 73 countries.

Through its recent acquisitions, it has been developing a global focus to capture more mid-market business and is selling its full range of products to clients, irrespective of whether they currently uses Pegasus or Sun Systems solutions. It is pursuing an aggressive strategy, both tactically and practically, to establish a "global", end-to-end platform of solutions for every facet of corporate financial operations. Rather than creating a single, monolithic brand, it appears to be swallowing up companies completely, adopting an integrative approach to consolidate a suite of best-of-breed point solutions. To maximize the opportunities from its integrated solutions suite, Systems Union's organizational focus is on geographic regions rather than product families or legal structure.

Systems Union solution integrates with financials and other existing applications like enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), BI etc. Also, its consolidated suites offer a full range of BI tools globally. It has a platform of solutions for many facets of corporate integrated financial solutions. Systems Union's MIS, for example, integrates full financial solutions, and covers solutions for legal and management consolidation, risk management, balanced scorecard, strategic planning, and subsidiary management.

The Importance of Application Integration and Consolidation

As technology advances, systems need to integrate to create better performances. Recently, some vendors are heading towards consolidating their systems to better meet user needs through joint collaboration. The importance of business applications integration becomes clear by answering questions like,

* Does your accounting clerk input the same HR information that sales has?

* Does your finance staff have to re-key information from printed spreadsheets?

* Are there discrepancies in the financial data from different departments?

Unfortunately, if these situations occur in an organization, its applications are not integrated into a cohesive system. Since the center of all business functionality is finance, financial management is central to performance management strategy, and accurate financial reporting is important for complete, consolidated view of financial performance.

But, different systems and technologies have grown over time, and the market has become further complicated through recent merger and acquisition trends, global expansion, and the development of e-business, and now there are numerous tools on the market. Consequently, because of the lack of BI standards, it is difficult to combine and centralize real-time information located in various sources across the enterprise. Such discrepancies further exasperate inconsistent data and analysis. Given the far sweeping consequences of inaccurate finance reporting, as seen by recent corporate scandals, government is stepping in with financial reporting regulations and compliance. For example, the US Sarbanes-Oxley Act (SOX) puts companies under more pressure than ever to guarantee the accuracy of financial information.

The most important part of SOX to BI and BPM are sections 302, 404, and 409, which deal with reporting procedures and internal control. Many companies comply with SOX by using spreadsheets, which can be a feasible, temporary solution, but compliance is a continuous process, and one which companies have to face every year. Spreadsheets lack the sophistication, for example, in terms of data sharing and report generation.

Some, but not all BI vendors are automating processes to be SOX compliant, and by automating and integrating most of the financial, auditing jobs reduces costs and makes compliance more accurate. However, not all are embracing BI standardization and consolidation. Small vendors in particular are reluctant because standardization means cutting down from many tools to one, or at least a few, under a single platform. Systems Union's global reach attempts to solve the regulatory and compliance problem by dividing the world into regional groups. However, big BI vendors like Business Objects, Hyperion, and Cognos are in competition to become a standard BI vendor, which will push smaller and consolidated vendors like Systems Union to face tough challenges.

One Single BI Solution or Consolidated BI Solutions

Ultimately, you cannot manage what you can't see or measure. Since many large organizations have more than one BI application, management does not receive a single, big picture of the company's business. Based on this argument, one single BI solution is better than fragmented or consolidated BI solutions. Some argue that a consolidated BI solution under a single ownership is better, because it helps avoiding duplication and overlap, which is the approach Systems Union is taking. However, there are advantages and disadvantages between these systems. Fragmented BI is cheaper in short term but expensive in long term, whereas consolidated BI is cheaper in long term. Though, fragmented departmental BI solutions give fragmented views of the corporation and have lower maintenance and training costs, because they are already installed and operating. While consolidated BI solutions give a single view, they are initially expensive. Nonetheless, they will save money in staffing and training in the long term. A consolidated solution also requires one group licence for the software, which is cheaper than having many licenses for different solutions.

The truth is, no system is perfect, and no single vendor has all the functionality required to fulfill all the needs of a client. If you mix and match different tools or modules from different vendors, the system might do a job better. But, in reality it is not possible to force vendors to build one system with modules for various solutions. Systems Union is trying to leverage the benefits of different tools from different vendors, while bringing the consistency that comes from one service provider. It has consolidated groups of BI solutions under one umbrella, keeping the entity of the product brand and functionalities the same. It is not alone in its strategy. Companies like Hyperion Software, Business Objects, and Cognos are trying their hand at offering consolidated solutions. Hyperion acquired Brio and several small private companies such as Appsource; Business Objects acquired Crystal Decisions; and Cognos acquired Adaytum, among others. Again, these big players will also present challenges to Systems Union, while they may offer a more competitive landscape, giving users more options.

SOURCE:
http://www.technologyevaluation.com/research/articles/integration-and-consolidation-of-business-intelligence-within-business-performance-management-18064/

Best-of-breed Approach to Finance and Accounting

2010-10-01T03:14:00.001-07:00

Merging Global Trade Management with Global Finance

2010-10-01T03:13:00.001-07:00

Financial Fusion ~ E-Finance Wireless Leader?

2010-10-01T03:12:00.000-07:00

WESTPORT, Conn., /PRNewswire/ -- Confirming its commitment to lead the e-finance marketplace into the rapidly emerging wireless marketplace, Financial Fusion, Inc. announced the formation of its new Web and Wireless Division along with the launch of its patent-pending Total Wireless product family - available for immediate implementation.

Financial Fusion's focus on wireless technology will allow financial institutions to provide consumers and small businesses with seamless access to important financial information. Consumers can conduct time-sensitive financial transactions such as funds transfer, bill payment, and stock trading on a wide range of popular wireless devices including Palm Pilots and other web-enabled PDAs, cell phones, and pagers. In addition, Total Wireless delivers personalized stock portfolios, one-to-one messages, news, weather, and e-commerce features. (Source: Financial Fusion)

Market Impact

Financial Fusion has formed a wireless branch of their operation to provide financial organizations, such as Old Kent, with full wireless connectivity for their clients. While Old Kent and Financial Fusion are not the first to offer wireless e-finance, the venture represents yet another step forward to the wireless age.

Financial Fusion offers a pre-packaged wireless solution aimed directly at e-finance. The package will allow a financial institution's clients access to day to day banking transactions, as well as to stock trading, quotes, sports, news and weather. The advent of wireless in the e-finance arena gives the client control. From this point forward a client can bank anytime, anywhere, without limitation. (Of course your cell phone will not suddenly start spurting out cash.)

The wireless offering will utilize existing physical wireless technology from Palm Pilot (Palm VII PDA), Nokia, Motorola, Qualcomm, and Ericsonn Wireless Access Phones (WAP). Financial organizations such as Fidelity Investments have also offered wireless access via a two-way Research In Motion Pager and the Palm VII PDA, so what makes Financial Fusion's offering unique? Simply because Financial Fusion's Stage III Architecture is based on java objects, eliminating the need to re-code HTML pages for wireless devices.

In addition, Financial Fusion's product is entirely removed from the user interface, regardless of whether the user has a PDA or a WAP, code can be written once and used across all devices without modification. Due to Financial Fusion's Java technology, the Stage III Architecture auto-detects the type of wireless device a client is using and serves multiple wireless interfaces concurrently. Wireless Interfaces include the Wireless Access Protocol (WAP), Palm Query Applications (PQA), Short Messaging Standard (SMS) and Dynamic Hyper Text Markup Language (DHTML) with Wireless Markup Language (WML) emerging presently.

SOURCE:
http://www.technologyevaluation.com/research/articles/financial-fusion-e-finance-wireless-leader-15632/

Merging Global Trade Management with Global Finance

2010-10-01T03:11:00.001-07:00

Best-of-breed Approach to Finance and Accounting

2010-10-01T03:06:00.000-07:00

CODA Group, a finance and systems specialist headquartered in the United Kingdom, offers financial solutions that help companies grapple with international business issues such as language, currency, and compliance. Designed to be an "upgrade friendly system", CODA applications offer open and standards-based reporting tools. CODA's alliance with Microsoft Corp. has allowed it to deliver a range of financial and management accounting systems, and it has made several strategic acquisitions to further strengthen its position as a compliance solution.

Part Three of the Composing Collaborative Financial Applications, CODA series.

Among its recent endeavors, CODA has recently announced new set of financial planning and budgeting products: CODA s-Planning ("s" standing for "standard") and CODA c-Planning ("c" standing for "collaborative"), as well as a range of improved analysis and reporting tools, which will be detailed shortly. Nevertheless, to date, these corporate performance management (CPM) capabilities have targeted mainly existing customers of the CODA transactional systems. These users have focused on financial analytics, budgeting, and planning, either through Microsoft Excel integration within CODA c-Planning and CODA s-Planning, or through a partnership with Cognos for enterprise-level planning and budgeting. CODA's consolidation capabilities have traditionally been limited to the basic ones inherent in Coda-Financials. While these are adequate for simpler enterprises, the vendor has thus far been unable to successfully compete with offerings from specialists such as Hyperion Solutions, Geac (formerly Comshare), Applix, Longview, Outlooksoft, or Cartesis. Yet, the importance of these functionalities has been witnessed by Cognos' acquisition of Adaytum in 2003 and Business Objects' recent acquisition of the specialist SRC. See Financial Reporting, Planning, and Budgeting as Necessary Pieces of EPM for information on the functionality.

Thus, this merger deal should benefit both parties for many reasons. While Simple Concepts should get access to CODA's well developed global distribution channel and benefit from its financial stability, CODA should fill the financial consolidation gaps in its solution. Immediate cross-selling opportunities into CODA's install base will expand further as CODA translates OCRA into more languages. Not to mention, there are opportunities coming from OCRA's prior integration with SAP, Oracle, and other leading enterprise resource planning (ERP) solutions. The acquisition also gives CODA a base for strengthening its direct sales operation and presence in Scandinavia.

The two recent acquisitions came at the heels of CODA's June 2005 launch of a suite of add-on applications that extends the range of planning and budgeting requirements: CODA s-Planning and CODA c-Planning . These could offer more benefits for CODA-Financials users. The suite includes Version 3 of the much talked about CODA-XL application. CODA-XL allows the fairly simple and secure output, manipulation, display, sharing, and input of CODA-Financials data within Microsoft Excel. s-Planning and c-Planning were seen to enable users to carry out a range of day-to-day tasks, such as producing and sharing statutory reports; processing expenses; or even developing and setting financial budgets using CODA-Financials alongside Excel and the other familiar Microsoft Office tools that most organizations probably already have in place. These new products were meant to make CODA-Financials the launch pad for a quicker and easier budget cycle. By combining the functionality and embedded control of CODA with the familiarity and convenience of Microsoft Excel, CODA s-Planning and CODA c-Planning should streamline the seeding, preparation, manipulation, and production of budgets, based on (or update) the user's CODA-Financials data. Moreover, CODA continues to develop its relationship with Cognos, offering the Cognos Enterprise Planning product where clients have wider enterprise requirements. The vendor also uses a mix of partnership and in-house development to address other CPM elements, such as activity-based costing (ABC), strategic planning and scenario analysis, shareholder value measurement, activity monitoring, information distribution, etc.

In addition to the "standard" budgeting and forecasting facilities provided by CODA s-Planning, users have the option to make their entire cycle more coordinated, efficient, and controlled by opting for the "collaborative" add-on of the CODA c-Planning product. This interfaces with the CODA-Control process management solution, adding a facility to publish budgets as CODA-Control web sites and tasks. This will keep all participants informed and aware of the input needed and when it is required. There are also audit trails and document history to support compliance reporting. CODA c-Planning aims to help organizations set financial budgets and collaboratively develop plans, which both reflect top-down business objectives and assess the need to account for bottom-up creativity and realities. For example, it will give budget managers visibility of process bottlenecks, including vacation and sick days of department managers, information on groups waiting for information from subsidiaries, and vice versa. Conversely, many other peer products focus purely on bringing together and reporting the figures in the system, and not on collaborative processes that are key to collecting and verifying the figures in the first place. The application's aggregation features often make the budgeting and planning process quicker, more dependable, and more predictable, giving financial professionals more time to analyze and consider their overall budget before making decisions crucial to the organization's mid-term plans.

Another analytic module worth mentioning is the CODA Collaborative Scorecard, which helps user organizations link corporate goals through group objectives and individual performance. Designed to be deployed to every desktop in the enterprise, the product supports multiple performance management methodologies. Generally speaking, scorecards assist organizations in monitoring their business performance beyond bottom-line results by tracking both financial and non-financial measures, and then reporting them in a graphical user interface (GUI). A key element is the way they cascade corporate goals through the organization, helping managers to set individual objectives, and then aggregate performance results back up through the company structure, so that management can review the contributions made by individuals and groups. This aligns corporate strategy with the activities of individuals within the organization.

CODA believes that scorecards should be a strategic pillar of any analytic framework, bonding personal accountability to the enterprise's overall performance management. Initial releases of CODA Collaborative Scorecard have complied with commonly used performance management methodologies, such as the European Foundation for Quality Management (EFQM) balanced scorecard, Six Sigma, etc. to provide a relatively functional and flexible method of managing and aligning enterprise, group, business unit, and personal objectives. However, one should note that, although scorecards should be the fundamental link between personal performance and the overall objectives of the enterprise, they are frequently the weak link in the CPM closed-loop cycle, either because they are too difficult to deploy widely in the organization, or because they have fixed, inflexible methodology (see Why Most Balanced Scorecards are Subverted).

Related to the above line of products is CODA Analytic Explorer, which is a business intelligence (BI) tool that allows CODA users to carry out multidimensional browsing across CODA-Mart and any other relational data source. It is a generic, on-line browsing tool with both two-dimensional and multidimensional browsing capabilities built in, and has a separately licensable cube builder that provides extra performance. As finance departments struggle to add value to their businesses, performance management enables them to deliver better decisions more efficiently. However, CPM is not about static plans that sit on the shelf and get dusted off at board meetings, but rather about continuously adjusting to the range of inputs that the business is constantly receiving. To that end, CODA Analytic Explorer provides the ability to investigate exceptions and trends quickly and easily, so that corrective actions can be taken, and forecasts and plans reviewed.

CODA-XL is now in its third release. It provides a two-way bridge between Excel, which is indisputably the most popular spreadsheet, and CODA's enterprise-level financial and CPM products. CODA-XL was launched in 2003 and brings the familiarity of the Excel interface to CODA-Financials. It should provide customers with several benefits, such as reduced training for end users of CODA-Financials during implementation. Other benefits typically include the elimination of transcription errors and file-handling overheads during the transfer of data between CODA-Financials and Excel. Thus, it may prevent the proverbial "islands of information," where local systems containing great value and insight are locked on individuals' desktops and personal computers and cannot be shared across the organization. However, unlike some similar products from competitors, CODA-XL goes beyond exploiting the familiarity of the user interface (UI) and makes use of the success that Excel enjoys as an informal business modeling and planning tool. It provides "What If?" scenario testing with the option of writing back from the spreadsheet to CODA-Financials. For example, the CODA Security Model is fully embedded within CODA-XL, thus ensuring consistent data security. This means that while add-ins to Excel deliver rich CODA functionality accessed directly from the Microsoft Office desktop, they must respect the same CODA security, validation, and business rules. For example, Excel formulas referencing live account balances are stored directly in CODA Database, with all necessary authorizations for users appearing down to the spreadsheet cell level. For more on the advantages and the inherent risks of Excel-based tools, see Vendors Harness Excel (and Office) to Win the Lower-end of Business Intelligence Market.

Within CODA e-Finance (a Web-based version of the product), all reports validated and cross-checked on-line to validate, to eliminate separate, unsecured reporting tables. "Lights out" scheduling and Web document publishing also eliminate manual intervention. In addition, the data manipulation capabilities of Excel mean that management accountants can build and model scenarios that can be tested against real data relatively quickly, which can be very useful for creditor and debtor management, customer profitability analysis, and ad hoc queries. Furthermore, US Security and Exchange Commission (SEC) submissions can be made through Microsoft Word documents with embedded "live" Excel documents that do not have cut and paste, export, and manipulation functions, which can introduce the potential for errors. Non-programmatic, wizard-driven automation of data entry with real time validation direct from Excel (transactions, allocations, masters, budgets, and forecasts) also eliminates open database connectivity (ODBC), direct structured query language (SQL) updates, relational database management systems (RDMBS) logons, etc., which are also points of risk.

Last but not least along collaboration lines, CODA Collaborative Close is yet another application built using Microsoft Office technologies, one that is designed to help organizations close their books more quickly, more dependably, and more predictably, giving financial professionals more time to analyze and consider data before making crucial decisions. The product was designed to recognize and support the neglected collaborative processes that underpin period close. Other products in this area focus merely on consolidating and reporting the finance figures, but not on collaborative processes that are key to collecting and verifying the figures in the first place. Unfortunately, verification is traditionally carried out manually, which can be time-consuming and makes the process hard to track and improve.

Period-end reporting has always been a challenge for all accounting departments, and this challenge grows when an organization is distributed. The cost of an extended period close in human resources is considerable, since each extra elapsed day can cost a finance department many days of labor. Period-end closing is a collaborative process of questions and answers, of confirming detailed information, and of individuals collaborating to arrive at the answer and generate a picture of numbers about the organization's current financial situation. Every organization in the world has to address this, and they all have different processes; often, financial processes across corporations vary due to merger and acquisition activity, which has absorbed different groups using different business models. This adds complexity to the task of gathering information to close the financial period, and makes it all but impossible to fully automate using conventional systems. Ironically, the aim is to ensure that accountants spend more time adding value to management and performance information, and less time "chasing" data.

The use of technology to render the process less painful, to enable people to collaborate, to progress tasks, and to automate the final postings may be of help in delivering a true, fast closing process to business. Another potential benefit is that CODA's Collaborative Close may uses only information technology (IT) infrastructure and technology that a customer likely already uses. CODA Collaborative Close uses the latest technologies and features from Microsoft Office 2003, Microsoft SharePoint Portal Server, and Microsoft Office Infopath. These, together with task modeling technology from CODA, allow CODA Close to manage approvals, exception reporting, stock reconciliations, aged debt processes, and a string of other potential bottlenecks in the period-end closing process. The application automatically generates a period-end web site through the Microsoft SharePoint Portal Server. Related links then automatically bring up InfoPath forms to gather information from different participants and to drive period-end processes, while the web site dynamically reflects data in the back-office finance system. Real time information sharing between CODA and Microsoft applications is driven through Office Research Panes in Microsoft Excel, Word, and Outlook.

SOURCE:
http://www.technologyevaluation.com/research/articles/best-of-breed-approach-to-finance-and-accounting-18267/

Financial Fusion ~ E-Finance Wireless Leader?

2010-08-24T07:52:00.003-07:00

New Data Triggers for International Supply Chain Finance

2010-08-24T07:52:00.001-07:00

Global Business recently interviewed over one hundred major retailers and manufacturers, global transportation and logistic companies, financial institutions, and global trade vendors to assess existing and emerging trade data and document solutions. As part of that exercise, we discussed, with each segment, their views on international supply chain finance.

There are four transformative forces driving corporate global supply chains:

* Globalization

* Outsourcing

* Security and regulatory mandates, and

* Technology

Our discussions with corporation after corporation indicated that many have drastically changed their global supply chain models in a relatively short time. The degree of international sourcing or third-party manufacturing in most industries is forcing the redesign of processes, partner relationships, systems, etc. to improve cycle time, delivered costs, order fill rates, and on time performance. In virtually every industry, companies operate their supply chains on a global basis to compete.

By using arm's length contracts to source product, engineer, manufacture components, or sub-assemble products, companies have now put themselves in a position to be much more concerned about managing inventory and working capital.

The Forces at Work

We see many driving forces behind the opportunities in international supply chain finance, but will focus on three dominant ones:

Force #1: Companies are rapidly increasing their planned direct imports and global procurements over the next five years.

This has major balance sheet implications, as many companies are accruing in-transit inventory at some point overseas. In the past, buying domestic enabled companies to smooth out demand (their domestic suppliers held extra inventory at a cost, in order to mask the difficulties of forecasting and bad behavior on both sides). Now companies must incur additional lead times, transportation transit times, and associated bottlenecks. This can add forty-five days or more to the order. Additionally, companies are using letters of credit (LC) less and less to finance these imports.

Force #2: The number of consumer brand manufacturers using third parties to manufacture outside the US has exploded.

The automotive and high tech sectors have been most progressive in sharing information (designs, forecasts, etc.) with contract manufacturers, and other industries are following suit, given the aforementioned transformative trends. In some cases, brand companies no longer pay tier one and two suppliers directly. Instead, the consolidating manager or third party logistics (3PL) providers manage and pay these suppliers, adding layers and additional time in the supply chain.

Force #3: Internet-based technologies enable the real-time exchange of information about product data between trading partners.

Determining how much banks would lend against your receivables was once a manual effort; now technology has changed the landscape. Banks used to look at boxes of aging reports to prepare their borrowing-based reports, and then credit analysts would take these reports and eliminate ineligibles to come up with the lending amount. Today the process can be automated, so the borrower can capture all key receivable and payment information to create all these reports on the fly.

In addition to these main forces, various others are at work, and they are demanding a new way for banks and logistic providers to work together.

Supply Chain Finance Trigger Points

In our research, we found the market is in the early stages of migrating to data triggered finance. Our study found six trigger points in international supply chain finance, defined as lending to a party based on a relationship to another party.

(click here for larger verison)

A brief discussion of each trigger follows.

The Six Triggers

Trigger #1: Purchase Order Issuance

While suppliers desire more access to offshore funds, traditionally pre-shipment finance has been seen as a pure supplier responsibility and in the domain of local Asian banks. There are some banks that are playing in this space using buyer master purchase orders for working capital facilities for key suppliers.

Trigger #2: Work in Progress Payments

We found a small number of large (usually regional or global) banks with buyer support programs and master purchase order contracts with medium to large tier one and two suppliers who have performed well and contract over many years. These suppliers are critical to the buyer in product and design and are therefore dedicated and usually a part of a long-term relationship. For example, Ford will identify suppliers and provide performance history to the bank to assist in provision of pre-shipment facilities.

Trigger #3: Vendor Managed Inventory

Many high tech manufacturers in the made-to-order business are using vendor managed inventory programs with overseas suppliers to provide a more cost-effective and efficient flow to inventory management. Lead logistic providers and major third-party logistics providers are behind these programs, and as a result, there will be a growing interest in trigger finance and payment when inventory is pulled from a warehouse.

Trigger #4: Inventory In-transit Financing

There are a select few vendors that are going beyond the GT Nexus, Inttra, and Tradebeam supply chain visibility models to enable international in-transit inventory to be funded on a non-recourse basis to emerging market suppliers.

Trigger 5: Proof of Delivery via Forwarder Cargo Receipt and Other Documents

In our survey group, we did not find any banks involved in receiving electronic forwarder cargo receipt (FCR) or inspection certificates to trigger finance. We believe that to date, traditional collection products emulate having FCRs and other documents, such as certificate of origin (CofO), inspection certificates, etc. But as more cargo is exported with electronic messages such as FCRs and advanced shipment notices, then there will be more opportunities to develop liquidity off these messages. This trigger remains to be explored and developed.

Trigger #6: Buyer Approved Invoices

There is both great interest and a high degree of market confusion about the buyer-supported, supplier early payment model. These programs are not without single buyer concentration, accounting, and loss of flexibility risk to the buyers. These challenges must be overcome before a more rapid acceptance of the program.

Entering a Transition Period

We are entering a period where banks and finance houses have major opportunities on the "supplier side". We see that most solutions are developing from the buy side as a point of lower risk.

Our survey on supply chain finance showed 63 percent of companies strongly agreed or agree with the following statement:

"We are interested in helping our overseas vendors with supply chain finance solutions and recognize their overhead costs come back to us in freight on board (FOB) prices, and I am willing to work with my banking group to find solutions here"

Thus there is strong market support for international supply chain finance solutions based on the aforementioned figure.

From our discussions, no bank, finance house, or logistics company is doing all six forms of trigger point international finance. The trigger points that generate the most cross-industry interest are buyer-supported vendor early payments that trigger the approved invoice, and pre-export financing that trigger an established purchase order.

Market Predictions

To date, most banks focus on major corporate buyers and help with finance for a few key international suppliers to mitigate supply chain costs, but as the market moves away from documentary-based trade, such as LC and documentary collections, opportunities exist to help a broader number of trading partners.

We believe

1. Banks need data triggers to be smarter about payment and finance, and that means figuring out how to work with global transportation and logistics players.

2. Banks will need to get smart about industry sectors and the global flow of suppliers, the tiered nature of specific supply chains, etc. The old "formula of wallet", where banks measure market share by calculating a percentage of their corporate client's account, does not make as much sense in this global supply chain world.

3. New credit and business policies will need to be put in place to deal with this new world. The opportunity for open accounts is now a supply chain finance structure. It cannot be ignored and traditional products will not suffice. The time to start making the transition is now.

SOURCE:
http://www.technologyevaluation.com/research/articles/new-data-triggers-for-international-supply-chain-finance-18048/

Best-of-breed Approach to Finance and Accounting

2010-08-24T07:50:00.003-07:00

CODA Group, a finance and systems specialist headquartered in the United Kingdom, offers financial solutions that help companies grapple with international business issues such as language, currency, and compliance. Designed to be an "upgrade friendly system", CODA applications offer open and standards-based reporting tools. CODA's alliance with Microsoft Corp. has allowed it to deliver a range of financial and management accounting systems, and it has made several strategic acquisitions to further strengthen its position as a compliance solution.

Part Three of the Composing Collaborative Financial Applications, CODA series.

Among its recent endeavors, CODA has recently announced new set of financial planning and budgeting products: CODA s-Planning ("s" standing for "standard") and CODA c-Planning ("c" standing for "collaborative"), as well as a range of improved analysis and reporting tools, which will be detailed shortly. Nevertheless, to date, these corporate performance management (CPM) capabilities have targeted mainly existing customers of the CODA transactional systems. These users have focused on financial analytics, budgeting, and planning, either through Microsoft Excel integration within CODA c-Planning and CODA s-Planning, or through a partnership with Cognos for enterprise-level planning and budgeting. CODA's consolidation capabilities have traditionally been limited to the basic ones inherent in Coda-Financials. While these are adequate for simpler enterprises, the vendor has thus far been unable to successfully compete with offerings from specialists such as Hyperion Solutions, Geac (formerly Comshare), Applix, Longview, Outlooksoft, or Cartesis. Yet, the importance of these functionalities has been witnessed by Cognos' acquisition of Adaytum in 2003 and Business Objects' recent acquisition of the specialist SRC. See Financial Reporting, Planning, and Budgeting as Necessary Pieces of EPM for information on the functionality.

Thus, this merger deal should benefit both parties for many reasons. While Simple Concepts should get access to CODA's well developed global distribution channel and benefit from its financial stability, CODA should fill the financial consolidation gaps in its solution. Immediate cross-selling opportunities into CODA's install base will expand further as CODA translates OCRA into more languages. Not to mention, there are opportunities coming from OCRA's prior integration with SAP, Oracle, and other leading enterprise resource planning (ERP) solutions. The acquisition also gives CODA a base for strengthening its direct sales operation and presence in Scandinavia.

The two recent acquisitions came at the heels of CODA's June 2005 launch of a suite of add-on applications that extends the range of planning and budgeting requirements: CODA s-Planning and CODA c-Planning . These could offer more benefits for CODA-Financials users. The suite includes Version 3 of the much talked about CODA-XL application. CODA-XL allows the fairly simple and secure output, manipulation, display, sharing, and input of CODA-Financials data within Microsoft Excel. s-Planning and c-Planning were seen to enable users to carry out a range of day-to-day tasks, such as producing and sharing statutory reports; processing expenses; or even developing and setting financial budgets using CODA-Financials alongside Excel and the other familiar Microsoft Office tools that most organizations probably already have in place. These new products were meant to make CODA-Financials the launch pad for a quicker and easier budget cycle. By combining the functionality and embedded control of CODA with the familiarity and convenience of Microsoft Excel, CODA s-Planning and CODA c-Planning should streamline the seeding, preparation, manipulation, and production of budgets, based on (or update) the user's CODA-Financials data. Moreover, CODA continues to develop its relationship with Cognos, offering the Cognos Enterprise Planning product where clients have wider enterprise requirements. The vendor also uses a mix of partnership and in-house development to address other CPM elements, such as activity-based costing (ABC), strategic planning and scenario analysis, shareholder value measurement, activity monitoring, information distribution, etc.

In addition to the "standard" budgeting and forecasting facilities provided by CODA s-Planning, users have the option to make their entire cycle more coordinated, efficient, and controlled by opting for the "collaborative" add-on of the CODA c-Planning product. This interfaces with the CODA-Control process management solution, adding a facility to publish budgets as CODA-Control web sites and tasks. This will keep all participants informed and aware of the input needed and when it is required. There are also audit trails and document history to support compliance reporting. CODA c-Planning aims to help organizations set financial budgets and collaboratively develop plans, which both reflect top-down business objectives and assess the need to account for bottom-up creativity and realities. For example, it will give budget managers visibility of process bottlenecks, including vacation and sick days of department managers, information on groups waiting for information from subsidiaries, and vice versa. Conversely, many other peer products focus purely on bringing together and reporting the figures in the system, and not on collaborative processes that are key to collecting and verifying the figures in the first place. The application's aggregation features often make the budgeting and planning process quicker, more dependable, and more predictable, giving financial professionals more time to analyze and consider their overall budget before making decisions crucial to the organization's mid-term plans.

Another analytic module worth mentioning is the CODA Collaborative Scorecard, which helps user organizations link corporate goals through group objectives and individual performance. Designed to be deployed to every desktop in the enterprise, the product supports multiple performance management methodologies. Generally speaking, scorecards assist organizations in monitoring their business performance beyond bottom-line results by tracking both financial and non-financial measures, and then reporting them in a graphical user interface (GUI). A key element is the way they cascade corporate goals through the organization, helping managers to set individual objectives, and then aggregate performance results back up through the company structure, so that management can review the contributions made by individuals and groups. This aligns corporate strategy with the activities of individuals within the organization.

CODA believes that scorecards should be a strategic pillar of any analytic framework, bonding personal accountability to the enterprise's overall performance management. Initial releases of CODA Collaborative Scorecard have complied with commonly used performance management methodologies, such as the European Foundation for Quality Management (EFQM) balanced scorecard, Six Sigma, etc. to provide a relatively functional and flexible method of managing and aligning enterprise, group, business unit, and personal objectives. However, one should note that, although scorecards should be the fundamental link between personal performance and the overall objectives of the enterprise, they are frequently the weak link in the CPM closed-loop cycle, either because they are too difficult to deploy widely in the organization, or because they have fixed, inflexible methodology (see Why Most Balanced Scorecards are Subverted).

Related to the above line of products is CODA Analytic Explorer, which is a business intelligence (BI) tool that allows CODA users to carry out multidimensional browsing across CODA-Mart and any other relational data source. It is a generic, on-line browsing tool with both two-dimensional and multidimensional browsing capabilities built in, and has a separately licensable cube builder that provides extra performance. As finance departments struggle to add value to their businesses, performance management enables them to deliver better decisions more efficiently. However, CPM is not about static plans that sit on the shelf and get dusted off at board meetings, but rather about continuously adjusting to the range of inputs that the business is constantly receiving. To that end, CODA Analytic Explorer provides the ability to investigate exceptions and trends quickly and easily, so that corrective actions can be taken, and forecasts and plans reviewed.

CODA-XL is now in its third release. It provides a two-way bridge between Excel, which is indisputably the most popular spreadsheet, and CODA's enterprise-level financial and CPM products. CODA-XL was launched in 2003 and brings the familiarity of the Excel interface to CODA-Financials. It should provide customers with several benefits, such as reduced training for end users of CODA-Financials during implementation. Other benefits typically include the elimination of transcription errors and file-handling overheads during the transfer of data between CODA-Financials and Excel. Thus, it may prevent the proverbial "islands of information," where local systems containing great value and insight are locked on individuals' desktops and personal computers and cannot be shared across the organization. However, unlike some similar products from competitors, CODA-XL goes beyond exploiting the familiarity of the user interface (UI) and makes use of the success that Excel enjoys as an informal business modeling and planning tool. It provides "What If?" scenario testing with the option of writing back from the spreadsheet to CODA-Financials. For example, the CODA Security Model is fully embedded within CODA-XL, thus ensuring consistent data security. This means that while add-ins to Excel deliver rich CODA functionality accessed directly from the Microsoft Office desktop, they must respect the same CODA security, validation, and business rules. For example, Excel formulas referencing live account balances are stored directly in CODA Database, with all necessary authorizations for users appearing down to the spreadsheet cell level. For more on the advantages and the inherent risks of Excel-based tools, see Vendors Harness Excel (and Office) to Win the Lower-end of Business Intelligence Market.

Within CODA e-Finance (a Web-based version of the product), all reports validated and cross-checked on-line to validate, to eliminate separate, unsecured reporting tables. "Lights out" scheduling and Web document publishing also eliminate manual intervention. In addition, the data manipulation capabilities of Excel mean that management accountants can build and model scenarios that can be tested against real data relatively quickly, which can be very useful for creditor and debtor management, customer profitability analysis, and ad hoc queries. Furthermore, US Security and Exchange Commission (SEC) submissions can be made through Microsoft Word documents with embedded "live" Excel documents that do not have cut and paste, export, and manipulation functions, which can introduce the potential for errors. Non-programmatic, wizard-driven automation of data entry with real time validation direct from Excel (transactions, allocations, masters, budgets, and forecasts) also eliminates open database connectivity (ODBC), direct structured query language (SQL) updates, relational database management systems (RDMBS) logons, etc., which are also points of risk.

Last but not least along collaboration lines, CODA Collaborative Close is yet another application built using Microsoft Office technologies, one that is designed to help organizations close their books more quickly, more dependably, and more predictably, giving financial professionals more time to analyze and consider data before making crucial decisions. The product was designed to recognize and support the neglected collaborative processes that underpin period close. Other products in this area focus merely on consolidating and reporting the finance figures, but not on collaborative processes that are key to collecting and verifying the figures in the first place. Unfortunately, verification is traditionally carried out manually, which can be time-consuming and makes the process hard to track and improve.

Period-end reporting has always been a challenge for all accounting departments, and this challenge grows when an organization is distributed. The cost of an extended period close in human resources is considerable, since each extra elapsed day can cost a finance department many days of labor. Period-end closing is a collaborative process of questions and answers, of confirming detailed information, and of individuals collaborating to arrive at the answer and generate a picture of numbers about the organization's current financial situation. Every organization in the world has to address this, and they all have different processes; often, financial processes across corporations vary due to merger and acquisition activity, which has absorbed different groups using different business models. This adds complexity to the task of gathering information to close the financial period, and makes it all but impossible to fully automate using conventional systems. Ironically, the aim is to ensure that accountants spend more time adding value to management and performance information, and less time "chasing" data.

The use of technology to render the process less painful, to enable people to collaborate, to progress tasks, and to automate the final postings may be of help in delivering a true, fast closing process to business. Another potential benefit is that CODA's Collaborative Close may uses only information technology (IT) infrastructure and technology that a customer likely already uses. CODA Collaborative Close uses the latest technologies and features from Microsoft Office 2003, Microsoft SharePoint Portal Server, and Microsoft Office Infopath. These, together with task modeling technology from CODA, allow CODA Close to manage approvals, exception reporting, stock reconciliations, aged debt processes, and a string of other potential bottlenecks in the period-end closing process. The application automatically generates a period-end web site through the Microsoft SharePoint Portal Server. Related links then automatically bring up InfoPath forms to gather information from different participants and to drive period-end processes, while the web site dynamically reflects data in the back-office finance system. Real time information sharing between CODA and Microsoft applications is driven through Office Research Panes in Microsoft Excel, Word, and Outlook.

It is a well-known fact that many accountants currently use Microsoft Office tools like Excel in their closing processbut in isolation. Conversely, CODA Collaborative Close integrates these tools with a wide variety of corporate finance systems to bring a unified approach to the problem, with the likely result of improved speed and control over information gathering, allowing more time for analysis and planning. The idea is to help user organizations meet the regulatory demands of the Sarbanes-Oxley Act (SOX), International Accounting Standard (IAS), Basel II, etc., and also to give finance managers more time to analyze their finance figures, and to think about and plan for the near future. CODA Collaborative Close has been designed to work with extensible markup language enabled (XML)-financial applications from vendors such as Microsoft Navision, Microsoft Great Plains, SAP, and Oracle (including PeopleSoft), as well as CODA's own CODA-Financials.

SOURCE:
http://www.technologyevaluation.com/research/articles/best-of-breed-approach-to-finance-and-accounting-18267/

Merging Global Trade Management with Global Finance

2010-08-24T07:50:00.002-07:00

On January 7, JPMorgan Chase Bank, N.A. (NYSE: JPM), a leading global financial services firm with assets of $1.1 trillion (USD) and operations in more than 50 countries announced an Agreement and Plan of Merger with Vastera (NASDAQ: VAST). What is significant about this merger, is that JPMorgan is a leader in investment banking and financial services and Vastera is the only publicly traded software company focused exclusively on global trade. Vastera's services includes global trade management (GTM) software, managed services, global trade content, education and high-end consulting services. Under the agreement, Vastera will be acquired by and combined with the Logistics and Trade Services businesses of JPMorgan Chase's Treasury Services unit.

With more than 50,000 clients and a presence in 36 countries, the Treasury Services business of JPMorgan Chase is the world's largest provider of treasury management services. Its full-services include innovative payment; collection; liquidity and investment management; trade finance; commercial card; and information solutions for corporations; financial services institutions; middle market companies; small businesses; governments; and municipalities worldwide. Under the planned merger agreement, Vastera shareholders will receive $3.00 for each of their outstanding shares of Vastera common stock. The total transaction value will be approximately $129 million (USD), about 50 percent premium over the annual revenue of Vastera.

Vastera's solutions automate the required trade management processes associated with the physical movement of goods internationally. The acquisition should further provide JPMorgan Chase clients with a "one-stop-shop" service that addresses the increasing challenges and risks associated with moving goods internationally. The JPMorgan Chase solution currently facilitates the seamless management of information and processes in support of the movement of physical goods movement and the financial settlements when the trade process is completed. Through this combination, JPMorgan Chase is believed to be the first global financial institution to offer a complete, integrated cash, trade, and logistics solution across the physical and financial supply chains in a way that maximizes benefits to its clients.

Vastera already had an extensive working relationship with JPMorgan Chase by providing it with GTM solutions. Now the two tout they will be able to build on that relationship as part of the same firm offering a broader GTM infrastructure to bring tangible benefits to their clients. Namely, this acquisition should give current JPMorgan Chase's clients the benefits of broader GTM solutions. In turn Vastera's clients will receive the benefits of JPMorgan Chase's comprehensive financial services platform and product set. Vastera will continue to independently market its software and services and manage complex export-import paperwork. However, much more growth opportunity is expected from bundling Vastera's software and services with JPMorgan Chase's offering, which will supposedly track trade goods and the payments needed at each step of the process.

The merger, which was subject to the approval of Vastera shareholders, and the approval of various banking and other, customary regulations, took place in April. The transaction was previously approved by Vastera's board of directors who recommended that shareholders vote in favor of the transaction at a subsequent shareholder meeting. Two major shareholders, Ford Motor Company and Technology Crossover Ventures, representing approximately 28 percent of the Vastera shares outstanding have reportedly committed to vote their shares in favor of the transaction pursuant to voting agreements entered into with JPMorgan Chase.

With approximately 650 professionals in 14 countries and with over 400 clients throughout the world, Vastera is the worldwide leader in providing solutions for GTM and serves an international client base, including companies such as Alcatel, Dell, Ford, General Electric (GE), Lucent, Fonterra, Goodyear, Nortel Networks, and Seagate. Clients use Vastera's solutions and services to manage information flows associated with the cross-border components of importing and exporting goods. As a result, they can navigate the complexities and inefficiencies inherent in global trading in a manner that allows them to capitalize on the large, highly fragmented, and rapidly growing opportunity that exist in the international market. These clients reportedly realize significant cost reductions when managing their global trade operations, while improving compliance with government regulations and service levels to end customers.

This is Part One of a three-part note. Part Two will cover Vastera.

Part Three will discuss the merger rationale.

Vastera Background

Dulles, Virginia-based (US) Vastera began life in 1991 as a software vendor assisting companies with the complex world of global trade with software to guide manufacturers through logistics planning and customs regulations. The applications kept up with duty rates, regulations, licensing requirements, and value added tax (VAT) rates, to focus mainly on country-specific trade regulations and compliance. Vastera's initial solutions consisted almost exclusively of software solutions and implementation services associated with the installation of the software products.

In July 2000, the company undertook a fundamental shift in its product and services offerings when it acquired Ford Motor Company's global customs import operations, including a number of Ford's employees. The acquisition has enabled Vastera to significantly broaden its solutions offerings allowing it to provide trade management BPO services to its clients in the form of its managed services provider (MSP) offering. By striking a sound ten year deal with Ford, Vastera has leveraged its global trade systems and deep content knowledge into an MSP model. In turn, Ford can focus on its core competencies of designing and building cars and trucks while gaining the collaborative advantages of Vastera's business-to-business (B2B) GTM offerings.

Thus, in recent years, as trade becomes even more complex with "smart ports" and twenty-four hour advanced notice requirements, manufacturers have increasingly been seeking outsourced global trade services. An astute software vendor should do this more efficiently than a manufacturer, since it is a non-core aspect of the manufacturer's operation. As a result of this arrangement with Ford, which currently owns 20 percent of Vastera and accounts for 30 percent of its revenues, Vastera became one of the first software firms to use its core content knowledge in customs and import/export documentation and in compliance application development to become a business service provider (BSP).

Both parties benefited. Ford remained staffed on-site with its former employees, with Vastera maintaining the systems and keeping content updated daily. Vastera gained a long-term customer and the chance to replicate its BSP model and extend its knowledge beyond Ford to other Vastera customers. Additionally, Ford has lent its stability to Vastera and allowed it to build a deep database of automotive and truck industry parts, HTS classifications and duties, and to gain country-specific knowledge where Ford has supplier relationships.

GTM Background

Most supply chain management (SCM), not to mention enterprise resource planning (ERP) vendors typically lack strong international trade logistics (ITL) and GTM capabilities. Specifically, while technology may be rendering the world smaller, the word has also become a lot more complicated. Many barriers to conducting international business over the Internet inevitably exist and most businesses are still not prepared for these challenges.

The Internet has enabled a networked world by providing a communication infrastructure and enterprise applications, and this has opened the door for international trade, but not many applications really offer multi-enterprise services and software to automate the complex, multimodal transportation and Internet-based logistics management needs of a global trading network. Simply put, most modern Web-based buy- and sell-side applications fall well-short of providing automated global trade management and a traditional international trade logistics.

As described in more detail in International Trade or ITL Adoption, ITL and GTM are execution systems specifically designed to automate the import/export business process. Their basic functional components are trade documentation generation and transmission, and regulatory compliance validation. They exchange complex information between multiple entities, including suppliers, carriers, freight forwarders, customs brokers, banking institutions, and other third party transportation and storage providers. A true ITL/GTM system is, in effect, an inter-enterprise resource management system, and requires a data model that takes into account the breadth and depth of information exchanged between the multiplicity of interrelated entities. Thus, ITL/GTM systems should support export and import border-crossing processes, documentation, compliance (which are incomprehensible to ordinary mortals), accounting, and financial reporting in a multicurrency, multilingual, and multi-units of measure (UOM) environment.

When people talk about the risks of globalization, many are usually referring to the threat of domestic jobs moving overseas. The global trade compliance aspect is rarely discussed, even though it poses a risk that affects almost every manufacturer that either imports or exports. Namely, getting these goods and parts shipped from one country to another is a daunting task and needs the support of a GTM software and service provider. This must be combined with global trade domain knowledge, proven processes, and international trade best practices in order to be successful.

Each of the nearly 200 countries in the world has individual governmental requirements for importing and exporting goods. One has to account for factors like tariffs and duties, country-to-country preferences and anti-dumping laws, and there is the danger of incurring hidden costs at every step. If that is not complex enough, the events of September 11, 2001 have increased the scrutiny countries place on global trade and can impact costs adversely. According to the Brookings Institute, the cost of slowing the delivery of imported goods by one day because of additional security checks could amount to $7 billion (USD) per year. Stringent new documentation and homeland security requirements are placing serious legal and financial consequences on importers and exporters violating these constantly changing trade regulations. Moreover, the burden is on the importer/exporter to know exactly what the regulations are and how to comply with them.

SOURCE:
http://www.technologyevaluation.com/research/articles/merging-global-trade-management-with-global-finance-17937/

Composing Collaborative Financial Applications

2010-08-24T07:50:00.001-07:00

Founded in 1979, and headquartered in the United Kingdom, CODA Group is a finance management systems specialist, and part of the publicly traded CODASciSys plc. group (AIM: CSY). After a series of changes which began in the late 1990s when it was first acquired and then divested by former Baan to Science Systems, and then in early 2000, CODA changed its name to CODASciSys. (See Baan Posts $236 Million Loss and Sells Off Coda for Nearly $40M Less Than It Paid). The group offers a broad suite of products and services designed to meet the needs of financial and accounting departments. Its offerings range from financial, accounting, and procurement systems linked to a complementary suite of applications that support finance, reporting, and analytic processes across the organization, through to planning, budgeting, consolidation, reporting, and analytics. It also encompasses process control and compliance management. Its traditional transactional systems are applications that optimize accounting, procurement, asset management, and e-commerce across (and beyond) the entire, often distributed, user enterprise.

Lately, the vendor has expanded into a range of integrated business intelligence (BI), planning, forecasting, and consolidation analytic tools to deliver a more complete, near real time picture of the user organization's finances, performance, and opportunities. Among these complementary applications, which will explained in more detail in this article series, is a range of new collaborative applications that will streamline and automate key business processes, such as regulatory compliance, financial period-end close, and corporate responsibility programs.

Currently CODA employs more than 550 people around the world and delivers global sales, service, and support through its own offices in 11 countries. It has a carefully selected network of partners in a further 17 countries to provide implementation services, training, and support for over 2,500 customers in over 100 countries. Of its total number of employees, about 170 are in research and development (R&D), 60 in support (with 15 based in the US), and 110 in consulting. Its worldwide customer base includes medium and large user organizations found across many industry sectors, such as insurance, shipping, transportation and logistics, retail, banking and finance, professional services, and the public sector. While retail is one of the stronger sectors for CODA in the UK, transportation and shipping and financial services companies are the frequent users in North America.

CODA Financials, Inc., located in Manchester, New Hampshire (US) is one part of the CODA Group. Present in the US and Canada since 1988, CODA Financials has a rich history of helping finance departments solve complex problems where issues of scale or high transactional volumes, reliability, and performance are of primary importance. While many may not have heard of CODA itself, many have heard of some of the global, blue chip organizations that are using CODA products and services to support their business. CODA has more than 250 customers in the US and Canada, including Booz-Allen & Hamilton, Maher Terminals, Texas Pacific Group, Lin TV, Pan-American Life Insurance, and Reno Depot, that have delegated their financial intelligence requirements to CODA. Globally, and across some industry sectors, clients include IKEA in retail, AMBAC Assurance Corporation in the financial services, Central Ohio Transit Authority (COTA) in transportation and logistics, and the Fashion Institute of Design and Merchandising in education.

CODA's Strengths

A key attribute of CODA's offerings is its "multi" features. It can handle multiple companies, multiple currencies, multiple languages, and multiple charts of accounts in a single product's instance or database. Thus, its single or "unified" ledger architecture, which processes and holds the user company's financial data in a single ledger and in real time, eliminates traditionally lengthy and tardy batch updates between sub-ledgers. Consequently, a near real time financial position is always maintained, and the entire general ledger (GL) should always be balanced. Additionally, the Multiple Dimensional "Flexchart" capability supports up to eight variable length account code segments, which enable revenue and expense tracking at a highly detailed level. The Hierarchies and Account Groups features add virtually unlimited account "roll-ups" to meet inquiry, reporting, and drilldown needs.

Additionally, the complementary CODA analysis and collaborative solutions have been designed to integrate seamlessly both with CODA applications and other leading operational systems to capitalize on customers' existing information technology (IT) investments. Increasingly, CODA solutions are also being used to address the complex requirements of companies that need to intelligently share information with business partners, customers, and suppliers. Furthermore, "upgrade friendly" interfaces underline the vendor's technical vision for integration. For instance, CODA's application programming interfaces (API) "de-couple" the source and feeder applications, thereby enabling system upgrades without having to reengineer interfaces. Application-driven form and report customizations are preserved during upgrades.

Last but not least, the open and standards-based product architecture supports multiple platforms, third party reporting tools, secure Microsoft Office integration, and extensible markup language (XML) and Web services integration. Earlier in 2005, Microsoft Corp. and CODA announced a multiyear alliance intended to enable CODA to deliver a range of financial accounting, management, analysis, and control solutions that take advantage of the Microsoft platform. In addition to CODA's existing line of financial management products for the Microsoft platform, versions of the company's next generation of analysis and process control solutions—including CODA-Analytics and CODA-Intelligence for corporate performance management (CPM), and CODA-Control for compliant process management—will be built using Microsoft technology. Among these are the Microsoft .NET Framework, Structured Query Language (SQL) Server 2005 Integration Services and Analysis Services, Microsoft Office System, Windows Server 2003, and SharePoint Portal products and technologies. CODA maintains that the alliance should help it deliver solutions that will allow enterprises to analyze, control, and exploit changing business dynamics and realize greater value from their financial systems investments. By building on the Microsoft platform, CODA pledges to deliver greater customer value with solutions that are even easier to use, deploy, and maintain, and will help reduce ownership and integration costs.

The alliance between CODA and Microsoft builds on the late 2004 announcement that highlighted CODA's support for the new Microsoft Development Center in Denmark. CODA was the first Microsoft independent software vendor (ISV) partner to take advantage of the center to design, develop, and improve solutions that use the latest advancements to the Microsoft platform. The resulting system architecture designs now include a number of new technologies that aim to helping performance and customer usability, as well as to accelerate CODA's time-to-market with its new application architecture. The new technologies include

* Information Bridge Framework (IBF). Allows data from line of business (LOB) systems (such as CODAFinancials) to be "brought to life" inside the Microsoft Office Suite and related systems that use MS Office technology (such as CODA Collaborative Control and CODA XL)

* Microsoft BizTalk Server 2004. Microsoft engineers reportedly helped the CODA team understand the tight integration of BizTalk into CODA applications, facilitating complex hub-and-spoke back-end business integrations.

There is also an apparent commitment to Microsoft technologies; for example, analytics solutions like Analytic Explorer and CODA Intelligence will exploit SQL Server 2005 integration services, analysis services, and reporting services, while process automation and modeling solutions like CODA-Control will exploit latest Microsoft Office technologies. However, other CODA transactional solutions for financial management support many other platforms and configurations, including OpenVMS (Virtual Memory System), IBM iSeries (AS/400), UNIX, open source, client/server, Web technologies, and Web services (without imposing the choice between client/server and Web-based configurations on the customer). On the application server side, with the choice of the Microsoft SQL Server, Oracle, IBM DB2/400, or Sybase database platforms and the choice of Windows Server, UNIX (HP UX, Sun Solaris, and IBM AIX versions), and IBM iSeries operating systems (OS), application services provide and enforce business rules, security, and validation. The application server includes a single point of maintenance for users, roles, business rules, account validation, reporting roll-up structures, master file details, document posting rules, inquiry templates, pay, matching, etc. The system features a scalable financial engine that can accommodate between tens and thousands of concurrent connections with a farm enabled Web server.

On the other hand, by leveraging extensible markup language (XML) and transmission control protocol/Internet protocol (TCP/IP), Web servers (which can be either the open source Apache on UNIX/IBM iSeries/Linux or Microsoft Internet Information Server [IIS] on Windows) enable a scalable delivery of CODA functionality to a Web browser and to Web service-enabled user interfaces (UI), and also serve as gateways for integration. They enable location independent, tailored, intuitive user operation. Form modifications are stored as separate XML documents, and thus become "upgrade friendly" as customizations are preserved during future upgrades. In addition, the use of hypertext markup language (HTML) over HyperText Transfer Protocol (HTTP)/ Secure HTTP (S-HTTP) enables multi-window, browser-based access to complete CODA functionality, as well as centralized configuration, rollout of the user's desktop environment, and a zero-client footprint installed across a secure intranet connection. Moreover, CODA-Portal provides a common platform to view both live CODA data and non-CODA data published as Web documents.

Finally, programmatic access to CODA application services are available through XML, Web services, Java, Microsoft .NET, or traditional batch loads. Whichever technology is applied, it must respect the same CODA security, validation, and business rules. The approach, which is both Microsoft .NET and Java 2 Enteprise Edition (J2EE) compatible (see Understand J2EE and .NET Environments Before You Choose), aims at secure integration across the firewall, as well as platform and device independent integration. Furthermore, integration routines are independent of the CODA server version, whereas there is a traditional batch loading of historical/legacy system data.

Despite the technology's nascent nature and the challenges that relate to this, Web services have increasingly been offering the following high level benefits to businesses that subscribe to CODA and Microsoft:

* Application to application (A2A) communication across the firewall. Provides a secure communication method across a standard S-HTTP Web connection. Nowadays, enterprise applications can communicate across geographically diverse locations and networks without the need for highly expensive dedicated links.

* Common integration approach across platforms, vendors and devices. Since Web services have been adopted and supported by a wide variety of technology providers including Microsoft, Oracle, IBM, Sun, and open source vendors (see Liberty Alliance versus WS-I; J2EE versus. .NET; Overwhelmed. YET?). As a result, businesses can be confident that a common integration approach can be employed to provide higher levels of investment protection and reuse resources and skills, regardless of the disparate IT policies used in-house and by their business partners.

* Rapid application development. Modern application development tools are now engineered to accept or "consume" Web services, and greatly reduce the amount of software coding required to develop functionally rich business applications. This typically translates into significantly lower costs when developing, testing, and supporting applications that are built in this way. It can also enable more nimble and flexible platforms for organizations to respond to changing business needs and market conditions.

* Reduced costs of software deployment and integration. Web services provide a framework to integrate existing applications on existing platforms and use existing World Wide Web (WWW) network connectivity. De-coupling applications means that discrete components can be upgraded and modified, and that major code changes will not impact other enterprise applications.

For these reasons, CODA's product architecture may very well embody flexibility in terms of both the platform, such as allowing multiple choices for databases, application servers, Web servers, and interfaces; and the deployment mode, where users can mix and match Web browsers, rich-client Office desktops, and other customized client-side applications. The system is also customizable and yet supportable, owing to the data-driven screen presentation and layout. The screen and UI modifications are stored separately from the CODA supplied forms, while cascading style sheets promote the adoption of special, "homemade" styles. In other words, UIs are de-coupled from the current CODA version. Lower maintenance costs are not atypical either, given that the unified GL requires no batch updates, due to the single point of maintenance for security, rules, reporting structures, and so on. Finally, being standards-based (which is not necessarily exclusive to CODA) should bode well for protecting return on investment (ROI), owing to commonly available industry standard development skills.

SOURCE:
http://www.technologyevaluation.com/research/articles/composing-collaborative-financial-applications-18263/

Merging Global Trade Management with Global Finance

2010-08-24T07:50:00.000-07:00

Best-of-breed Approach to Finance and Accounting

2010-08-24T07:49:00.000-07:00

CODA Group, a finance and systems specialist headquartered in the United Kingdom, offers financial solutions that help companies grapple with international business issues such as language, currency, and compliance. Designed to be an "upgrade friendly system", CODA applications offer open and standards-based reporting tools. CODA's alliance with Microsoft Corp. has allowed it to deliver a range of financial and management accounting systems, and it has made several strategic acquisitions to further strengthen its position as a compliance solution.

Part Three of the Composing Collaborative Financial Applications, CODA series.

Among its recent endeavors, CODA has recently announced new set of financial planning and budgeting products: CODA s-Planning ("s" standing for "standard") and CODA c-Planning ("c" standing for "collaborative"), as well as a range of improved analysis and reporting tools, which will be detailed shortly. Nevertheless, to date, these corporate performance management (CPM) capabilities have targeted mainly existing customers of the CODA transactional systems. These users have focused on financial analytics, budgeting, and planning, either through Microsoft Excel integration within CODA c-Planning and CODA s-Planning, or through a partnership with Cognos for enterprise-level planning and budgeting. CODA's consolidation capabilities have traditionally been limited to the basic ones inherent in Coda-Financials. While these are adequate for simpler enterprises, the vendor has thus far been unable to successfully compete with offerings from specialists such as Hyperion Solutions, Geac (formerly Comshare), Applix, Longview, Outlooksoft, or Cartesis. Yet, the importance of these functionalities has been witnessed by Cognos' acquisition of Adaytum in 2003 and Business Objects' recent acquisition of the specialist SRC. See Financial Reporting, Planning, and Budgeting as Necessary Pieces of EPM for information on the functionality.

Thus, this merger deal should benefit both parties for many reasons. While Simple Concepts should get access to CODA's well developed global distribution channel and benefit from its financial stability, CODA should fill the financial consolidation gaps in its solution. Immediate cross-selling opportunities into CODA's install base will expand further as CODA translates OCRA into more languages. Not to mention, there are opportunities coming from OCRA's prior integration with SAP, Oracle, and other leading enterprise resource planning (ERP) solutions. The acquisition also gives CODA a base for strengthening its direct sales operation and presence in Scandinavia.

The two recent acquisitions came at the heels of CODA's June 2005 launch of a suite of add-on applications that extends the range of planning and budgeting requirements: CODA s-Planning and CODA c-Planning . These could offer more benefits for CODA-Financials users. The suite includes Version 3 of the much talked about CODA-XL application. CODA-XL allows the fairly simple and secure output, manipulation, display, sharing, and input of CODA-Financials data within Microsoft Excel. s-Planning and c-Planning were seen to enable users to carry out a range of day-to-day tasks, such as producing and sharing statutory reports; processing expenses; or even developing and setting financial budgets using CODA-Financials alongside Excel and the other familiar Microsoft Office tools that most organizations probably already have in place. These new products were meant to make CODA-Financials the launch pad for a quicker and easier budget cycle. By combining the functionality and embedded control of CODA with the familiarity and convenience of Microsoft Excel, CODA s-Planning and CODA c-Planning should streamline the seeding, preparation, manipulation, and production of budgets, based on (or update) the user's CODA-Financials data. Moreover, CODA continues to develop its relationship with Cognos, offering the Cognos Enterprise Planning product where clients have wider enterprise requirements. The vendor also uses a mix of partnership and in-house development to address other CPM elements, such as activity-based costing (ABC), strategic planning and scenario analysis, shareholder value measurement, activity monitoring, information distribution, etc.

In addition to the "standard" budgeting and forecasting facilities provided by CODA s-Planning, users have the option to make their entire cycle more coordinated, efficient, and controlled by opting for the "collaborative" add-on of the CODA c-Planning product. This interfaces with the CODA-Control process management solution, adding a facility to publish budgets as CODA-Control web sites and tasks. This will keep all participants informed and aware of the input needed and when it is required. There are also audit trails and document history to support compliance reporting. CODA c-Planning aims to help organizations set financial budgets and collaboratively develop plans, which both reflect top-down business objectives and assess the need to account for bottom-up creativity and realities. For example, it will give budget managers visibility of process bottlenecks, including vacation and sick days of department managers, information on groups waiting for information from subsidiaries, and vice versa. Conversely, many other peer products focus purely on bringing together and reporting the figures in the system, and not on collaborative processes that are key to collecting and verifying the figures in the first place. The application's aggregation features often make the budgeting and planning process quicker, more dependable, and more predictable, giving financial professionals more time to analyze and consider their overall budget before making decisions crucial to the organization's mid-term plans.

Another analytic module worth mentioning is the CODA Collaborative Scorecard, which helps user organizations link corporate goals through group objectives and individual performance. Designed to be deployed to every desktop in the enterprise, the product supports multiple performance management methodologies. Generally speaking, scorecards assist organizations in monitoring their business performance beyond bottom-line results by tracking both financial and non-financial measures, and then reporting them in a graphical user interface (GUI). A key element is the way they cascade corporate goals through the organization, helping managers to set individual objectives, and then aggregate performance results back up through the company structure, so that management can review the contributions made by individuals and groups. This aligns corporate strategy with the activities of individuals within the organization.

CODA believes that scorecards should be a strategic pillar of any analytic framework, bonding personal accountability to the enterprise's overall performance management. Initial releases of CODA Collaborative Scorecard have complied with commonly used performance management methodologies, such as the European Foundation for Quality Management (EFQM) balanced scorecard, Six Sigma, etc. to provide a relatively functional and flexible method of managing and aligning enterprise, group, business unit, and personal objectives. However, one should note that, although scorecards should be the fundamental link between personal performance and the overall objectives of the enterprise, they are frequently the weak link in the CPM closed-loop cycle, either because they are too difficult to deploy widely in the organization, or because they have fixed, inflexible methodology (see Why Most Balanced Scorecards are Subverted).

Related to the above line of products is CODA Analytic Explorer, which is a business intelligence (BI) tool that allows CODA users to carry out multidimensional browsing across CODA-Mart and any other relational data source. It is a generic, on-line browsing tool with both two-dimensional and multidimensional browsing capabilities built in, and has a separately licensable cube builder that provides extra performance. As finance departments struggle to add value to their businesses, performance management enables them to deliver better decisions more efficiently. However, CPM is not about static plans that sit on the shelf and get dusted off at board meetings, but rather about continuously adjusting to the range of inputs that the business is constantly receiving. To that end, CODA Analytic Explorer provides the ability to investigate exceptions and trends quickly and easily, so that corrective actions can be taken, and forecasts and plans reviewed.

CODA-XL is now in its third release. It provides a two-way bridge between Excel, which is indisputably the most popular spreadsheet, and CODA's enterprise-level financial and CPM products. CODA-XL was launched in 2003 and brings the familiarity of the Excel interface to CODA-Financials. It should provide customers with several benefits, such as reduced training for end users of CODA-Financials during implementation. Other benefits typically include the elimination of transcription errors and file-handling overheads during the transfer of data between CODA-Financials and Excel. Thus, it may prevent the proverbial "islands of information," where local systems containing great value and insight are locked on individuals' desktops and personal computers and cannot be shared across the organization. However, unlike some similar products from competitors, CODA-XL goes beyond exploiting the familiarity of the user interface (UI) and makes use of the success that Excel enjoys as an informal business modeling and planning tool. It provides "What If?" scenario testing with the option of writing back from the spreadsheet to CODA-Financials. For example, the CODA Security Model is fully embedded within CODA-XL, thus ensuring consistent data security. This means that while add-ins to Excel deliver rich CODA functionality accessed directly from the Microsoft Office desktop, they must respect the same CODA security, validation, and business rules. For example, Excel formulas referencing live account balances are stored directly in CODA Database, with all necessary authorizations for users appearing down to the spreadsheet cell level. For more on the advantages and the inherent risks of Excel-based tools, see Vendors Harness Excel (and Office) to Win the Lower-end of Business Intelligence Market.

Within CODA e-Finance (a Web-based version of the product), all reports validated and cross-checked on-line to validate, to eliminate separate, unsecured reporting tables. "Lights out" scheduling and Web document publishing also eliminate manual intervention. In addition, the data manipulation capabilities of Excel mean that management accountants can build and model scenarios that can be tested against real data relatively quickly, which can be very useful for creditor and debtor management, customer profitability analysis, and ad hoc queries. Furthermore, US Security and Exchange Commission (SEC) submissions can be made through Microsoft Word documents with embedded "live" Excel documents that do not have cut and paste, export, and manipulation functions, which can introduce the potential for errors. Non-programmatic, wizard-driven automation of data entry with real time validation direct from Excel (transactions, allocations, masters, budgets, and forecasts) also eliminates open database connectivity (ODBC), direct structured query language (SQL) updates, relational database management systems (RDMBS) logons, etc., which are also points of risk.

SOURCE:
http://www.technologyevaluation.com/research/articles/best-of-breed-approach-to-finance-and-accounting-18267/

Small Business Credit Scoring Can Help You Finance Your Project

2010-06-13T00:41:00.001-07:00

More and more banks and financial institutions are using credit scoring models to analyze the risks associated with lending to small businesses. This has interesting consequences on the availability of credit for small businesses and business start up projects that usually lack the funds and the financing needed to successfully develop and take too long to expand whereas with the proper financing such processes could take only a year or two at most.

A proper financing system for small businesses could generate even more employment than what they already provide (they account for almost half of the private job positions in US). Therefore it is both interesting and encouraging that the use of a specific credit calculation system for businesses contributes to a healthier economy.

The Uses of Small Business Credit Scoring

The credit rating that evaluates businesses is used for considering application for many different business financial solutions. This includes: Business Loans and Lines of Credit, Equipment Leasing for businesses, Invoice Factoring (Cash Flow Aid), Business Sales and Acquisitions, and many other financial solutions for businesses.

Before the business credit assessment system, a long credit and financial verification process was needed every time that a financial product had to be approved. Though the processes remain long, they are improving and the speed slowly resembles the swiftness with which banks and financial institutions provide unsecured financing for personal purposes.

How Is Small Business Credit Scoring Cooked?

The scoring system just like consumer credit assessment system is based mainly on credit history. However there are some differences that need also be considered. For instance, the actual credit score and history of the owner or owners of the business are part of the small business credit score. This is due to the fact that small companies are too dependant of the owners, especially when the business needs capital contributions.

Therefore, when it comes to small companies credit scoring the first information collected is data on the owners provided by consumer credit companies: outstanding debt, credit lines used and unused, delinquencies, etc. Secondly, there is data on the company that is obtained by the financial institution starting on the information you provide during the loan or line of credit application and information on the company can sometimes also be provided by commercial credit bureaus.

Of course, that's not the end of it, in order to obtain the scoring system all the variables included in the data obtained are processed through an algorithm or formula that includes the variables. No more than fifteen variables and no less than seven are included in these formulas that help banks and financial institutions standardize the decision making process of commercial loan and credit line approval.

Small Business Credit calculation has gone a long way improving the access to credit for small companies and the results are very promising. The first third party credit scoring system was provided in 1995, seven years later almost all financial institutions providing commercial loans and other financial products make use of third party's or proprietary assessment systems and fortunately the availability of funds for small firms has increased amazingly.

3 Steps to a Simple, Automated Personal Finance Setup

2010-06-13T00:40:00.000-07:00

Personal finance can be scary and intimidating. We all know we should be saving for retirement and large purchases, but don't like to talk or even think about it. This article shows you the 3 steps needed to a simple, solid personal finance system.

The Elements of a Solid Personal Finance System
Everyone needs at least 3 accounts for a secure financial set-up. First, a high-yield checking account for everyday purchases. Second, a high-yield savings account for your emergency fund and large purchases. Third, a retirement account, at least a 401(k) (or equivalent), with preferably an IRA in addition. Let's look at each element in detail.

1) High-Yield Checking Account
The foundation of your personal finances should be a checking account that earns interest. If your current bank charges fees for your account, dump it! The bank should be paying you to use their services.

Interest rates are pretty low right now, but check with your local credit union, they usually offer higher interest rates. By finding a high-yield or rewards checking account, your bank will pay you simply for keeping money in your account!

2) High-Yield Savings Account
Are you one of those conspiracy theorists that keeps their savings under your mattress? Get over it! You're losing money by keeping it out of a bank. Your bank should be paying you to keep money in a savings account.

Once again, check with your local credit union first, but most of the higher-interest savings accounts are now found online. ING, Everbank, and Ally are good options to look into. Set up automatic monthly deposits from your checking account into your savings until you have a 3-6 month emergency fund.

3) Retirement Account
If you aren't saving for retirement, plan on flipping burgers at McDonald's in your 80's. Everyone procrastinates saving for retirement and underestimates how much they'll need; bad combination! Talk to your employer about any retirement accounts they offer, such as a 401(k).

Then, set up your own traditional or Roth IRA with an online broker such as Vanguard or Fidelity. Save about 15% of your take home pay by first funding your 401(k) up to the employer match, then maxing out your IRA, then back to your 401(k) if there's any left.

By following these 3 easy steps, you will have a secure financial future.

Throw Away Your Financial Statements: Managing by Metrics

2010-03-27T23:02:00.001-07:00

Accounting systems have always had two primary goals: track information in detail and generate financial and operational reports. Until recently it has not been technologically possible to do anything else., except process information, create invoices, pay invoices, pay employees, track costs, and generate financial statements at the end of the month. That's fine, but the problem is that financial reports are sometimes generated forty-five or more days after a fiscal period begins and the information they present must, out of necessity, start at the highest, most general level. If the results are below or even above expectations, additional reports may need to be generated and studied in an attempt to determine what went wrong or right. In addition, the factors contributing to poor financial results may have started their downward trend at the beginning of the fiscal period and will therefore still be creating problems forty-five or more days later. I use the word "later" because the drill-down analysis will require several days if not weeks to complete, once the financial statements have been published.

This style of after-the-fact management may have been the only way to conduct business in the past, but technological and more specifically, reporting advances now make it possible to identify these problem areas as they develop.

Management by Metrics

Technology can currently support the concept of digital dashboards that can display information in a graphical format, with whatever level of detail may be required. Rather than starting with the highest level of information analysis and presentation (which are the standard financial statement) users can "flip" their priorities by identifying these critical KPIs, track these values on whatever time frame is best suited, isolate those KPIs that require attention, take steps to improve the KPIs, and then track the results to confirm that the steps taken have the desired effects.

The key to this proactive management style is that if the correct set of KPIs is identified, closely monitored, and effectively managed, the financial statements will take care of themselves. In essence management by metrics eliminates the need to publish financial statements and their underlying operational analysis reports. Managers no longer have to wait for periodic reports and then invest additional time trying to determine what went wrong (or right).

Naturally there is one significant proviso. While the concept of management by metrics will improve efficiency and effectiveness, it will do so only if the correct set of KPIs is identified, responsibility assigned to the correct set of managers, and managers react quickly to an ever-changing set of business imperatives.

To some extent it has always been possible to identify and publish KPIs. Most accounting systems support some form of report writer that allows users to extract the information required and publish that information in report format. In addition most products supports some form of export whereby information can be exported to a spreadsheet and KPI graphs can be created.

The advantage of a digital dashboard is that users do not have to rely on static reports that display a single value or even that value over x number of weeks or months. Presenting graphical information in a spreadsheet is almost the same as a digital dashboard but users do not have to export/import the information or flip from on spreadsheet to another to view multiple KPIs.

Putting Management by Metrics into Practice

Digital dashboards present constantly refreshed information to users and only the information of interest to that user is presented. Unfortunately most accounting software vendors have not yet taken the concept to its most effective potential so we cannot really cite specific systems as examples. I suspect or hope that vendors or resellers will develop their systems further or begin to really understand what Management by Metrics is all about.

Confronting Core Global Trade Problems: Order, Shipment, and Financial Settlement

2010-03-27T23:01:00.002-07:00

To reach its aspirations of creating an end-to-end global trade management (GTM) solution, TradeBeam, a leading provider of global trade solutions, has designed several so-called "solution blueprints" for solving specific global trade issues. Solutions range from providing import shipment visibility and trade compliance to eliminating financial discrepancies while managing letters of credit (LC). TradeBeam's Solution Blueprints begin with the key pain points of global trade and identify tools and strategies available to corporations seeking the advantages of optimized GTM. They include a non-prescriptive set of GTM applications that, individually, may add significant value to a user corporation while solving specific export management problems. The idea is to align strategies with finance and logistics organizations and to establish a beachhead with a relatively quick proof of concept that starts automating a defined set of processes and provides payback in several months. Given that the GTM market is still relatively new, TradeBeam has done an impressive job establishing itself as a pioneer.

Part Four of the TradeBeam Keeps on Rounding Out Its GTM Set series.

To broaden its offering, TradeBeam has embarked on a series of careful acquisitions. Its acquisition of SupplySolution has helped TradeBeam produce its collaborative inventory management (CIM) solution blueprint, which shares and communicate parts levels, shipment data, and forecast to anticipate and manage shortages and schedule changes through event driven alerts. In doing so, the solution solves business problems like poor inventory visibility through the networked supply chain, excessive buffer inventories, and costly impact of shortages and schedule changes. TradeBeam also has other acquisitions bundled with its in-house, organic development.. Export management, import management, trade finance, legalization, global trade content, insurance and claims management, letter of credit, and supply chain electronic management are other solution blueprints that TradeBeam has developed or is in the process of releasing. TradeBeam's Letter of Credit Solution Blueprint and SCEM Solution Blueprint are two that are particularly noteworthy because both their core functionality came from acquisitions and lead to significant advances in the field of global trade settlement solutions

TradeBeam Letter of Credit Solution Blueprint

TradeBeam aimed to reduce discrepancies and improve efficiencies in the financial supply chain through automated document preparation and collections, managed LC creation, and issuance expiry and draws. Thus it acquired LC Express in 2003, IFR, and eTime Capital in 2002, which has allowed TradeBeam to develop its impressive LC methodology. The transactions were stock and cash deals, where TradeBeam acquired the companies out of bankruptcy. eTime Capital had spent over $45 million (USD) developing solutions for its customers to helped them optimize their cash flow cycle by applying a groundbreaking technology and a differentiated capability linking financial settlement to the global trade logistics business processes through reconciliation, exception management and real-time reporting. These capabilities have meanwhile provided an excellent complement to TradeBeam's global trade business process and document management solution. Automating the overall letters of credit (LC) process to ensure accuracy and reduce the discrepancy rate is not simply a matter of automating LC issuance. The process if far more complicated because automation is a necessary precursor to integrating the entire supply chain. LC are one of the most important payment and financing vehicles for international trade, because they offer security and risk mitigation. However, in exchange for this security, there are additional costs and challenges. For example, up to 70 percent of all LC documents submitted to the bank for payment are rejected upon first presentation because the documentation has been issued incorrectly. This leads to payment delays, additional fees, and in some cases, non-payment of the drawing. Other LC-related challenges are complicated and lengthy application process, delays in conducting the transaction due to the long issuance process, the strict and often complex documentary requirements, associated secondary and penalty fees, and the high susceptibility to errors because multiple parties must produce documentation.

The result was TradeBeam's Letter of Credit Solution Blueprint, which manages existing LC use and relationships for over one hundred and fifty corporate clients. It synchronizes payment terms and critical supporting documents to enable both electronic LC creation and bank presentation. Part of the secret to TradeBeam's success lies in its document management and reconciliation capability that generates documents based on the LC terms, making use of business partner profiles, electronic data transmission, and templates to minimize data entry. Paper and electronic distribution of LC documentation can be made to banks, trading partners, or any service provider. All documents created and managed by TradeBeam are compliant with Uniform Customs and Practice for Documentary Credits (UCP500) and Electronic Uniform Customs and Practice (eUCP).

People or Resources: The Financial Sector in a Crossroads

2010-03-27T23:01:00.001-07:00

Ten years ago, in the mid-nineties, the financial sector faced four main challenges: market globalization, financial freedom, non-intermediation, and the importance of new technologies in business practices. Today, the first three challenges have been met, while the fourth is still being grappled with.

The fourth challenge, technology, is the main obstacle facing every financial entity—from banks, savings banks, and rural banks, to credit unions, insurance companies, and other financial intermediaries. How technology can be harnessed in the case of human resources is particularly challenging. Specifically, how can human resources be efficiently managed through knowledge-supporting technical tools.

Generally speaking, technology solutions must be used by organizations seeking to maximize human resources. Moreover management has also become more complex, or, at least larger due to the growing number of people that comprise an organization. The old concept of personnel cards, for example, has paved the road for "people management" tools. They have become necessary, particularly in an environment such as the financial sector, where resources have become global, and more complex management methods are needed to administer people.

Making functionality more professional

Also, compared to a decade ago, human resources function has become more professional and technical. Old personnel management methods evolved into human resource management and has now emerged as a modern, people management concept. This evolution is due to three decisive factors, present since the mid-nineties: the diminishing number of jobs in the market and the battle for talent; the idea that human resources are the most important asset in a company; and, the need to introduce technology with technical support. Together with the need to organize and manage knowledge about and for people, tools and solutions have been created with varying degrees of success. Most of the solutions use an extensive approach, which can be applied to every functional area in non-specialized organizations or companies. Additionally, only a few of the larger software companies have intensively focused on classical management functionalities.

Technology-based solutions that help companies to efficiently manage their resources are defined by sector. A specific activity sector, such as finances, demands solutions that have a good fit and are customizable. Solutions should be as flexible as the business is, changing with the sector, and adapting to the evolution of an activity's parameters. The financial sector also demands that implementators be responsive, innovative, and creative. In the case of human resource function, it has had to overcome an crucial obstacle: how to create joint value. This is essential for its consolidation as a core part of a business. Human resources has gone from being perceived as a secondary activity, as described by Michael Porter in Competitive Advantage, to becoming a primary activity that needs to improve to avoid being outsourced. Human resource function has reached high efficiency and effectiveness due to its professionalism. It has also been helped greatly by management tools.

Getting Strategic Planning and Financial Planning in the Same Bailiwick

2010-03-27T23:00:00.000-07:00

By partnering with operations on balanced scorecard initiatives, financial managers are helping their companies focus on critical business processes and gain consensus on the critical set of measures to help drive desired business results. In addition, with the explosion of Enterprise Resource Planning (ERP) and e-Commerce systems, financial executives are leading the charge in going from theory to practice by developing a cascading measurement architecture and providing the key linkages to other relevant information (e.g., products, projects, performance plans, and organizational data).

Certainly, the financial community has responded to the 'relevance' challenge that was laid down over a decade ago1. In fact, relevance has been contagious. Already companies are tying balanced scorecard initiatives to leadership and strategy; making sure operating managers are focusing on the right issues and priorities, and coordinating the actions of the company as a whole in implementing those strategies2.

While the role for today's financial managers is quickly moving upstream in the strategic planning domain, the challenge becomes even greater in light of the accelerating pace of change. This reality is quickly rendering obsolete the traditional approaches to corporate governance, such as 3-5 year strategic plans, annual planning and static budgets. In this new environment, financial managers can play a key role in driving the corporate agenda through their sponsorship and support of projects and investments that deliver critical business capabilities. To provide useful financial insight, sooner rather than later, financial managers need to think about business strategy as a process of continuous course corrections, evaluated more like a series of 'real options' than a single projected cash flow3. While the concepts behind real options are certainly familiar to most executives, the trick to identifying, valuing and making strategic choices lies in the complex and often overwhelming task of understanding the linkage between initiatives and changing corporate goals and managing the interaction among projects.

This article provides a breakthrough planning approach for rapidly realizing the business capabilities dictated by strategy and then through the financial lens of 'real options' shows how to time strategic choices

Financial Reporting, Planning, and Budgeting As Necessary Pieces of EPM

2010-03-27T22:55:00.000-07:00

Naturally, financial reporting and forecasting analytic solutions will have weaknesses. For one, they are still limited to only the data within general ledgers. Optimizing financial management processes is only a first step on the road to their better alignment with other organizational business processes. Hence, various enterprise business intelligence (BI) solutions enable organizations to track, understand, and manage enterprise-wide performance, and they leverage the information that is stored in an array of corporate databases/data-warehouses, legacy systems, enterprise resource planning (ERP), supply chain management (SCM) or customer relationship management (CRM) applications.

Once limited to the finance department of large companies, BI/analytics has expanded across departments and now even addresses the needs of customers, suppliers, and partners outside of the firm, given that if BI can help any department understand and serve customers better, that should in turn lead to better financial results. Companies have become adept at storing huge quantities of data on customers, products, and employees. However, this valuable data is often wasted, because it is analyzed in pockets, thus preventing valuable insight throughout the enterprise and beyond. To that end, nowadays, popular uses of BI include management dashboards and scorecards, collaborative applications, workflow, analytics, enterprise reporting, financial reporting, and both customer and partner extranets, to name some. These solutions enable companies to, for example, gain visibility into their business, acquire and retain profitable customers, reduce costs, detect patterns, optimize the supply chain, analyze project/product portfolio, increase productivity, and improve financial performance.

Going Further with EAS

2010-01-27T05:22:00.000-08:00

For various reasons, very few enterprise application vendors are focusing first and foremost on delivering EAS, which offers Google-like search capabilities strictly within their own suites of applications. Some vendors may have a hard time engineering this feature into their products because they own a large number of different applications, all with different architectures. Other vendors may find that offering EAS is not an attractive option for them given their business models, as they prefer to develop broad technology stacks beyond the scope of their applications; so developing a stand-alone search appliance is more appropriate for them.
EAS perhaps takes search effectiveness one step further than Google and other stand-alone search tools, since a generic Google-like search does not let you fully leverage context in the design of your search. With Google and other broad enterprise search tools, you get a lot of results, but perhaps very few are relevant. In the case of a Google search of the Web, for instance, a search by a keyword like "Ford" might yield information on President Gerald Ford, actor Harrison Ford, or Ford vehicles. It is difficult to tell the Google engine exactly what it is that you are looking for. Similarly, an enterprise search of your internal data can yield thousands of irrelevant documents on any customer, with little opportunity to narrow the search to find only purchase orders, only word processor documents of correspondence, only invoices, only change orders, etc.

By integrating search technology directly into an enterprise application, application designers can allow users to specify whether they are searching for a company, a person, a purchase order, or other types of information. This helps to filter out irrelevant search results and deliver even more efficiency than a typical Google-like search.

There is a place in organizations for stand-alone search products. If a company needs to index multiple sources of data, including company intranets, local documents, e-mails, databases, etc., a number of these bolt-on search appliances can do that.

Conversely, true EAS capabilities are integrated as a component within an application. The primary purpose of EAS is to make the information within that specific application suite easily searchable through a unified interface. Because EAS is integrated into the application it is designed to be used with, it offers a number of benefits for searching application data when compared to generic products like those offered by Oracle, Google, Thunderstone, Index Engines, Autonomy, Convera, FAST Search, Verity, and others. These advantages include

* Cost—Because the EAS tool is integrated into an application, it does not carry additional software licensing or hardware fees. Moreover, there is no work or cost involved in integrating the search tool with your systems. EAS functionality is part and parcel of a modern enterprise application, so no integration project is necessary.

* Security—Even if a bolt-on search tool has security features, these security features need to be integrated with each application and data source they are to be used with. A full-featured application search relies on the underlying security schema of an application, which means search results are only visible to people with the proper user permissions to view that data. For instance, general ledger data, closely guarded in both publicly and privately held companies, is automatically protected from unauthorized viewers.

* Context—An EAS tool can use contextual information, including data on what tasks that user has been performing in the applications, to deliver more targeted results. This is similar to how Google has added various tools to allow search results to become more specific, such as geographic filters so that local results can be moved up in the list of results when appropriate. But this concept can also be used to leverage business process context rather than geographic context, so that if a system user is involved in finance-related functions, results that conform to his or her organizational role can be accentuated.

* Intent—Because EAS has full knowledge of the application metadata (information about information), it is possible for the user to express intent of a search in simple, well-understood business terms such as "customer information," "order data," "product data," or other descriptors.

* Hybrid search—It should be possible to combine the EAS results and traditional database search results into a single query to deliver the best of both search methods at once.

Searching within Your Own Systems

2010-01-27T05:21:00.001-08:00

The ability to find things on the Web using powerful search tools like Google and AltaVista is a tremendous time-saver. Similar time-saving and efficiencies can also be achieved by expediting the search for information within your company's own systems—specifically, within an enterprise application.
An enterprise application is in some ways similar to the public Internet, as it connects computer data throughout your company, uniting islands of information into a single data universe. And like the Internet, the application features some type of navigation structure to help you surf between the different screens and functions. These tabs or hierarchy of screens are the equivalent of the bookmarks we used to have to navigate the Internet. To run a query on your enterprise data, you go to the correct form and run a query in the appropriate field or dialog. Just like in the early days of the Internet, to find information in your business application, you need to know where it is.

In searching for information about a particular company, you need to know whether the information you want is attached to records regarding individual companies, records on people who work for the company, or records of active projects having to do with the company. With enough knowledge of precisely how you have configured your enterprise application, you can find what you are looking for.

This search method is probably an acceptable way for frequent users of a system to search for purchase orders, or to search by supplier or customer information. But it does not work that well for the occasional user of a system, or even for a heavy user of the system who is searching an application in an area with which he or she is not intimately familiar. Because enterprise applications are so broad and cover so many different disciplines within a company, it is hard for any one person to have a thorough understanding of even a majority of an application's functionality.

That is why application vendors are coming to market with various search solutions for use within their products. There are two distinct approaches to delivering this critical search function.

In short, EAS is a tool that is tightly integrated with an enterprise application, and it delivers targeted search results from within the application's knowledge base. Enterprise search is a product marketed separately from the application, and searches data both inside and outside of the application.

Enterprise search is the approach taken by a number of technology vendors, including Google, which has launched its Google Search Appliance and Google Mini products. SAP and Oracle are each marketing their search tools as a separate product to locate data not only within their own applications, but elsewhere on a company's intranet and databases. Other vendors, including Thunderstone, Index Engines, Autonomy, Convera, FAST Search, and Verity, focus more exclusively on search tools rather than the enterprise applications they are to work with. All of these offerings can be considered examples of pure enterprise search. They are generic search appliances for use within an enterprise. The alternative strategy, EAS, involves a search function more tightly integrated with a specific application, and is a critical feature to look for in an enterprise application.

An Historic Crossroads

2010-01-27T05:18:00.000-08:00

Historical dates are divided into years BC, or before the birth of Jesus of Nazareth, and AD, or Anno Domini. It is not our intention to debate the mistakes that the monk Dionysius Exiguus made in arriving at the date of transition between eras, or whether the more neutral terms BCE and CE (for Before the Common Era and Common Era, respectively) are preferable. Instead, we will focus on the passing of two other historic landmarks and their implications for enterprise computing.

The first date we will focus on is the advent of the Internet, which changed computing forever.

When the US Department of Defense's Advanced Research Projects Agency Network (ARPANET) and open architecture networking first gave rise to the galactic network that we now refer to as the Internet, life online was very different than it is today. We can refer to this period as BG, or Before Google (although perhaps it would be more correct to refer to this period as BAV, or Before AltaVista). This new era started at the second date of importance here—the advent of full-text Internet search, which changed the Internet forever. In August of 1995, technicians at Digital Equipment Corporation's Western Research Lab completed the initial index of the entire Web, allowing full-text search of ten million Web pages. AltaVista, the first globally successful, text-based search engine was born—only later to be eclipsed by Google.

What is so earth-shattering about that moment? In the early days of the Web, bookmarks, portals, and Web indexes were very important in order to find what you were looking for online. The Internet had succeeded in connecting countless remote computer networks, but in order to find anything, paradoxically, you had to first know where it was. Many sites on the Internet prominently featured links pages, which were designed to be reference points thoughtfully provided by the sites' owners to make it easier for their visitors to find specific resources online. Earlier search tools required site owners to register their web sites, and then, only very narrow keywords would be searchable rather than the entire site contents. So using an early search engine, you might, at best, be able to find a site about sports history, but not specific information on how many home runs baseball great Hank Aaron accumulated during his career (775) or the number of goals Brazilian soccer great Ronaldo has scored in World Cup play. You could find sites containing information on industrial equipment, but probably would have trouble finding "for sale" listings for a used dewatering screen for your mining operation, or a rotary die cutter for your printing and converting company

Acquisitions Fuel Vendor Growth in the Enterprise Applications Field

2009-12-06T11:14:00.000-08:00

Both SSA Global and Infor continue to grow through the acquisition of companies that extend the scope of their offerings. New Vendor Acquisition Strategies in the Enterprise Applications Field and The Impact of the "Assembler Strategy" in the Enterprise Applications Field began an examination of these acquisitions. We continue by examining Infor's acquisition of Formation Systems and Geac.

This is Part Five of the six-part series The Enterprise Applications "Arms Race" To Be Number Three. Parts One to Four were published April 24 to April 27.

This is part of a comparative analysis of SSA Global and Infor, two contenders in the fierce ongoing competition to be number three (after SAP and Oracle) in the world of enterprise resource planning (ERP) vendors. See The Enterprise Applications "Arms Race" To Be Number Three for background information and a discussion of vendor similarities. Also see Contributing to the Rejuvenation of Legacy Systems in the Enterprise Resource Planning Field. The other leading contender is Lawson Software. For a detailed discussion of Lawson, see 'New' Lawson Software's Transatlantic Extended Enterprise Resource Planning Intentions.
Infor cites continued organic growth, license revenue from new customers, and install base cross-selling and up-selling as key growth drivers for the group. The company is also betting on expansion outside the North America and Germany strongholds, into the UK and other key markets such as the Asian Pacific region and China. A potentially expanded footprint in the realms of product lifecycle management (PLM) or enterprise asset management (EAM) should also contribute to the top line. To that end, in August 2005, Infor announced that it had acquired Formation Systems, a privately-held provider of PLM solutions exclusively for process manufacturing companies. This acquisition further strengthens Infor's broad product portfolio for process industries. Formation Systems has since joined the Infor Process Manufacturing Group, which is led by Hermann Stehlik (vice president [VP] and general manager [GM]), and which continues to operate in Southborough, Massachusetts (US).

As a leading provider of PLM solutions for the food and beverage, home and personal care, and specialty chemical industries, Formation Systems should significantly enhance Infor's capability to integrate, streamline, and manage the entire process of product development. For ten years, the company has provided PLM software solutions to high-profile process manufacturers, and has built a highly skilled and dedicated workforce having a deep knowledge of PLM best practices in the vertical markets they serve. Thus, the acquisition of Formation Systems supports Infor's vertical strategy, and should establish the combined company as a global leader in providing solutions with an integrated PLM system to selected process manufacturing industries.

For a more detailed discussion of process manufacturing ERP, see Preparing for Product Development in Process Manufacturing.

Many regulatory bodies have renewed their focus on product compliance, and the Formation Systems acquisition confirms the trend towards PLM functionality becoming an essential element of an enterprise application portfolio. It also confirms that industry-specific functionality is increasingly critical to buyers of enterprise applications. Naturally, regulatory requirements vary according to the industry, as do many other PLM requirements (for more information see PLM is an Industry Affair—Or Is It?).

While product design rules engines may eventually be retrofitted to apply across several vertical industries, the tricky makeup of recipes/formulae and security mandates will require a deep understanding of process manufacturing requirements. Consequently, defining and formulating recipe-based products requires industry-tailored solutions to adequately allow product development. The Optiva product suite from Formation Systems features strong formula management capabilities which might give Infor a differentiating value proposition when selling to prospective customers in process manufacturing, as well as the ability to up-sell and cross-sell to a larger installed customer base. Infor and Formation Systems customers may mutually benefit by gaining the opportunity to standardize on a single broad process solution for all their process ERP, supply chain planning (SCP), supply chain execution (SCE), corporate performance management (CPM), and PLM needs.

The centerpiece of the suite is Optiva Workbench, which accelerates product development by supporting design collaboration with suppliers on formulas and specifications, as well as by providing the visibility needed for fully using existing information to avoid unnecessarily "reinventing the wheel." Other modules in the Optiva product suite, such as Optimization (for constraint-based formulating), Requirements Management, and Specifications Management, are designed to capitalize on the data management features of Workbench (see Formation Systems Pioneers Product Design Collaboration For The Process Industries). Also widely deployed are integrated packaging management (from the primary pack to the pallet), integrated label content management, product performance, safety and efficiency testing, material safety data sheets (MSDS) and hazard label generation, nutritional and nonconformance analysis modeling integrating laboratory information management systems (LIMS) assay results, integrated stage gate, and portfolio management. Capabilities such as parametric searches, visual comparisons, material usage restrictions, best practices feedback, and role-based modeling are used from concept to launch.

In its entirety, the Optiva suite speeds up the product development lifecycle by easing collaboration, facilitating access to supply information, and managing product testing and the other tasks that precede a commercial release. Combining process PLM with process ERP can produce a unified sample management solution that allows product samples to be shipped in the same manner as commercialized products. Furthermore, combining process PLM with process-oriented supply chain solutions can provide unique recipe optimization capabilities that evaluate current inventory to develop least-cost or best-fit formulations, thereby accelerating the new product introduction (NPI) process and achieving globally compliant products with lower development costs and a shorter time to world markets. It is thus no small wonder that Coca-Cola Co., Akzo Nobel, Gillette Co., GE Plastics, Campbell Soups, and over forty other process manufacturing clients (several of them are also Infor customers) are on the vendor's roster of high-profile process manufacturing clients.

The downside, however, is that Optiva, despite deep and broad collaborative product data management (PDM) functionality, is not yet a full-fledged PLM suite, since it is missing important pieces like strategic sourcing, product configuration, portfolio management, shop floor integration, and regulatory compliance for multiple industries (both discrete and process). For more information on what constitutes a full-fledged PLM system, see Critical Components of an E-PLM System and The Many Faces of PLM.

In fairness, Optiva integrates sourcing and extends traditional strategic sourcing, to meet process industries' specific requirements and to drive significant material cost and cost avoidance savings. Strategic sourcing applications are nonetheless limited to total spend analysis, and lack pervasive content management. With Optiva, companies like RPM have a purchasing action component that not only analyzes total spend across more than twwenty companies having multiple ERP packages, but also more accurately projects cost, time, and risks involved in material and vendor rationalization. This automated business process thus helps refine the business case, since once a project is approved and resources are apportioned, executive management has insight into trade-off decisions and achieved cost savings.
This business process helps the diverse teams managing materials, formulas, packaging, and vendors to better rationalize their charges. By using the integrated design and compliance applications, more projects should be completed, and more savings should be delivered. Also, since all product development teams have insight into material, vendor, formula, and packaging status, redundant materials or rationalized materials are not re-introduced, and cost savings are sustained. Additionally, as part of new material introduction, the sourcing team should have visibility the instant a new experimental material is entered; alternate approved materials or vendors can then proactively be suggested.

Many companies have cross-functional teams which continually assess material value-add and regulatory risk. In an effort to minimize compliance risks, one customer reportedly turned off over 48 percent of its materials, and achieved significant cost savings. As companies buy, sell, close, or reconfigure plants, they need strategic sourcing suggestions. To that end, Optiva plays a critical role in requalifying, reformulating, and repackaging, in order to ensure regulatory, cost, and quality compliance. Companies are also finding that they are making sourcing decisions based on incomplete information, although the item and vendor item module in traditional ERP systems is well-suited for nascent regulatory requirements. A hypothetical scenario provides a good demonstration of the utility of this kind of module: Once an ERP item (a vitamin, for example) is entered and certified, alternate vendors may be sourced from, and entered as vendor-specific items, with differences in cost also entered. If a new allergen law (let's say) is enacted, it might suddenly be relevant that the first vendor uses peanut oil as a processing aid. But if one or more of the vendors uses vegetable oil as a processing aid instead, then a critical decision needs to be made.

Since sourcing is a numbers-oriented game, factors such as compliance risks and product quality need to be included. Several customers have integrated such sourcing metrics into product development, in order to ensure that products require less post-launch effort when developing alternate sources for single-sourced vendors, or when finding lower cost providers. These customers will focus R&D efforts on having fewer single-source materials, or will calculate the percentage of materials coming from preferred vendors. Integration of Optiva with ERP systems allows product development to leverage high volume (and often in-stock) materials. Rather than simply selecting an approved material, using these higher volume or in-stock materials means that managers can avoid generating new purchase orders, as well as the carrying costs of partial drums (or other bulk packages). If the material has shelf life issues, material write-off can be avoided too. Rather than needlessly duplicating existing strategic sourcing capabilities, Optiva has extended these capabilities to drive cost reduction and cost avoidance.

Optiva can also send recipes compliant with Instrumentation, Systems, and Automation Society (ISA) standard S88 to manufacturing execution systems (MES) used at multiple customer sites. Using integrated business process management (BPM) capability, the system can integrate with one or more ERP and MES systems, which should eliminate time and cost wastage, while optimizing cost performance and compliance. As these platforms are approved for multiple plants and markets, product platforms that are truly global can be relatively quickly adapted to company specificities, and companies can minimize time to global rollout.

With every new release, Optiva's portfolio management capabilities are enhanced. Most customers are using rule-based scoring and prioritization, risk rating, and readiness rankings, which are rolled up with each activity to provide near real-time visibility in Web-based dashboards. Being focused on process manufacturing, Optiva has developed a process-focused product configuration capability which is based on application platforms. Common uses include color matching, flavoring, or scenting of application platforms. Rather than maintaining a separate formula and packaging bill of material (BOM) for every possible combination, customers are building product platforms which are certified for permissible options (by plant, market, brand, use and user, and sometimes customers). This allows new requirements to be matched to the option, and also allows the most cost-effective and compliant intermediate material to be identified. A unique formula and package can be derived and validated for compliance.

Still, this laser-sharp focus is likely the reason why SSA Global was not more aggressively involved in the bidding for Formation Systems, although it would come as no surprise to learn that it was involved in preliminary (at least) merger discussions. Again, lately SSA Global has been considering only the acquisitions that would help in a "bigger picture" manner. In a way which is analogous to its CRM case, the vendor has a decent PDM solution stemming from Baan, but admits that the product's low brand recognition has limited it to only the existing install base (and even there it has to contend with best-of-breed PLM products). Conversely, as mentioned earlier, the vendor has become a feared competitor in the supply chain execution (SCE) space, given the successful assimilation of once well-known products such as EXE or CAPS (indications are that the license revenues from these products have quadrupled under SSA Global, compared to their status under their formerly independent and struggling vendors). Thus, if and when the time comes, SSA Global will most likely acquire a well-rounded and well-known PLM product (or a strategic sourcing and supply chain planning [SCP] product), although it recognizes that specialty process PLM vendors such as Selerant, Prodika, Sequencia, and IMS would be a good fit for its process-manufacturing-oriented products, which stem from both BPCS and the former Marcam's Protean and PRISM products (see The Name and Ownership Change Roulette Wheel for Marcam Stops at SSA Global). For the same reason, Infor will also likely remain in the hunt for more solutions, in order to round out its PLM, EAM, and product configurator capabilities.

The Optiva strategy is to develop tier one applications in modeling, vendor collaboration, compliance, and portfolio management, and also to increase its open integration capabilities. This will likely be used to integrate with applications from Infor or other vendors; as these tier one capabilities are developed, Infor pledges to develop best practices offerings that can be deployed by smaller process manufacturing customers.

The Impact of the 'Assembler Strategy' in the Enterprise Applications Field

2009-12-06T11:13:00.002-08:00

In evaluating recent acquisitions in the enterprise resource planning (ERP) field, it will be useful to describe Infor Process Group's vertically-focused "assembler strategy" (also see Stability and Functionality for Process and Discrete Manufacturers). It is interesting to note that the Infor of today originated with the Infor Process Group; its very first acquisition was the 2002 Process Group spin-off from the former SCT Corporation, which brought Adage ERP and Fygir SCP process manufacturing products into the fold (see iProcess.sct Enters Golden Gate Opportunity). It is ironic, however, that this very functional and prosperous "mother" product portfolio has been left largely unattended by Infor for some time, owing to a spate of other acquisitions, especially within the now much larger discrete manufacturing and wholesale distribution groups.

This is Part Four of the six-part series The Enterprise Applications "Arms Race" To Be Number Three.

But any "injustice" in this regard has seemingly been rectified. For one thing, in late 2004, Infor acquired IncoDev Software-Entwicklung GmbH, headquartered in Hamburg (Germany). Over the past twenty-five years, this company has provided ERP software to large and midsized European companies within the chemical, dyes and paints, life sciences, and food and beverage industries. Their software has deep a vertical focus, supporting most requirements of the lot- and recipe-oriented manufacturing industry, which, combined with its broad customer and partner base throughout Europe, was an important factor in strengthening Infor's position within process industries.

The combination of IncoDev's ERP capabilities with Infor's existing supply chain planning (SCP) offerings, international presence, and financial strength, provided additional benefits to its customers while increasing the vendor's competitive advantage. IncoDev's ERP solution, rebranded into Infor Blending, now supports many aspects of financial management, production planning, and inventory management for specific process industries, and is certified for the pharmaceutical industry. The solution also includes integrated quality management, a laboratory information management system (LIMS), and hazardous materials management. The product serves over 200 large and midsized customers, and has more than 10,000 users; this is a result of being marketed directly (in a big way) in Germany, and through a dedicated network of solution partners throughout western Europe.

Consequently, the Infor Process Group now boasts over 120 employees (with over 80 percent of employees in the research and development [R&D], support, and professional services departments) and over 400 customers (of which 150 are specialty chemical enterprises, 50 are pharmaceuticals, and 200 are food and beverage companies). The group has estimated annual revenues of about $36 million (USD), with license reevenue amounting to 27 percent (with an equitable split between the support and maintenance revenues). Europe contributes 53 percent of revenues, and North America contributes the remaining 47 percent.
This continuation of a series comparing SSA Global and Infor Process Group, two contenders in the fierce ongoing competition to be number three (after SAP and Oracle) in the world of ERP vendors, analyzes Infor's acquisition of Adage ERP and Fygir SCP from the former SCT Corporation, and of Datastream Systems. Later articles will discuss Infor's acquisition of Formation Systems and Geac.

See The Enterprise Applications "Arms Race" To Be Number Three for background information and a discussion of vendor similarities. For more information, see Contributing to the Rejuvenation of Legacy Systems in the Enterprise Resource Planning Field. Also see New Vendor Acquisition Strategies in the Enterprise Applications Field for a comparable analysis of SSA Global. The other leading contender is Lawson Software. For a detailed discussion of Lawson, see �New' Lawson Software's Transatlantic Extended Enterprise Resource Planning Intentions).

In combination, the two ERP products, Infor Adage and Infor Blending, feature support for the resolution of many process manufacturing "fatal flaws" (see The Fatal Flaws for Process Manufacturers, Fatal Flaws in ERP Software Create Opportunity for Niche Software in CPG Companies, and Process Manufacturing Software: A Primer). Some key differentiators worth mentioning include support for variable weight or "catch weight"; lot traceability to help food processors trace any portion of each batch or lot (for purposes of damage control, the US Department of Agriculture [USDA] requires food processors to be able to trace any portion or product of, for example, a processed chicken); quality management; variable weight-based costing and pricing throughout the supply chain; regulatory compliance; and a comprehensive supply chain management (SCM) solution for process industries.
The vendor does acknowledge some technological and functional shortcomings, especially with respect to the Adage product, which still lacks a proper graphical user interface (GUI). Also, Adage often needs to interface with strong financial management products (such as SAP or PeopleSoft solutions), and lacks US Food and Drug Administration (FDA) regulatory compliance for pharmaceutical companies. For that reason, a helpful target division of products would involve using Adage for larger companies in the food and beverage, and chemical sectors, and Blending for smaller companies in the pharmaceutical and consumer products sectors.

In the short term, which means by the end of 2006 (or even earlier), the products are slated for user interface (UI) enhancements (in terms of browser deployment and improved usability for Infor Adage 5.0), and for integration with Infor WMS (i.e., VISUAL WMS) and Infor Global Financials (for the Infor Blending 5.9 release only)—the latter stemming from Varial. The idea is to migrate the Adage 6.0 and Blending 6.0 releases in 2007 to the adopted Infor client (within Corestone) and to integrate them into Infor Global Financials. Also, both products are to be migrated to n-tier architecture, with complete encapsulation of business logic in a manner enabled by service-oriented architecture (SOA). All these short-term and midterm functional enhancements have been driven by user groups, regulatory compliance, and industry trends.

The long-term roadmap, for 2008 and later (and for both product releases 7.0 and later), is to eventually converge the products into an Infor Process ERP product (in a way that is somewhat similar to SSA Global's current forays), using Corestone architecture components, with core process industries applications such as process manufacturing, order management, and costing. By then, the product will also be integrated with Infor Global Financials, Infor WMS, Infor CRM (coming from SyteLine), and Infor SCM.

New Vendor Acquisition Strategies in the Enterprise Applications Field

2009-12-06T11:13:00.001-08:00

Although its consolidation appetite is not diminishing by any means, SSA Global seems to be showing signs of more deliberation and even restraint, rather than jumping the gun to indiscriminately gain market share. Once seemingly insatiable, SSA Global now admits that growth by acquisition is no longer as straightforward and cheap as it used to be in the early 2000s, due to the increased costs of install base acquisition. Namely, while the vendor has paid on average $37,000 (USD) per customer for its 13,000 acquired customers, recently Oracle apparently paid about $2 million for each acquired Retek customer. Thus, while acquisitions at the right price will continue, SSA Global is shifting its focus towards providing extended solutions rather than acquiring peer enterprise resource planning (ERP) products.

This is Part Three of the six-part series The Enterprise Applications "Arms Race" To Be Number Three.

This article continues a comparative analysis of SSA Global and Infor, two contenders in the fierce ongoing competition to be number three (after SAP and Oracle) in the world of ERP vendors. See The Enterprise Applications "Arms Race" To Be Number Three for background information and a discussion of vendor similarities, along with Contributing to the Rejuvenation of Legacy Systems in the Enterprise Resource Planning Field. The other leading contender is Lawson Software. For a detailed discussion of Lawson, see �New' Lawson Software's Transatlantic Extended Enterprise Resource Planning Intentions.

By its own admission, until 2003, SSA Global was merely a collection of ERP products, with a desire to consolidate. At that time, its only established ERP product extensions were the embedded Cognos business intelligence (BI) nuggets, the acquired Warehouse BOSS solution, and a collection of disjointed third-party products (such as Applix for customer relationship management [CRM], Logility for supply chain planning [SCP], and Digital Union/Verticalnet for sourcing and procurement). Acquisitions were focused on ERP as well as on the associated research and development (R&D) investment. This state of affairs is in contrast to today's nearly complete SSA Global solution footprint and delivery of converged solutions having predictable and published product roadmaps. Also, the acquisitions have become rather more strategic, bundled as they are with balanced development investment, and deliveries on promises of continued support.

Although many might still consider SSA Global's acquisitions to be opportunistic, the vendor has long instituted a so-called "4M approach" underlying the evaluation of acquisition candidates:

* Motivation—is the candidate motivated?
* Money—will there be sufficient payback?
* Method—does the candidate have the right people?
* Match—does the acquisition fit SSA Global's "big picture"?

The vendor's goal is to ensure that it keeps customers for life. In order to do that, it must preserve the customers' investments while continuing to deliver a long-term product strategy of convergence, modernization, and vertical focus, all in a predictable and incremental manner. The short-term strategy, on the other hand, is to enhance the value of current applications in delivering the functionality (with a consistent tempo of releases) that customers have been asking for, by delivering integration to extension products like CRM and supply chain management (SCM), and by delivering first-rate support.

SSA Global' s three most recent acquisitions in particular, E.piphany, Boniva Software, and Provia Software, may indicate a new phase in the vendor's acquisition strategy and development cycle.
In the fall of 2005, SSA Global completed the acquisition of E.piphany, Inc. (also known as Epiphany), an innovative but financially long-struggling global CRM solutions provider. As a result of the merger, Epiphany now operates as a wholly owned strategic CRM division of SSA Global; shares of Epiphany common stock have been delisted from NASDAQ, and deregistered with the Securities and Exchange Commission (SEC).

Unlike many earlier SSA Global acquisitions, Epiphany certainly cannot be categorized as providing an outdated product. In fact, the embattled CRM vendor, which now prefers to drop the dot from its official name, was famed for trying to put the e (the electronic business moniker) into CRM, and was a big name during the dot-com era. Its CRM analytics were (and arguably still are) an important part of e-commerce and e-business development. To a certain degree, it succeeded in building a business on applications related to marketing automation, call center management, real-time customer analytics, and real-time interaction. These applications (the Interaction Advisor, Insight Advisor, and Lead Advisor modules) peaked at $125 million (USD) in annual revenues in 2001, with Vodafone, Nestle, Gap Inc., Citibank, Virgin Holidays, HBOS, and Barclays all signing up as users. However, revenues have since fallen sharply, closer to the $70 million (USD) mark.

Epiphany's products have been widely implemented among business-to-consumer (B2C) companies that have large numbers of direct customers, such as wireless carriers, travel and transportation services, banks and other financial services firms, telecommunications, utilities, and retailers. The catch with these customers, however, is that they tend to spread their applications portfolios over multiple providers, making Epiphany's revenues much less impressive than its customer list. In fact, Epiphany has never shown a profit in any fiscal year since it went public in 1999. Thus, in August 2005, after 7 years of consecutive losses, including a whopping $2.6 billion (USD) hit in 2001, the innovative CRM provider fell into the arms of SSA Global, for a quite surprising $329 million (USD) in stock. This was all the more surprising given that the company had revenues of about $75 million (USD) and losses of $16 million (USD) in the previous 12 months (although a significant cash position of about $160 million [USD] would have been a good rationalization for SSA Global).

In justifying the merger, the two parties cited two major synergies between them. First of all, out of 450 Epiphany customers, there was reportedly a significant 20 percent of shared customers in the manufacturing, finance, and services industries, with certain cross-selling opportunities owing to the complementary nature of the products. Epiphany filled a major gap in the SSA portfolio, with respect to inbound and outbound marketing automation and analytics (see Why Are CRM and Analytics Intrinsically Connected?), sales force automation (SFA), online solutions, and e-commerce. Some marketing automation features are certainly top-notch, such as collaborative filtering (identifying cross-selling campaign opportunities based on past purchases), real-time data mining and decision-making (using static and dynamic customer attributes while the customer is browsing online), and predictive analytics capabilities (see Predictive Analytics; the Future of Business Intelligence). Although SSA Global had some CRM capabilities with Baan (via the acquisition of Aurum and subsequent in-house developments), these were inconsistent and lacked sophistication, so that the customer demand and mind share for the SSA CRM suite have always been very low. On the other hand, SSA CRM's native strengths lie in sales configuration, order management, and field service functionality, which are not areas that Epiphany covers. Once the integration is complete (some time in 2007 at the earliest), the SSA CRM offering should be more well-rounded and appealing than current native offerings for users of Baan or the Applix add-on on the business planning and control (BPCS) side.

However, concern remains that the two companies have thus far not had much of a common market focus. Namely, while SSA Global is oriented toward business-to-business (B2B) applications (primarily in the realm of manufacturing), Epiphany has largely focused on the aforementioned B2C markets in service industries. These install bases naturally have separate functional and support requirements, and only time will tell where additional outlets will arise once the immediate cross-selling opportunities are mined. SSA Global contends that manufacturers too should be interested in reaching customers directly via marketing campaigns (with the help of analytics), as shown by recent success of marketing automation specialists such as Unica and SAS (see Should Uniqueness Vouch For Marketing Automation Niche Players?). Also, since SSA Global had a considerable business in service industries even without Epiphany (for example, with KPN as a customer), there may actually be more of a common market focus than might appear at first glance. With Epiphany, 37 percent of the installed base is now in the services sector; conversely, a significant percentage of Epiphany's customer base was in the manufacturing sector.

But the second synergy—shared adoption of technology based on open standards and service-oriented architecture (SOA)—might be even more compelling. Namely, while Epiphany has long leveraged J2EE- and SOA-based technologies to rewrite its products, SSA Open Architecture explored in Part Two of this series remains in part a statement of direction, since many of its products will need much retooling to conform to the SOA vision (although fewer will need retooling as of the third release of the product in the spring of 2006).

The vendor will need developers experienced in these technologies, and by buying Epiphany, it has acquired a development organization which is already at the place SSA Global is aiming for. Apparently, the former Epiphany Customer Relationship Backbone (CRB) platform has already been rolled into SSA Open Architecture (6.0, the first release where CRB and Open Architecture converge, is due in the spring of 2006), and the SSA SCM team has been delivering new warehousing management capabilities while leveraging the savvy of its CRM colleagues.

In summary, existing Epiphany customers will breathe a sigh of relief owing to the strength of a global company behind the CRM products; this assures financial viability and continued R&D. Indeed, CRM is a strategic area of investment for SSA Global, and the Epiphany's team in San Mateo, California (US) has been supplemented by engineers in India, the Netherlands, Dallas (US), and Toronto (Canada). As they have done many times before, SSA Global will commit to continued support for all CRM products. On the other hand, existing SSA Global customers will eventually be exposed to a more complete sales force automation (SFA) and call center solution that enables sales (and service of customers) across multiple channels and lines of business (LOBs). Some customers may benefit from a comprehensive marketing automation solution both for B2C and B2B environments, but all solutions will be under a sole SSA CRM brand which includes all current capabilities on a modern J2EE platform, both for CRM solutions and all future development activity.

The go-to-market CRM strategy for SSA Global consists of maintaining and growing business in B2C verticals, where it plans to maintain a distinct sales structure to focus on traditional Epiphany market segments (such as the financial services and telecommunications sectors). Also, the vendor will try to widen cross-selling opportunities in its installed base by leveraging existing SSA Global sales teams and specific offerings targeted at the mid-market. The idea is also to expand sales into eastern Europe, Latin America, and the Asian Pacific (APAC), by leveraging a global sales organization and providing tier one language support. SSA Global will also try to leverage strategic alliances in some sectors, for example, with IBM (for financial services,, retail, and manufacturing), with Capgemini (for telecommunications), and with some resellers such as Harte Hanks and Merkle (for the mid-market).

Contributing to the Rejuvenation of Legacy Systems in the Enterprise Resource Planning Field

2009-12-06T11:11:00.000-08:00

Lawson Software's upcoming Landmark platform (see A New Platform to Battle Software Bloat?) and Infor's Corestone have been described during our recent The Blessing and Curse of Rejuvenating Legacy Systems series, whereas Microsoft's, SAP's and Oracle's platform related forays have been duly reported as well (see SOA-based Applications and Infrastructure—The Next Frontier? and Multipurpose SAP NetWeaver). But the time has now come for us to describe the corresponding moves of SSA Global, whose equivalent platform is branded SSA Open Architecture.

This is Part Two of the six-part series The Enterprise Applications "Arms Race" To Be Number Three.

The common thread to all these platforms is a service-oriented architecture (SOA) strategy built to meet current market requirements, such as hidden complexity, and low total cost of ownership (TCO). Sound product architecture is critical to enabling faster implementations, easier upgrades, easier integration to other non-native applications, and more flexibility to change processes on an ongoing basis. For acquisitive vendors, there is the benefit of lowering acquisition cost; they can assemble component pieces that are non-proprietary, with an upgrade path to greater functionality, while still maintaining the replaceable nature of these components (due to their standards-based quality). The idea is to build anew only what cannot be assembled from the existing component repository. SOA is the unifying integration factor, whereby one can assemble composite solutions from disparate components: some that are built internally; some that come with acquired companies; and some that come from partnering with best-of-breed vendors.

One can thereby thin down a monolithic application's bloated and unwieldy core, while putting increasing amounts of functionality in thinner layer components that can be snapped onto or shared with several application kernels as required. Software built in an object-oriented (OO) fashion is thus less unwieldy; the leaner, more modular architecture can result in quicker implementations, improved flexibility, and easier uppgrades. This framework also provides agility and flexibility for integrating industry niche solutions, and for development of industry-specific solutions, with insulation from the vendor's major release cycles. For instance, SSA Global has recently been striving to add new functionality to support the food and beverage industry needs in the form of business logic that supports country of origin labeling (COOL), bioterrorism preparedness, and global trade item number (GTIN) compliance.
Although SSA Global has many service, software, and technology alliances or partnerships with companies around the world (such as Atos Origin, Accenture, Fujitsu, Cognos, Sirius, CSC, and Capgemini), its quintessential partnership is with IBM. This partnership was cemented in mid-2004, and aimed to more easily modernize and integrate disparate SSA Global systems across the extended enterprise. Under the terms of the agreement, the two companies jointly market SSA Global extended enterprise solutions built on IBM middleware, including IBM WebSphere Portal, IBM WebSphere Business Integration, IBM WebSphere Application Server, and IBM DB2 Universal Database. IBM Business Consulting Services and SSA Global also collaborate to offer implementation and consulting services.

With thousands of customers already running SSA Global solutions on IBM eServer xSeries, iSeries, pSeries, and zSeries technology, the joint solution should further reduce TCO and time-to-value, while helping these companies adopt a growing list of industry standards and information technology (IT) mandates. In other words, while Intentia, Lawson, and Infor are certainly major IBM partners, SSA Global has possibly become the most exclusive. SSA Global justifies this exclusivity decision by referring to the following three concepts:

1. Synergy: Together, SSA Global and IBM should offer a more complete and extensive solution, meeting both business and technology needs. Namely, SSA Global has been providing customers with the industry solutions they need for competitive differentiation, whereas IBM has been contributing leading technology and infrastructure (this technical standardization should ultimately lower the TCO).
2. Affordability: The two vendors have been developing solutions for large global customers—solutions that can be scaled down and made affordable for small and medium customers as well.
3. Interoperability: SSA Global is standardizing on the renowned IBM WebSphere middleware platform, providing its customers with industry-standard integration infrastructure.

Like its peers, SSA Global has thoroughly analyzed the industry trends and issues affecting manufacturing and distribution companies worldwide. Business is now moving faster than most companies' ability to adapt. The velocity of business transactions—from orders by mail, to orders by phone, fax, and now the Internet—is ever-increasing, and as a result there are increasing demands on IT departments. In addition, executive strategies passed down through the organization are expected to be implemented faster and faster, which is putting further pressure on IT departments to be more agile and to implement solutions quicker and more efficiently. Globalization is also introducing new levels of complexity, and virtually no company, big or small, has been unaffected by globalization. Whether a company has operations across borders or whether its supply chain extends overseas, it must contend with economic, cultural, linguistic, and regulatory differences, putting more pressure on the IT infrastructure to efficiently accommodate these needs (see Merging Global Trade Management with Global Finance).

The trend towards lowering TCO requirements also needs only small mention, since top executives are wiser today than they were several years ago (given they are apt to have had direct or indirect experience with IT projects that failed to deliver promised business benefits). They are also under more competitive pressure to obtain a tangible return on investment (ROI) and to extend the value of their IT infrastructures. The level of detail for ROI studies has meanwhile increased, and executives demand information that tells them what the true, long-term cost of a technology investment will be (without a credible ROI forecast, the odds are that a given project will not be approved).

Bundled with this is the trend towards application portfolio rationalization; over the last few decades, we have seen a move towards decentralization, as a result of which companies have built elaborate localized technology infrastructures to support the needs of remote locations. Despite the flexibility and agility of autonomous remote divisions (see Standardizing on One ERP System in a Multi-division Enterprise), many top executives have realized that there is a high cost of maintaining a software infrastructure characterized by a disparate set of standard and customized applications. To achieve greater efficiency, cost reduction, and security, many user companies are moving to consolidate and standardize their applications and associated technology platforms, whereby the objective is to align IT infrastructure with business needs.

Technology landscapes are also consolidating, since customers are beginning to realize that they can get significant cost benefits by reducing the number of technology platforms they support. In addition, there is an inclination toward supporting open nonproprietary standards that offer more control over the applications they use and the vendors with whom they work. The industry consensus is that more than 75 percent of new enterprise application development is now built on platforms based on either Microsoft .NET or J2EE.

In summary, everyone needs more business agility, as well as the ability to conduct more transactions (including quality, service, management, production, and so forth) with fewer resources and assets (in terms of supporting applications and hardware). Like most of its peers, SSA Global is focused on providing business value via underlying technology improvements, such as solving the business problems of supply chain visibility, master data unification, vendor-managed inventory (VMI), and so on.

While the vendor is tackling recent buzzword-based technological concepts like Web services, composite applications, extensible markup language (XML), enterprise service bus (ESB), SOA, and so forth, the point is to map these concepts to true business value (in order to prove that this horde of whiz-bang terms and concepts really adds some value).

To that end, SOA describes modular software which is constructed using discrete executable tasks as the primary unit of subdivision, and which uses exposed service interfaces as the primary method of modularization (see Understanding SOA, Web Services, BPM, BPEL, and More). As mentioned earlier, users have an increasing need for greater simplicity, manageability, and agility, and if their business processes have changed, they want to know exactly how long it will take for an IT department to modify the software accordingly. As for what SOA means for customers, it should enable more rapid integration with existing systems, whereby customers can acquire new services without going through full upgrades. Additionally, it supports hybrid solution rollout and insulation against technology changes, and enables business process configuration and orchestration specific to vertical industries and distributed deployment.

The Enterprise Applications 'Arms Race' To Be Number Three

2009-12-06T11:10:00.000-08:00

In the enterprise resource planning (ERP) world there is fierce competition to be number three (after SAP and Oracle). The leading contenders are Infor, Lawson Software, and SSA Global. For a detailed discussion of Lawson, see �New' Lawson Software's Transatlantic Extended Enterprise Resource Planning Intentions).

This is Part One of the series The Enterprise Applications "Arms Race" To Be Number Three.

Even those who still believe that weapons of mass destruction (WMDs) will be found in Iraq (or in North Korea or Iran) should by now have realized that the number one position in the enterprise applications space will ultimately be decided in the inevitable showdown between SAP and Oracle (and their accompanying platform and partner ecosystems). Certainly, this does not imply that either of those will ultimately dominate the tier two or high end of the tier three market segments per se. Thus, the "arms race" for the number three spot is no less exciting (and is maybe even breathtaking), given that the revenue rankings snapshot for SSA Global, Lawson Software (soon to merge with Intentia), and Infor may change at any time, depending on which vendor has most recently announced yet another acquisition. One should also note that Infor, Lawson, and SSA Global have no illusions of dominance in the tier one segment, since that battle will already have been decided between the two aforementioned giants.

One should also not ignore Microsoft Business Solutions (MBS) or Sage Group, in light of their total applications revenues, but these two archrivals are still fighting in the lower end of the market. Their respective significance remains, however, especially given Sage's recent acquisition of Adonix (which certainly has many larger midsized customers), and the fit of Microsoft Dynamics AX (formerly Microsoft Axapta) to like-sized enterprises, although this product is impeded by its nascence. Also significant are Epicor Software (with its recent acquisition of CRS Retail Solutions), and China-based CDC Software (with its ongoing digestion of the globally renowned Ross Systems, IMI, and Pivotal brands; its recent acquisition of JRG Software; and vacillating plans to nab Onyx Software), but they are still at a safe distance, revenue-wise, from the tier two echelon.

Recently, we have given due attention to the Lawson-Intentia combination, and to the rivalry between MBS and Sage (see The Market Impact of Two Powerhouses), so the time has come for a comparative analysis of the remaining two foes: SSA Global and Infor. Executives of these two vendors would be genuinely (or not so genuinely) insulted at any mention of similarities between the two entities, and although the two do have mutually distinct characteristics (which will be tackled further on), the two vendors do indeed have many similarities.

For one, besides their similar size, similar geographic coverage, significant industry overlap, close partnerships with IBM, and so on, both are, after all, aggressive acquirers (being more or less strange conglomerations of over a dozen enterprise products). This is in distinction to "organic growers," which SAP, QAD, IFS, or IBS largely remain (if one disregards their occasional smaller, complementary acquisitions to fill some functional gaps). Other so-called organic growers include Oracle (prior to their acquisition of PeopleSoft/J.D. Edwards, and Siebel), and pre-merger Intentia and Lawson (see Rapidly Consolidating Enterprise Applications Market: The Worlds of 'Organic Growers' and 'Aggressive Consolidators').

Both vendors vehemently object to anyone characterizing them as aggressive consolidators, since the term gives the negative impression that acquisitions serve the purpose of farming maintenance revenues without any commitment to developing new solutions. SSA Global contends that it is much more than a consolidator, as it has been espousing and executing a well-defined convergence strategy. On the other hand, Infor claims to be a sort of organic grower of the businesses that it has assembled—adding close to 1,000 new customers annually.

Related to this is the similar youth of the companies, which are both around toddler age. We know them now as SSA Global and Infor respectively, but via their progenitor companies, they can each boast about thirty years of market existence and industrial experience.

For example, from bankruptcy (with about $130 million [USD] in revenues and a cash hemorrhage of $16 million [USD]) in late 2000, SSA Global generated almost quintuple revenues of $637.8 million, with a net income of $20 million (USD) for the fiscal year ending July 2004. This was accomplished via nine acquisitions from April 2001 to August 2004. For fiscal year 2005, revenues totaled $711.8 million (USD), not including the last three acquisitions, which will be discussed later. With about 5,000 jittery customers in 2000, SSA Global now has over 13,000 active customers in 90 countries and 121 offices worldwide. The company, which also went public in May 2005, spends on average 15 percent of its annual revenues, or over $100 million (USD), on the research and development (R&D) of new solutions and enhancements.

On the other hand, from its first (hardly ever publicized) acquisitions in 2002, Infor has thus far acquired 18 companies, and estimates are that it has become a nearly $780 million (USD) company. This includes projections for the latest, partial acquisition of Geac Computer Corporation, and the complete acquisition of Datastream Systems, which will also be analyzed later on. It now has more than 3,100 employees in over 50 global offices, with earnings before interest, tax deduction, and amortization (EBITDA) currently around $140 million (USD), or a projected $190 million (USD) after the above acquisitions. The company is privately held, but remains refreshingly open about its finances, which is another similarity with private-era SSA Global. Another similarity is that both companies are far from being finished with their acquisition streaks—both are keeping watchful eyes around the clock on several dozen possible acquisition targets. However, eager candidates can also click designated buttons at these vendors' Web sites and offer themselves up to "chief acquisition officers" (or whatever their titles might be).

Both SSA Global and Infor will sooner rather than later reach the magic $1 billion mark in revenues. As a matter of fact, both vendors are occasionally frustrated at being branded by analysts as mid-market-only providers simply because their revenues do not match up those of SAP and Oracle. In fact, many of their customers are multinational corporations with multibillions in revenues. Another striking similarity is that a lot of due diligence and integration takes place before any acquisition is publicly and officially announced; there is no confusion amongst their ranks about who is staying in which capacity, and about who has to move on. Also (at least at a mid-managerial level), there is a tradition of meritocracy in both houses, whereby incumbent employees do not necessarily have a "free ride" advantage over newcomers—many employees from acquired companies have actually climbed far up the corporate ladders.

Using Predictive Analytics within Business Intelligence: A Primer

2009-12-06T11:08:00.002-08:00

Predictive analytics has helped drive business intelligence (BI) towards business performance management (BPM). Traditionally, predictive analytics and models have been used to identify patterns in consumer oriented businesses, such as identifying potential credit risk when issuing credit cards, or analyzing the buying habits of retail consumers. The BI industry has shifted from identifying and comparing data patterns over time (based on batch processing of monthly or weekly data) to providing performance management solutions with right-time data loads in order to allow accurate decision making in real time. Thus, the emergence of predictive analytics within BI has become an extension of general performance management functionality. For organizations to compete in the market place, taking a forward-looking approach is essential. BI can provide the framework for organizations focused on driving their business based on predictive models and other aspects of performance management.

We'll define predictive analytics and identify its different applications inside and outside BI. We'll also look at the components of predictive analytics and its evolution from data mining, and at how they interrelate. Finally, we'll examine the use of predictive analytics and how they can be leveraged to drive performance management.

Overview of Analytics and Their General Business Application

Analytical tools enable greater transparency within an organization, and can identify and analyze past and present trends, as well as discover the hidden nature of data. However, past and present trend analysis and identification alone are not enough to gain competitive advantage. Organizations need to identify future patterns, trends, and customer behavior to better understand and anticipate their markets.

Traditional analytical tools claim to have a 360-degree view of the organization, but they actually only analyze historical data, which may be stale, incomplete, or corrupted. Traditional analytics can help gain insight based on past decision making, which can be beneficial; however, predictive analytics allows organizations to take a forward-looking approach to the same types of analytical capabilities.

Credit card providers offer a first-rate example of the application of analytics (specifically, predictive analytics) in their identification of credit card risk, customer retention, and loyalty programs. Credit card companies attempt to retain their existing customers through loyalty programs, and need to take into account the factors that cause customers to choose other credit card providers. The challenge is predicting customer loss. In this case, a model which uses three predictors can be used to help predict customer loyalty: frequency of use, personal financial situations, and lower annual percentage rate (APR) offered by competitors. The combination of these predictors can be used to create a predictive model. The predictive model can then be applied and customers can be put into categories based on the resulting data. Any changes in user classification will flag the customer. That customer will then be targeted for the loyalty program. Financial institutions, on the other hand, use predictive analytics to identify the lifetime value of their customers. Whether this translates into increased benefits, lower interest rates, or other benefits for the customer, classifying and applying patterns to different customer segmentations allows the financial institutions to best benefit from (and provide benefit to) their customers.
Data mining can be defined as an analytical tool set that searches for data patterns automatically and identifies specific patterns within large datasets across disparate organizational systems. Data mining, text mining, and Web mining are types of pattern identification. Organizations can use these forms of pattern recognition to identify customers' buying patterns or the relationship between a person's financial records and their credit risk. Predictive analytics moves one step further and applies these patterns to make forward-looking predictions. Instead of just identifying a potential credit risk, an organization can identify the lifetime value of a customer by developing predictive decision models and applying these models to the identified patterns. These types of pattern identification and forward-looking model structures can equally be applied to BI and performance management solutions within an organization.

Predictive analytics is used to determine the probable future outcome of an event, or the likelihood of a situation occurring. It is the branch of data mining concerned with the prediction of future probabilities and trends. Predictive analytics is used to analyze automatically large amounts of data with different variables, including clustering, decision trees, market basket analysis, regression modeling, neural nets, genetic algorithms, text mining, hypothesis testing, decision analytics, and so on.

The core element of predictive analytics is the predictor, a variable that can be measured for an individual or entity to predict future behavior. These predictors are based on models that are created to use the analytical capabilities within the generated predictive models. Descriptive models classify relationships by identifying customers or prospective customers, and placing them in groups based on identified criteria. Decision models consider business and economic drivers and constraints that surpass the general functionality of a predictive model. In a sense, statistical analysis helps to drive this process as well. The predictors are the factors that help identify the outcomes of the actual model. For example, a financial institution may want to identify the factors that make a valuable lifetime customer.

Multiple predictors can be combined into a predictive model, which, when subjected to analysis, can be used to forecast future probabilities with an acceptable level of reliability. In predictive modeling, data is collected, a statistical model is formulated, predictions are made, and the model is validated (or revised) as additional data becomes available. One of the main differences between data mining and predictive analytics is that data mining can be a fully automated process, whereas predictive analytics requires an analyst to identify the predictors and apply them to the defined models.

A decision tree is a variable within predictive analytics that allows the user to visualize the mapping of observations about an item and compare it to conclusions about the item's target value. Basically, decision trees are built by creating a hierarchy of predictor attributes. The highest level represents the outcome, and each sub-level identifies another factor in that conclusion. This can be compared to if-else statements, which identify a result based on whether certain factors meet specified criteria. For example, in order to assess potential bad debt based on credit history, salary, demographics, and so on, a financial institution may wish to identify multiple scenarios, each of which is likely to meet bad debt customer criteria, and use combinations of those scenarios to identify which customers are most likely to become bad debt accounts.

Regression analysis is another component of predictive analytics that allows users to model relationships between three or more variables in order to predict the value of one variable in comparison to the values of the others. It can be used to identify buying patterns based on multiple demographic qualifiers such as age and gender which can be beneficial to identify where to sell specific products. Within BI, this is beneficial when used with scorecards that focus on geography and sales.
Practical applications of all of these analytical models allow organizations to forecast results to predict financial outcomes, hopefully increasing revenues in the process. Within BI, aside from financial outcomes, predictive analytics can be used to develop corporate strategies throughout the organization. What-if analyses can be performed to leverage the capabilities of predictive analytics to build various scenarios, allowing organizations to map out a series of outcomes of strategic and tactical plans. This way, organizations can implement the best strategy based on the scenario creation.

How Predictive Analytics Are Used within BI, and How They Drive an Organization's BPM

Data mining, predictive analytics, and statistical engines are examples of tools that have been embedded in BI software packages to leverage the benefits of performance management. If BI is backward looking, and data mining identifies the here and now, predictive analytics and their use within performance management is the looking glass into the future. This forward-looking view helps organizations drive their decision making. BI is known for its consolidation of data from disparate business units, and for its analysis capabilities based on that consolidated data. Performance management goes one step further by leveraging the BI framework (such as the data warehousing structure and extract, transform, and load [ETL] capabilities) to monitor performance, identify trends, and allow decision makers the ability to set appropriate metrics and monitor results on an ongoing basis.

With predictive analytics embedded within the above processes, the metrics set and business rules identified by organizations can be used to identify the predictors that need to be evaluated. These predictors can then be used to shift towards a forward-looking approach in decision making by using the strengths from the areas identified above. Scorecards are one example of a performance management tool that can leverage predictive analytics. The identification of sales performance by region, product type, and demographics can be used to define what new products should be introduced into the market, and where. In general, scorecards can graphically reflect the selected sales information and create what-if scenarios based on the data identified to verify the right combinations of new product distribution.

What-if scenarios can be used within the different visualization tools to create business models that anticipate what might happen within an organization based on changes in defined variables. What-if analysis gives organizations the tools to identify how profits will be affected based on changes in inflation and pricing patterns as well as the impact of increasing the number of employees throughout the organization. Online analytical processing (OLAP) cubes can be created to identify dimensional data, and patterns within changing dimensions can be compared over time to contrast scenarios using a cube structure to automatically view the outcome of the what-if scenarios.

Conclusion

Using predictive analytics helps organizations identify forward-looking trends based on identified data patterns. Predictors and models can be used to discover sales patterns and detect high risk credit card holders. They can also be leveraged and embedded within BI and BPM solutions. Organizations using BI and performance management tools should take advantage of the built-in predictive analytics tools to perform what-if scenarios, create regression models, and build decision trees to benefit from the patterns identified within the data mining tools that are embedded within BI.

Performance management initiatives within an organization can help drive forward-looking business decisions. Whether for the finance department, government compliance, call center performance management, or an organization's sales and related shipping patterns, developing what-if scenarios and using predictive models, the use of these techniques within performance management has changed the face of BI.

Selecting the appropriate predictive analytics tools is not a simple task. The following capabilities must be considered before implementing a predictive analytics tool: algorithm richness, degree of automation, scalability, model portability, web enablement, ease of use, and the capability to access large data sets. The more diversified the business, the more functions and unique models that are required. Model portability is important even within different business units in the same company. The scalability of the solution and its ability to handle expanded functionality should also be verified and based on the growth of a business.

Best-of-breed Approach to Finance and Accounting

2009-12-06T11:08:00.001-08:00

CODA Group, a finance and systems specialist headquartered in the United Kingdom, offers financial solutions that help companies grapple with international business issues such as language, currency, and compliance. Designed to be an "upgrade friendly system", CODA applications offer open and standards-based reporting tools. CODA's alliance with Microsoft Corp. has allowed it to deliver a range of financial and management accounting systems, and it has made several strategic acquisitions to further strengthen its position as a compliance solution.

Part Three of the Composing Collaborative Financial Applications, CODA series.

Among its recent endeavors, CODA has recently announced new set of financial planning and budgeting products: CODA s-Planning ("s" standing for "standard") and CODA c-Planning ("c" standing for "collaborative"), as well as a range of improved analysis and reporting tools, which will be detailed shortly. Nevertheless, to date, these corporate performance management (CPM) capabilities have targeted mainly existing customers of the CODA transactional systems. These users have focused on financial analytics, budgeting, and planning, either through Microsoft Excel integration within CODA c-Planning and CODA s-Planning, or through a partnership with Cognos for enterprise-level planning and budgeting. CODA's consolidation capabilities have traditionally been limited to the basic ones inherent in Coda-Financials. While these are adequate for simpler enterprises, the vendor has thus far been unable to successfully compete with offerings from specialists such as Hyperion Solutions, Geac (formerly Comshare), Applix, Longview, Outlooksoft, or Cartesis. Yet, the importance of these functionalities has been witnessed by Cognos' acquisition of Adaytum in 2003 and Business Objects' recent acquisition of the specialist SRC. See Financial Reporting, Planning, and Budgeting as Necessary Pieces of EPM for information on the functionality.

Thus, this merger deal should benefit both parties for many reasons. While Simple Concepts should get access to CODA's well developed global distribution channel and benefit from its financial stability, CODA should fill the financial consolidation gaps in its solution. Immediate cross-selling opportunities into CODA's install base will expand further as CODA translates OCRA into more languages. Not to mention, there are opportunities coming from OCRA's prior integration with SAP, Oracle, and other leading enterprise resource planning (ERP) solutions. The acquisition also gives CODA a base for strengthening its direct sales operation and presence in Scandinavia.

The two recent acquisitions came at the heels of CODA's June 2005 launch of a suite of add-on applications that extends the range of planning and budgeting requirements: CODA s-Planning and CODA c-Planning . These could offer more benefits for CODA-Financials users. The suite includes Version 3 of the much talked about CODA-XL application. CODA-XL allows the fairly simple and secure output, manipulation, display, sharing, and input of CODA-Financials data within Microsoft Excel. s-Planning and c-Planning were seen to enable users to carry out a range of day-to-day tasks, such as producing and sharing statutory reports; processing expenses; or even developing and setting financial budgets using CODA-Financials alongside Excel and the other familiar Microsoft Office tools that most organizations probably already have in place. These new products were meant to make CODA-Financials the launch pad for a quicker and easier budget cycle. By combining the functionality and embedded control of CODA with the familiarity and convenience of Microsoft Excel, CODA s-Planning and CODA c-Planning should streamline the seeding, preparation, manipulation, and production of budgets, based on (or update) the user's CODA-Financials data. Moreover, CODA continues to develop its relationship with Cognos, offering the Cognos Enterprise Planning product where clients have wider enterprise requirements. The vendor also uses a mix of partnership and in-house development to address other CPM elements, such as activity-based costing (ABC), strategic planning and scenario analysis, shareholder value measurement, activity monitoring, information distribution, etc.

In addition to the "standard" budgeting and forecasting facilities provided by CODA s-Planning, users have the option to make their entire cycle more coordinated, efficient, and controlled by opting for the "collaborative" add-on of the CODA c-Planning product. This interfaces with the CODA-Control process management solution, adding a facility to publish budgets as CODA-Control web sites and tasks. This will keep all participants informed and aware of the input needed and when it is required. There are also audit trails and document history to support compliance reporting. CODA c-Planning aims to help organizations set financial budgets and collaboratively develop plans, which both reflect top-down business objectives and assess the need to account for bottom-up creativity and realities. For example, it will give budget managers visibility of process bottlenecks, including vacation and sick days of department managers, information on groups waiting for information from subsidiaries, and vice versa. Conversely, many other peer products focus purely on bringing together and reporting the figures in the system, and not on collaborative processes that are key to collecting and verifying the figures in the first place. The application's aggregation features often make the budgeting and planning process quicker, more dependable, and more predictable, giving financial professionals more time to analyze and consider their overall budget before making decisions crucial to the organization's mid-term plans.

Another analytic module worth mentioning is the CODA Collaborative Scorecard, which helps user organizations link corporate goals through group objectives and individual performance. Designed to be deployed to every desktop in the enterprise, the product supports multiple performance management methodologies. Generally speaking, scorecards assist organizations in monitoring their business performance beyond bottom-line results by tracking both financial and non-financial measures, and then reporting them in a graphical user interface (GUI). A key element is the way they cascade corporate goals through the organization, helping managers to set individual objectives, and then aggregate performance results back up through the company structure, so that management can review the contributions made by individuals and groups. This aligns corporate strategy with the activities of individuals within the organization.

CODA believes that scorecards should be a strategic pillar of any analytic framework, bonding personal accountability to the enterprise's overall performance management. Initial releases of CODA Collaborative Scorecard have complied with commonly used performance management methodologies, such as the European Foundation for Quality Management (EFQM) balanced scorecard, Six Sigma, etc. to provide a relatively functional and flexible method of managing and aligning enterprise, group, business unit, and personal objectives. However, one should note that, although scorecards should be the fundamental link between personal performance and the overall objectives of the enterprise, they are frequently the weak link in the CPM closed-loop cycle, either because they are too difficult to deploy widely in the organization, or because they have fixed, inflexible methodology (see Why Most Balanced Scorecards are Subverted).
Related to the above line of products is CODA Analytic Explorer, which is a business intelligence (BI) tool that allows CODA users to carry out multidimensional browsing across CODA-Mart and any other relational data source. It is a generic, on-line browsing tool with both two-dimensional and multidimensional browsing capabilities built in, and has a separately licensable cube builder that provides extra performance. As finance departments struggle to add value to their businesses, performance management enables them to deliver better decisions more efficiently. However, CPM is not about static plans that sit on the shelf and get dusted off at board meetings, but rather about continuously adjusting to the range of inputs that the business is constantly receiving. To that end, CODA Analytic Explorer provides the ability to investigate exceptions and trends quickly and easily, so that corrective actions can be taken, and forecasts and plans reviewed.

CODA-XL is now in its third release. It provides a two-way bridge between Excel, which is indisputably the most popular spreadsheet, and CODA's enterprise-level financial and CPM products. CODA-XL was launched in 2003 and brings the familiarity of the Excel interface to CODA-Financials. It should provide customers with several benefits, such as reduced training for end users of CODA-Financials during implementation. Other benefits typically include the elimination of transcription errors and file-handling overheads during the transfer of data between CODA-Financials and Excel. Thus, it may prevent the proverbial "islands of information," where local systems containing great value and insight are locked on individuals' desktops and personal computers and cannot be shared across the organization. However, unlike some similar products from competitors, CODA-XL goes beyond exploiting the familiarity of the user interface (UI) and makes use of the success that Excel enjoys as an informal business modeling and planning tool. It provides "What If?" scenario testing with the option of writing back from the spreadsheet to CODA-Financials. For example, the CODA Security Model is fully embedded within CODA-XL, thus ensuring consistent data security. This means that while add-ins to Excel deliver rich CODA functionality accessed directly from the Microsoft Office desktop, they must respect the same CODA security, validation, and business rules. For example, Excel formulas referencing live account balances are stored directly in CODA Database, with all necessary authorizations for users appearing down to the spreadsheet cell level. For more on the advantages and the inherent risks of Excel-based tools, see Vendors Harness Excel (and Office) to Win the Lower-end of Business Intelligence Market.

Within CODA e-Finance (a Web-based version of the product), all reports validated and cross-checked on-line to validate, to eliminate separate, unsecured reporting tables. "Lights out" scheduling and Web document publishing also eliminate manual intervention. In addition, the data manipulation capabilities of Excel mean that management accountants can build and model scenarios that can be tested against real data relatively quickly, which can be very useful for creditor and debtor management, customer profitability analysis, and ad hoc queries. Furthermore, US Security and Exchange Commission (SEC) submissions can be made through Microsoft Word documents with embedded "live" Excel documents that do not have cut and paste, export, and manipulation functions, which can introduce the potential for errors. Non-programmatic, wizard-driven automation of data entry with real time validation direct from Excel (transactions, allocations, masters, budgets, and forecasts) also eliminates open database connectivity (ODBC), direct structured query language (SQL) updates, relational database management systems (RDMBS) logons, etc., which are also points of risk.

Last but not least along collaboration lines, CODA Collaborative Close is yet another application built using Microsoft Office technologies, one that is designed to help organizations close their books more quickly, more dependably, and more predictably, giving financial professionals more time to analyze and consider data before making crucial decisions. The product was designed to recognize and support the neglected collaborative processes that underpin period close. Other products in this area focus merely on consolidating and reporting the finance figures, but not on collaborative processes that are key to collecting and verifying the figures in the first place. Unfortunately, verification is traditionally carried out manually, which can be time-consuming and makes the process hard to track and improve.

Period-end reporting has always been a challenge for all accounting departments, and this challenge grows when an organization is distributed. The cost of an extended period close in human resources is considerable, since each extra elapsed day can cost a finance department many days of labor. Period-end closing is a collaborative process of questions and answers, of confirming detailed information, and of individuals collaborating to arrive at the answer and generate a picture of numbers about the organization's current financial situation. Every organization in the world has to address this, and they all have different processes; often, financial processes across corporations vary due to merger and acquisition activity, which has absorbed different groups using different business models. This adds complexity to the task of gathering information to close the financial period, and makes it all but impossible to fully automate using conventional systems. Ironically, the aim is to ensure that accountants spend more time adding value to management and performance information, and less time "chasing" data.

The use of technology to render the process less painful, to enable people to collaborate, to progress tasks, and to automate the final postings may be of help in delivering a true, fast closing process to business. Another potential benefit is that CODA's Collaborative Close may uses only information technology (IT) infrastructure and technology that a customer likely already uses. CODA Collaborative Close uses the latest technologies and features from Microsoft Office 2003, Microsoft SharePoint Portal Server, and Microsoft Office Infopath. These, together with task modeling technology from CODA, allow CODA Close to manage approvals, exception reporting, stock reconciliations, aged debt processes, and a string of other potential bottlenecks in the period-end closing process. The application automatically generates a period-end web site through the Microsoft SharePoint Portal Server. Related links then automatically bring up InfoPath forms to gather information from different participants and to drive period-end processes, while the web site dynamically reflects data in the back-office finance system. Real time information sharing between CODA and Microsoft applications is driven through Office Research Panes in Microsoft Excel, Word, and Outlook.

It is a well-known fact that many accountants currently use Microsoft Office tools like Excel in their closing process�but in isolation. Conversely, CODA Collaborative Close integrates these tools with a wide variety of corporate finance systems to bring a unified approach to the problem, with the likely result of improved speed and control over information gathering, allowing more time for analysis and planning. The idea is to help user organizations meet the regulatory demands of the Sarbanes-Oxley Act (SOX), International Accounting Standard (IAS), Basel II, etc., and also to give finance managers more time to analyze their finance figures, and to think about and plan for the near future. CODA Collaborative Close has been designed to work with extensible markup language enabled (XML)-financial applications from vendors such as Microsoft Navision, Microsoft Great Plains, SAP, and Oracle (including PeopleSoft), as well as CODA's own CODA-Financials.

Joining the Sarbanes-Oxley Bandwagon; Meeting the Needs of Small and Medium Businesses

2009-12-06T11:07:00.000-08:00

The need for solutions that can meet compliance regulations has grown. In 2004, finance executives around the world became increasingly sensitive to the need to improve reporting in relation to their corporate governance and regulatory compliance obligations. CODA Group, a United Kingdom-based finance management system specialist responded by launching CODA-Control, a task modeling tool (engine), which helps user companies control and audit business processes, and automate data collection for financial reporting. CODA-Control is one of CODA's recently unveiled collaborative solutions, and aids regulatory compliance, period-end financial closing, and automates financial procedures, thus possibly reducing escalating audit costs and lowering the risks of non-compliance. The product takes the organization's best practice model of a documented financial process and automatically generates a dedicated shared, secure, in-house team web site through which the execution of the entire process is controlled. CODA-Control helps transform the organization's processes into highly repeatable, auditable, and controllable events.

Part Two of the Composing Collaborative Financial Applications, CODA series.

As exemplified by CODA-Control, CODA views Microsoft technology as its primary development platform for its process control applications. This should help organizations manage and improve complex business processes, such as those geared towards enabling compliance with the Sarbanes-Oxley Act (SOX) of 2002 and towards facilitating month-end closing. CODA's decision to design a control application using the Microsoft SharePoint Products and Technologies platform has even been cited as a key factor in some customers' decisions to purchase CODA-Control.

To put this into context, SOX was passed by the US Congress in response to a number of high profile financial scandals, such as those at Enron, Tyco, and WorldCom, with the idea of making corporate accounting procedures more transparent to investors and regulators. Even before these fraudulent scandals, missed earnings announcements were often accompanied by chief executive officers (CFO) stating that financial expectations were not met due to a "lack of visibility" into corporate activities. These CFOs would frequently blame unforeseeable events, such as a key customer canceling a major order unexpectedly, or suppliers ramping up prices due to a shortage of raw materials. Regardless of the reason, CFOs are increasingly being called upon to give more accurate estimates of their earnings potential, and explanations as to why their company failed to meet these estimates.

Although the SOX law included a number of new mandates, two sections in particular have had clear implications for corporate information systems. Section 404 (Management Assessment of Internal Controls) requires management to assess, on a yearly basis, the effectiveness of its own internal controls and procedures for financial reporting. Section 409 (Real Time Disclosure) requires companies to disclose material changes in their financial condition or operations on a rapid and current basis. These two sections have prompted many predictions regarding how much must be spent on information technology (IT) in order to meet compliance needs (albeit, this may be at the cost of stalled projects in other areas that are now considered lower priority). Section 404 requires audits of internal controls, and has caused executives to reexamine, and possibly replace, operational systems that are not well integrated with financial systems. For example, an accounts payable (AP) system that does not systematically match purchase orders and receipts to vendor invoices, before the payment is made, might be vulnerable to fraud. Such a system may also be vulnerable to abuse by someone who creates fictitious employees and suppliers and then pockets the money. In addition, an invoicing system that is not integrated with shipping might allow a manager to improperly recognize revenue that was not yet earned.

Section 409 seems to call for a more transparent and integrated financial reporting system than many companies have. For example, companies that work on a ten day financial closing period seem to be at risk for non-compliance with real time disclosure, which currently demands the disclosure of material events within forty-eight hours. The problem is particularly acute for firms with multiple operating units and decentralized systems, because, in recent years, many enterprises have grown both organically and through acquisitions. As a result, accurately reporting on these business units requires a significant number of "manual" accounting processes and adjustments. Such companies will either need to adopt a common financial reporting system, perhaps by integrating multiple systems with a financial reporting layer at the corporate level, or by implementing a corporate performance management (CPM) solution to provide near real time analytics.

In any case, the requirements of SOX increase the amount of required manual processing, which, in turn, significantly increases the cost of compliance. The ongoing cost of testing manual financial controls to ensure SOX compliance, and the ongoing compliance risks associated with those controls are forcing companies to move towards financial systems that not only record transactions, but also manage the entire SOX 404 compliance process. Early adopters of SOX-compliance have reportedly learned some hard lessons by using SOX programs that highlight manual, paper-based processes. Such processes are very costly to audit as commpared to automated processes, and it is quite time-consuming to reconcile and correct errors. Such systems are also at higher risk for human errors and omissions.
In light of this, small or medium business faces a daunting task. It is no longer enough for a company to develop a strong business plan, have a breakthrough product or service, and build strong and effective distribution channels. The complexities of today's business world have created new risks, with a myriad of regulations and complex reporting requirements that can overwhelm a lean and focused organization, regardless of its size. The logical question is how a smaller organization, with limited resources, is supposed to cope with all of this, and, even more importantly, how it will stay abreast of the additional changes that are on the way. For instance, under existing (and soon to be outdated) accounting rules, a company might value its inventories at historic cost. For example, an electronics goods vendor might value unsold, months-old DVDs at the amount they could have been sold upon their initial release. However, under the forthcoming proposed International Accounting Standard (IAS-2), a company has to give an up-to-date net realizable value (NRV). In other words, it must give an accurate estimate of the products' market value at the time the report is published, with the idea that all corporate assets must be valued at their fair value, rather than at their problematic historic cost. Companies will also need to account for the cost of all employee compensation plans. In particular, this means that the cost of stock option plans or any shortfall in company pension funds must be recorded in the accounts.

Given the magnitude of tracking these types of nuanced accounts, the only sensible answer is to use technology, since many tools have been developed that can greatly simplify the process. Indeed, new versions of compliance software represent big improvements over earlier incarnations. Certainly, in addition to CODA-Control, recent releases from Axentis, ACL Services, Certus, Oversight Technology, Hummingbird, OpenPages, Virsa Systems, Precision Consulting, and Approva reflect a more realistic understanding of the compliance burdens. Some of these solutions compare a company's current controls to compliance "best practices", offering solutions on how to shore up weaknesses and better segregate duties. For example, the software can govern who has clearance to write checks to vendors, to pay employees, or to add revenue in a given quarter. Such software can also enforce the rules by, for example, alerting compliance watchdogs if an unauthorized person attempts to make changes, and can thus act as a mechanism to prevent fraud. Other solutions can help managers document policies and procedures, create electronic archives of those policies, or flag internal transactions that look suspicious.

Investment in CODA-Control-like financial systems might provide a cost-efficient solution that would allow business managers to focus more time on operations and less on compliance. Further, these systems might allow user enterprises to streamline the integration of new divisions into their financial systems and processes, ensuring that the business processes of the acquired units are SOX 404 compliant. Nonetheless, before they can benefit from this technology, small business managers must select the right tools. For more on the critical attributes of SOX tool sets, as well as a discussion on how to use them effectively to maximize payback on the investment of time and money, see Attributes of Sarbanes-Oxley Tool Sets.

Many SOX-compliant businesses will likely still spend many thousands of labor hours and millions of dollars in documenting their accounting processes. In addition, many companies will continue to incur significant annual audit fees for the ongoing testing of manual processes. CODA-Control might come in handy as a practical and affordable solution to this problem for medium to large companies, since CODA can transform manual processes into visible, repeatable, controllable, and auditable events. In other words, it might make auditing simpler, quicker, and cheaper, and thereby change CFOs and controllers back from being slaves to SOX to being masters of finance. In particular, the automation and centralization of manual processes should reduce both the risk and the associated costs of audits because the required checks and balances should be enforced by the system. In addition, processes in remote locations can be tested centrally, re-keying errors are eliminated (and reconciliation effort is thus reduced), and authorizations can be captured electronically and viewed on-line, because one can implement preventive controls to preempt errors before they occur. While there is no panacea for ensuring adherence to documented best practices, automated process management, such as the CODA-Control solution, still seems to be an essential part of first two years or so of any SOX compliance program.

The CODA-Control solution is available to all organizations, particularly those subject to SOX-compliance, and is independent of a company's financial accounting system. A Microsoft SharePoint web site powered by CODA can deliver tasks, forms, attachment, documents, etc. to business units' diverse transactional systems, and even include all necessary language translations. CODA expects demand for the solution to be extremely high in 2005 and 2006, and has specialist implementation resources available to support organizations worldwide. Still, while such software can help, it is not going to completely automate compliance, which will continue to be a huge manual effort, as there is no substitute for a manager's understanding of the business when it comes to assessing, designing, and implementing proper internal controls.
Compliance is a major issue in the US, particularly as more organizations struggle with the provisions of SOX, but it is also rapidly becoming a key issue in many other countries as legislation is introduced around the world to improve corporate governance. Thus, in August 2005, to further bolster its financial control capabilities, CODA announced an acquisition agreement and partnership with Control Solutions International, a global provider of assurance, risk management, and compliance advisory services. Founded in 1991, Control Solutions was one of the first firms dedicated solely to providing support to internal audit functions and to helping companies realize the benefits of effective internal controls. Control Solutions' services include internal audit outsourcing and co-sourcing, SOX first-year compliance and annual recertification, technology audits and advisory services, quality assurance reviews, enterprise risk assessments, and internal audit start-up services. The firm has reportedly developed close and long-term relationships with a diverse client base of leading companies through flexibility, open communication, and a "value-added" project approach. It has over 800 experienced internal audit professionals and 21 directors in offices around the world.

Under the terms of the agreement, CODA acquired the Sarbanes-Oxley Controls Evaluation Tool (SOCET) product from Control Solutions. SOCET is a Web-based internal controls documentation, evaluation, monitoring, and project management application designed to facilitate SOX compliance, and is currently deployed at a number sites of Control Solutions' major customers. CODA pledges to take on the future development and marketing of the product, whereby existing customers will receive support through the US-based support desk of CODA Financials Inc., part of the company's global support operation. Also as part of the agreement, Control Solutions and CODA will jointly develop additional, comprehensive compliance software products to help customers comply with SOX and other regulations, such as the European Union's Basel II.

Control Solutions has leveraged its breadth and depth of internal audit experience to assist over 250 US-listed companies with SOX readiness and ongoing compliance. After achieving a quick compliance fix , the next challenge for companies is "making SOX stick" , turning the near-impossible project into a practical and sustainable process, where documented processes are transformed into systems that drive the finance function. Accordingly, SOCET adds effective management dashboard reporting to the features of CODA-Control. The combination should bring additional value to existing customers. With the addition of SOCET and the opportunity to capitalize on Control Solutions' SOX expertise, CODA hopes to soon be a one-stop software shop for the whole process compliance cycle.

Future versions of SOCET, now re-branded as CODA-Control Assessor will support compliance with international regulations, since, while Control Solutions will provide the internal controls experience, CODA will provide the software to deliver it. Additionally, CODA-Control currently provides a Web-based platform for defining, rolling out, monitoring, and executing a complete range of financial, human resource (HR), and IT processes, in order to provide the visibility, repeatability, and an audit trail that is required to drive ongoing adherence to a user company's defined compliance procedures. SOCET similarly provides a Web-based environment to facilitate the testing and evaluation of financial, HR, and IT processes by an organization's internal audit team. The tool also provides management information on the status project testing and presents the information in an executive dashboard. As such, CODA's existing compliance application and SOCET are functionally highly complementary. On the technology front, both leverage Microsoft .NET, Internet Information Server (IIS) Web Server, and Structured Query Language (SQL) Server databases.

Control Solutions' deep expertise and experience in running over 250 SOX compliance projects in the US have shaped the design of SOCET. By transferring ownership to CODA, existing users should benefit from both CODA's support infrastructure and ongoing development, while CODA can continue to draw on Control Solutions' domain experience for the product's ongoing design. The roadmap for SOCET shows that the solution will become integrated into the CODA compliance suite (whose footprint will thereby be extended), while retaining its current ability to run as a standalone application. CODA will shortly announce a solution to greatly accelerate the design of controls and thereby provide a more complete solution for designing, implementing, sustaining, and testing the controls for SOX and other existing and emerging compliance initiatives, globally.

At this stage, even without SOCET's additions, CODA-Control delivers a centralized management and document repository. This is a repository web site that pulls together the tasks, people, supporting documentation, and necessary choreography to ensure that the process is completed in a compliant and efficient manner. It will also offer reasonably quick deployment and adoption and will be an easy-to-use implementation of a best practice model for a given financial process. CODA-Control also has a minimal user learning curve that leverages existing Microsoft Office skills and existing back-office applications. The product will also foster consistency throughout the framework to implement preventive controls that ensure repeatability of process completion, and this will be done in a way that promotes continuous process improvement. It will also offer "Command Center" visibility of current process status, percentage of completion, current hold-ups, task assignments, etc., and an entire audit trail of tasks, documents, commentary, etc. These features will be accessible to users and their auditors via an intranet uniform resource locator (URL). However, the product is also an extensible platform that supports automated task completion using Web service interrogation and automated updates of back-office systems. It also associates electronic forms to their related tasks using Microsoft InfoPath, and ccontrols both recurring financials processes (such as period-end closing, internal audit programs, budgeting, planning cycles, etc.) and ad hoc processes (including new hires, new vendors, capital projects etc.). Last but not least, the product also controls business processes such as the opening of new locations, corporate responsibility programs, HR processes, and so on.

2009-12-06T11:06:00.000-08:00

Founded in 1979, and headquartered in the United Kingdom, CODA Group is a finance management systems specialist, and part of the publicly traded CODASciSys plc. group (AIM: CSY). After a series of changes which began in the late 1990s when it was first acquired and then divested by former Baan to Science Systems, and then in early 2000, CODA changed its name to CODASciSys. (See Baan Posts $236 Million Loss and Sells Off Coda for Nearly $40M Less Than It Paid). The group offers a broad suite of products and services designed to meet the needs of financial and accounting departments. Its offerings range from financial, accounting, and procurement systems linked to a complementary suite of applications that support finance, reporting, and analytic processes across the organization, through to planning, budgeting, consolidation, reporting, and analytics. It also encompasses process control and compliance management. Its traditional transactional systems are applications that optimize accounting, procurement, asset management, and e-commerce across (and beyond) the entire, often distributed, user enterprise.

Lately, the vendor has expanded into a range of integrated business intelligence (BI), planning, forecasting, and consolidation analytic tools to deliver a more complete, near real time picture of the user organization's finances, performance, and opportunities. Among these complementary applications, which will explained in more detail in this article series, is a range of new collaborative applications that will streamline and automate key business processes, such as regulatory compliance, financial period-end close, and corporate responsibility programs.

Currently CODA employs more than 550 people around the world and delivers global sales, service, and support through its own offices in 11 countries. It has a carefully selected network of partners in a further 17 countries to provide implementation services, training, and support for over 2,500 customers in over 100 countries. Of its total number of employees, about 170 are in research and development (R&D), 60 in support (with 15 based in the US), and 110 in consulting. Its worldwide customer base includes medium and large user organizations found across many industry sectors, such as insurance, shipping, transportation and logistics, retail, banking and finance, professional services, and the public sector. While retail is one of the stronger sectors for CODA in the UK, transportation and shipping and financial services companies are the frequent users in North America.

CODA Financials, Inc., located in Manchester, New Hampshire (US) is one part of the CODA Group. Present in the US and Canada since 1988, CODA Financials has a rich history of helping finance departments solve complex problems where issues of scale or high transactional volumes, reliability, and performance are of primary importance. While many may not have heard of CODA itself, many have heard of some of the global, blue chip organizations that are using CODA products and services to support their business. CODA has more than 250 customers in the US and Canada, including Booz-Allen & Hamilton, Maher Terminals, Texas Pacific Group, Lin TV, Pan-American Life Insurance, and Reno Depot, that have delegated their financial intelligence requirements to CODA. Globally, and across some industry sectors, clients include IKEA in retail, AMBAC Assurance Corporation in the financial services, Central Ohio Transit Authority (COTA) in transportation and logistics, and the Fashion Institute of Design and Merchandising in education.
A key attribute of CODA's offerings is its "multi" features. It can handle multiple companies, multiple currencies, multiple languages, and multiple charts of accounts in a single product's instance or database. Thus, its single or "unified" ledger architecture, which processes and holds the user company's financial data in a single ledger and in real time, eliminates traditionally lengthy and tardy batch updates between sub-ledgers. Consequently, a near real time financial position is always maintained, and the entire general ledger (GL) should always be balanced. Additionally, the Multiple Dimensional "Flexchart" capability supports up to eight variable length account code segments, which enable revenue and expense tracking at a highly detailed level. The Hierarchies and Account Groups features add virtually unlimited account "roll-ups" to meet inquiry, reporting, and drilldown needs.

Additionally, the complementary CODA analysis and collaborative solutions have been designed to integrate seamlessly both with CODA applications and other leading operational systems to capitalize on customers' existing information technology (IT) investments. Increasingly, CODA solutions are also being used to address the complex requirements of companies that need to intelligently share information with business partners, customers, and suppliers. Furthermore, "upgrade friendly" interfaces underline the vendor's technical vision for integration. For instance, CODA's application programming interfaces (API) "de-couple" the source and feeder applications, thereby enabling system upgrades without having to reengineer interfaces. Application-driven form and report customizations are preserved during upgrades.

Last but not least, the open and standards-based product architecture supports multiple platforms, third party reporting tools, secure Microsoft Office integration, and extensible markup language (XML) and Web services integration. Earlier in 2005, Microsoft Corp. and CODA announced a multiyear alliance intended to enable CODA to deliver a range of financial accounting, management, analysis, and control solutions that take advantage of the Microsoft platform. In addition to CODA's existing line of financial management products for the Microsoft platform, versions of the company's next generation of analysis and process control solutions—including CODA-Analytics and CODA-Intelligence for corporate performance management (CPM), and CODA-Control for compliant process management—will be built using Microsoft technology. Among these are the Microsoft .NET Framework, Structured Query Language (SQL) Server 2005 Integration Services and Analysis Services, Microsoft Office System, Windows Server 2003, and SharePoint Portal products and technologies. CODA maintains that the alliance should help it deliver solutions that will allow enterprises to analyze, control, and exploit changing business dynamics and realize greater value from their financial systems investments. By building on the Microsoft platform, CODA pledges to deliver greater customer value with solutions that are even easier to use, deploy, and maintain, and will help reduce ownership and integration costs.

The alliance between CODA and Microsoft builds on the late 2004 announcement that highlighted CODA's support for the new Microsoft Development Center in Denmark. CODA was the first Microsoft independent software vendor (ISV) partner to take advantage of the center to design, develop, and improve solutions that use the latest advancements to the Microsoft platform. The resulting system architecture designs now include a number of new technologies that aim to helping performance and customer usability, as well as to accelerate CODA's time-to-market with its new application architecture. The new technologies include

* Information Bridge Framework (IBF). Allows data from line of business (LOB) systems (such as CODA�Financials) to be "brought to life" inside the Microsoft Office Suite and related systems that use MS Office technology (such as CODA Collaborative Control and CODA XL)

* Microsoft BizTalk Server 2004. Microsoft engineers reportedly helped the CODA team understand the tight integration of BizTalk into CODA applications, facilitating complex hub-and-spoke back-end business integrations.

There is also an apparent commitment to Microsoft technologies; for example, analytics solutions like Analytic Explorer and CODA Intelligence will exploit SQL Server 2005 integration services, analysis services, and reporting services, while process automation and modeling solutions like CODA-Control will exploit latest Microsoft Office technologies. However, other CODA transactional solutions for financial management support many other platforms and configurations, including OpenVMS (Virtual Memory System), IBM iSeries (AS/400), UNIX, open source, client/server, Web technologies, and Web services (without imposing the choice between client/server and Web-based configurations on the customer). On the application server side, with the choice of the Microsoft SQL Server, Oracle, IBM DB2/400, or Sybase database platforms and the choice of Windows Server, UNIX (HP UX, Sun Solaris, and IBM AIX versions), and IBM iSeries operating systems (OS), application services provide and enforce business rules, security, and validation. The application server includes a single point of maintenance for users, roles, business rules, account validation, reporting roll-up structures, master file details, document posting rules, inquiry templates, pay, matching, etc. The system features a scalable financial engine that can accommodate between tens and thousands of concurrent connections with a farm enabled Web server.

On the other hand, by leveraging extensible markup language (XML) and transmission control protocol/Internet protocol (TCP/IP), Web servers (which can be eithher the open source Apache on UNIX/IBM iSeries/Linux or Microsoft Internet Information Server [IIS] on Windows) enable a scalable delivery of CODA functionality to a Web browser and to Web service-enabled user interfaces (UI), and also serve as gateways for integration. They enable location independent, tailored, intuitive user operation. Form modifications are stored as separate XML documents, and thus become "upgrade friendly" as customizations are preserved during future upgrades. In addition, the use of hypertext markup language (HTML) over HyperText Transfer Protocol (HTTP)/ Secure HTTP (S-HTTP) enables multi-window, browser-based access to complete CODA functionality, as well as centralized configuration, rollout of the user's desktop environment, and a zero-client footprint installed across a secure intranet connection. Moreover, CODA-Portal provides a common platform to view both live CODA data and non-CODA data published as Web documents.
Finally, programmatic access to CODA application services are available through XML, Web services, Java, Microsoft .NET, or traditional batch loads. Whichever technology is applied, it must respect the same CODA security, validation, and business rules. The approach, which is both Microsoft .NET and Java 2 Enteprise Edition (J2EE) compatible (see Understand J2EE and .NET Environments Before You Choose), aims at secure integration across the firewall, as well as platform and device independent integration. Furthermore, integration routines are independent of the CODA server version, whereas there is a traditional batch loading of historical/legacy system data.

Despite the technology's nascent nature and the challenges that relate to this, Web services have increasingly been offering the following high level benefits to businesses that subscribe to CODA and Microsoft:

* Application to application (A2A) communication across the firewall. Provides a secure communication method across a standard S-HTTP Web connection. Nowadays, enterprise applications can communicate across geographically diverse locations and networks without the need for highly expensive dedicated links.

* Common integration approach across platforms, vendors and devices. Since Web services have been adopted and supported by a wide variety of technology providers including Microsoft, Oracle, IBM, Sun, and open source vendors (see Liberty Alliance versus WS-I; J2EE versus. .NET; Overwhelmed. YET?). As a result, businesses can be confident that a common integration approach can be employed to provide higher levels of investment protection and reuse resources and skills, regardless of the disparate IT policies used in-house and by their business partners.

* Rapid application development. Modern application development tools are now engineered to accept or "consume" Web services, and greatly reduce the amount of software coding required to develop functionally rich business applications. This typically translates into significantly lower costs when developing, testing, and supporting applications that are built in this way. It can also enable more nimble and flexible platforms for organizations to respond to changing business needs and market conditions.

* Reduced costs of software deployment and integration. Web services provide a framework to integrate existing applications on existing platforms and use existing World Wide Web (WWW) network connectivity. De-coupling applications means that discrete components can be upgraded and modified, and that major code changes will not impact other enterprise applications.

For these reasons, CODA's product architecture may very well embody flexibility in terms of both the platform, such as allowing multiple choices for databases, application servers, Web servers, and interfaces; and the deployment mode, where users can mix and match Web browsers, rich-client Office desktops, and other customized client-side applications. The system is also customizable and yet supportable, owing to the data-driven screen presentation and layout. The screen and UI modifications are stored separately from the CODA supplied forms, while cascading style sheets promote the adoption of special, "homemade" styles. In other words, UIs are de-coupled from the current CODA version. Lower maintenance costs are not atypical either, given that the unified GL requires no batch updates, due to the single point of maintenance for security, rules, reporting structures, and so on. Finally, being standards-based (which is not necessarily exclusive to CODA) should bode well for protecting return on investment (ROI), owing to commonly available industry standard development skills.

Thus it is not surprising that CODA achieved record operating profits (up 18.5 percent) of $14.0 million (USD) for 2004 ($4.4 million before goodwill amortization). Although revenue fell slightly for the period as a whole to $130.4 million (USD), the last quarter of the year showed a marked upturn in business, a trend which has reportedly continued into the first half of 2005. License revenues showed growth overall when compared with 2003 (up 3 percent to $19.0 million USD, and with a record number of "license seats" sold in 2004), with a significant improvement in the latter part of 2004. Maintenance also continued to advance (up 2.4 percent to $40.8 million USD), reflecting continued confidence from CODA's customers. However, CODA's latest products require less time to implement, which has slightly reduced the income it makes from consultancy.

The vendor has continued its high investment in R&D which amounts to around 20 percent of its total revenues. It hopes that it can maintain its focus on delivering solutions to the likes of chief finance officers (CFO) and other c-level officers to help them to control and reduce finance costs and address the ever-increasing compliance requirements within their businesses.

Business Intelligence: Its Ins and Outs

2009-12-06T11:03:00.000-08:00

Business intelligence (BI) is a big buzzword in today's IT world. It is a concept understood by some, but misunderstood by many.

The purpose of this article is to clarify what BI is and to discuss its main components. It will also discuss why BI is drawing so much attention, even during this economic downturn, and why it is not only winning the hearts and minds of decision makers, but is also penetrating many functional areas like marketing, finance, and securities.

Part of the confusion about BI lies in the flurry of acronyms relating to analyzing business information. In addition to business intelligence, terms like business performance management (BPM), business process management (also BPM), corporate performance management (CPM), and business activity monitoring (BAM), have also emerged. All of these are a part of BI. They are all dependent on BI tools, but it should be noted that BI is not dependent on them.

Though the name was coined by the Gartner Group in mid nineties, business intelligence as a concept started much earlier. The concept was rooted in the reporting systems of mainframe computers in the seventies. During that period reporting systems was static, two dimensional, and had no analytical capabilities. The demand for dynamic multidimensional reporting systems for predictive and intelligent decision-making pushed BI to develop. With the advent of new technologies and applications, BI came to its present state and is continuing to grow every day. BI today is capable of multidimensional analysis of data to see 360 degree business insight, statistical analysis, and forecasting to help better decision support systems.

Based on present trends, the use of BI will become so widespread that every desktop will have a BI icon that in the future. BI will become an integral part of an enterprise's information system and, like word processing software, BI will be used by almost all end users, business users, and government officials to gauge whether their strategies are aligned with their companies' overall strategic plan.

What BI Is All About

BI is neither a product nor a system. It is an umbrella term that combines architectures, applications, and databases. It enables the real-time, interactive access, analysis, and manipulation of information, which provides the business community with easy access to business data. BI analyzes historical data—the data businesses generate through transactions or by other kinds of business activities—and helps businesses by analyzing the past and present business situations and performances. By giving this valuable insight, BI helps decision makers make more informed decisions and supplies end users with critical business information on their customers or partners, including information on behaviors and trends.

Businesses generate a sea of data. Every datum carries a small piece of the business' story. This data is scattered everywhere, in disparate systems and in different departments. It is held captive in dead hard drives, and can even be situated in geographically different regions. However, it is in data, where the true nature of business—its trends, strengths, and weaknesses—lie. BI gathers all the related data to turn it into information and information that is analyzed properly can be used for decision making which can finally go into action.

In other words, BI transforms data into information, information into decisions, and decisions into action.

How BI Evolved

Key to understanding how BI analyzes business is understanding how data is processed into information (via different technologies) and how it is analyzed. Knowing these processes and how it fits into BI's architecture, tools, and applications will also provide clarity about BI.
BI doesn't produce any data, but it uses data produced by other business applications like enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM) etc. Over the past two decades, and especially in nineties, organizations have stored huge amounts of data by building online transaction processing (OLTP) systems and ERP systems, call centers, and the Internet. In pursuit of better data management enterprises build data warehouses (DW), data marts, and installed extract transform load (ETL) tools to work with data warehouses. But very few of these data were processed into information, and even less was used for decision support systems, largely because of the lack of tools to access and analyze the data for business users.

In seventies and eighties, accessing information systems was very tedious and it was rarely permitted to end users. Query and reporting was cumbersome and analytical reporting was spreadsheet based. The whole process of accessing information was time consuming, and delayed reporting didn't achieve results. The advent of technology and the increasing demand from companies to have better information, pushed BI systems to evolve.

Why BI

BI has a tremendous impact on business once installed. It produces the right information at the right time, which is key element for the success of any business enterprise. BI is the art of knowing and gaining the business advantage from data. Whether it is marketing competition, customer retention, inventory control, financial modeling, or even in national security, BI is the answer. BI can answer a company's critical questions such as, why market shares are going to competitors; which products contribute the most to profit; how can business become more profitable; why some divisions are not profitable; which plants produce at the lowest cost; how can productivity improve; which parts of the world are the most profitable; who are best and worst customers; where is money being lost or made, etc.

BI answers these questions by analyzing and comparing business historical data. Data is created by business activities or data from outside sources like environmental, demographic, immigration data, etc. to study a particular group of people or customers. Such information is used by businesses to understand their business trends, their strengths and weakness, and to analyze competitors and the market situation. The information can also be used by government or secret agencies, especially like US Homeland Security, that need to have access to financial, immigration, transportation, and any kind of related data that can be analyzed to determine probable attacks on its citizens or property.

In addition to determining trends, another push to implement BI comes from, the Sarbanes-Oxley legislation, which affects corporate financial reporting, and accounting rules for publicly-held companies. To be in compliance with Sarbanes-Oxley, BI systems will be needed to insure the timely and accurate analysis of business data. Thus real time BI is not only relevant but key to achieving compliance.

Business Intelligence Activities and Tools

As mentioned earlier, BI is a combination of technologies and architectures. Some important BI tools are data warehouses (DW) and data mart, extract transfer load (ETL), reporting and query tools, data visualization, balanced scorecards, dashboards, OLTP, OLAP, data mining, alerting and notification systems, and analytics. Under the BI umbrella all these tools are combined within a special architecture.

Glossary of Enterprise Applications Terminology Part One: Accounts Payable Through Internet

2009-12-04T01:28:00.001-08:00

ERP (enterprise resources planning) was an important step in an ongoing evolution of computer tools that began in the 1960s. Each evolutionary step is built on the fundamentals and principles developed within the previous one. As systems developed over time, a continuous stream of new terminology surfaced.
accounts payable (AP): The value of goods and services acquired for which payment has not yet been made.

accounts receivable (AR): The value of goods shipped or services rendered to a customer on which payment has not yet been received. Usually includes an allowance for bad debts.

advanced planning and scheduling (APS): Techniques that deal with analysis and planning of logistics and manufacturing over the short, intermediate, and long-term time periods. APS describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the "official plan." The five main components of APS systems are demand planning, production planning, production scheduling, distribution planning, and transportation planning.

APICS: A nonprofit educational organization consisting of over 70,000 members in the production and operations, materials, and integrated resource management areas. application Software: A program that performs a task or process specific to a particular end-user's needs, or solves a particular problem. Enterprise applications are typically large-scale business systems that organizations use to manage their operations.

application programming interface (API): A set of routines, protocols, and tools for building software applications or for communicating with programs or other systems. A good API makes it easier to develop a program by providing all the building blocks that a programmer needs Although APIs are designed for programmers, they are ultimately good for users because they guarantee that all programs using a common API will have similar interfaces, which makes it easier for users to learn new programs. On the other hand, many enterprise applications vendors provide APIs for integrating other applications with their systems.

application service provider (ASP): A third-party entity that manages and distributes software-based leased services and solutions to customers across a wide area network from a central data center. In essence, ASPs are a way for companies to outsource some or almost all aspects of their information technology needs.

architecture: A structured set of protocols that implements a system's functions. available-to-promise (ATP): The uncommitted portion of a company's inventory and planned production, maintained in the master schedule to support customer order promising.

back scheduling: A technique for calculating operation start dates and due dates. The schedule is computed starting with the due date for the order and working backward to determine the required start date and/or due dates for each operation.

bill of material (BOM): A listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly showing the quantity of each required to make an assembly.

browser: Software used on the Web to retrieve and display documents on-screen, connect to other sites using hypertext links, display images, and play audio files.

business intelligence (BI): Sets of tools that provide graphical analysis of business information in multidimensional views thus enabling people to make better decisions and improve their business processes.

business-to-business e-commerce (B2B) (A): Business being conducted over the Internet between businesses. The implication is that this connectivity will cause businesses to transform themselves via supply chain management to become virtual organizations, reducing costs, improving quality, reducing delivery lead time, and improving due-date performance.

Enterprise Applications—The Genesis and Future, Revisited Part Six: Looking to the Future

2009-12-04T01:27:00.002-08:00

Today's enterprise applications are required as a matter of course to address more than the processes taking place within the walls of an enterprise. While Web-enablement and collaborative e-business will continue to be a major direction, easier enterprise applications integration and interconnectivity; more flexible pricing; embracement of "plug-and-play" applications that support commonly accepted standards (reflecting a reduced need to heavily customize multi-vendor solutions), embedding analytical applications; knowledge management (KM); and workflow and business process management (BPM) are some of the best prospects among the ongoing wave of enterprise applications hot-buttons. It is needless to say that almost all traditional ERP vendors (small and big alike) had to experience a "wake up call" and have long been trying to expand their product offering in tune with the ever-changing trends and requirements of the new collaborative economy. Multinational capabilities, product data management (PDM), APS, warehouse management, Web-based product configurators, and component (modularized) architecture might still be the order winners, but, we believe these functional and technological features are becoming demoted into commodities (order qualifiers).

The still untapped ERP mid-market segments have also vicariously benefited by learning from mistakes and failed ERP implementations in many commercial companies in the past. Additionally, many enterprise systems are now also componentized, which provides phased implementations in more manageable chunks (instead of a traditional "big bang" approach) in addition to vendors' developed implementation methodologies that are based on bypassing the usual traps of past failures. Many ERP systems have meanwhile also been Internet-enabled, which also allows for a quicker and simpler implementation, because client machines do not have to be configured time and again. Consequently, a prospective customer also has a choice of either installing software on its own intranet or renting it via an application service provider (ASP).

It is apparent that lately ERP has been redefined as a platform for enabling e-business globally. Originally focused on automating the internal processes of an enterprise, ERP systems have begun to include customer and supplier-centric processes as well, having thereby become universal business applications that encompass front-office; business intelligence; and e-commerce or supply chain management. Given the mere "ERP" moniker is no longer an acronym sufficient enough to cover the above scope, we would like to join in the above-mentioned buzzword frenzy with a new acronym—iERP, standing for inter(net)-enterprise resource planning, albeit we are full aware of the buzzwords' abundance in the market and its imperfection of not fitting the TLA description (see BLM—Buzzword Lifecycle Management).
As mentioned earlier, knowing the history and evolution of enterprise software is essential to understand its current application and its future developments. ERP was an important step in an ongoing evolution of computer tools that began in the 1960s. Each evolutionary step is built on the fundamentals and principles developed within the previous one.

It should be noted that the underpinning of the most sophisticated business applications systems today still remains the same mathematical model introduced in the first MRP systems. This model of "what do I need, what do I already have, and what do I need to get and when" will be the backbone of the integrated, Internet-enabled supply chain.

Technology can never totally replace an effective demand management process. Therefore we have always regarded some analysts' hasty predictions of ERP's demise at the end of the 1990s as frivolous. The fundamental shortcomings of ERP revealed by the advance of technology and increasing customer demands have been addressed by extended-ERP point solutions (bolt-ons), and ERP vendors are expected to continue their quest for delivering more complete solutions. As mentioned earlier, there has been a renewed recognition that ERP is imperative to managing and controlling internal materials movements and processes, and it forms the foundation for collaboration, e-business, CRM, SCM, and so forth. Therefore, while the traditional introspective mind-set of ERP becomes history, its functionality remains critical. The "new economy" of the late 1990s will not have caused the obsolescence of general ledger (GL) and accounts payable and receivable (AP/AR) for example. Quite the contrary, it will have only emphasized their importance.

Still, one should ensure the transaction coherency that this extended scope of enterprise applications might likely hinder. In other words, unless all the functional modules have access to and use the same data in near real-time, unless all processes are fully integrated (so that, for example, a mobile sales representative can see the live inventory data for order promising), and unless users can seamlessly move from one module to another, we are not talking about coherency but rather about the hodgepodge of disconnected (or very loosely connected, in the best scenario) islands of information. While there is a promise of new technologies like portals, Web Services, layers of abstraction between application components, and so on, all to contribute to seamlessly connecting people, data and processes, that is still largely the most probable case within the context of a homogenous offering from a single vendor, and only whose all applications concurrently "look" at the same data.

Enterprise Applications—The Genesis and Future, Revisited Part Five: More on ERP Evolution

2009-12-04T01:27:00.001-08:00

Another important area of enterprise resource planning (ERP) vendors' functional expansion has been in the front-office and customer relationship management (CRM) arena, since customers are demanding applications and tools that allow them to link back-office ERP systems with front-office CRM systems. CRM has gone from a vast field of point solutions to suites of customer care applications covering SFA, field service, telesales, call center, marketing automation, etc. Today's enterprise applications are required as a matter of course to address more than the processes taking place within the walls of an enterprise. Almost all traditional ERP vendors (small and big alike) experienced a "wake up call" and have long been trying to expand their product offering in tune with the ever-changing trends and requirements of the new collaborative economy.

To that end, over the last few years, all significant enterprise applications players have been actively partnering or finding other ways to provide solutions that allow businesses to collaborate more effectively. Consequently, the boundaries between ERP, CRM, e-commerce, and SCM have blurred so much that any attempt to functionally separate them becomes ever more pointless. If the ultimate objective is to win and retain customers, one must consider the entire chain, which includes traditional ERP and SCM functions as well as the once-considered more remarkable and supposedly more relevant CRM and e-commerce activity.

The cycle begins with the attraction of the customer through sales and marketing. This hopefully results in an order management and fulfillment process and ends with customer service, which can involve anything from field installations through to enquiry and complaint management. All of these steps have to be executed well without exception. Otherwise, the prospective customer will end up on a competitor's list of customers. Therefore, the relative importance of CRM versus ERP, ERP versus SCM or of any other match-up is irrelevant. All of these functional areas are critical, except for some esoteric or autistic businesses that can get by with implementing islands of information.

The "64,000-dollar" question is how all business processes work together. In the electronic world, the degree of flexibility and efficiency of collaborative processes relating to the customer life cycle, product life cycle, and so on, to name but a few, will be a big determinant of losers and winners. As proof of the above might be the fact that the traditional large ERP providers like SAP, PeopleSoft, and Oracle can claim bigger CRM-related revenues than every pure-CRM vendor except for Siebel Systems that still clings to its CRM leadership position (see Comparison of ERP and CRM Markets' Life Cycle Snapshots). Some demarcation line here could be that ERP vendors are successfully selling into their manufacturing install base, while CRM specialists stronghold remains the service sectors where ERP as not gained much religion.
ERP software's scope has also recently gone beyond traditional transactional business functions by enabling organizations to deliver real-time performance analysis directly on the desktops of CFOs, CEOs, and other business managers. Major ERP vendors have been shifting focus from routine users' transaction requirements to the overall organization's business imperatives, thereby helping lines-of-business (LOB) become more knowledgeable and proactive. Instead of requiring a collection of processes, the system should appear to each user as a vast source of information. While relational databases, currently used by ERP systems, are good at retrieving a small number of records quickly, they are not good at retrieving a large number of records and summarizing them on request. Most ERP products have a rich database, but, translating the data stored within the database to information useful for making enterprise decisions has proven difficult. With the availability of software analytic solutions, several dozens of ERP providers can supply their customers with a valuable tool for harvesting the business value out of their database. Therefore, major ERP vendors have been increasingly embracing OLAP (On-line Analytical Processing) tools that provide a high-level aggregated view of data.

While ERP and analytics have been inseparable ever since the idea of business automation via IT way back in the 1960s, they have had different user experiences, evolutionary paths, and so on. Namely, although ERP systems have positively transformed many enterprises' business processes, many users have still been left feeling as oversold to, due to the overwhelming notion that these systems inhibit access to the vital information "jailed" in them. Often indeed, in most traditional ERP systems a number of financial activities are grouped together to form artificially created processes, which bear little resemblance to the actual business activities, such as ERP systems' focus had often appeared to only be getting the correct figures into the general ledger, which has a transactional glut as a result.

Contrary to traditional core ERP, business intelligence (BI)/analytics provides an environment in which business users receive information that is reliable, consistent, understandable and easily manipulated (i.e., flexible). Because C-level executives and middle management have always had a need to understand their business' performance regardless of good or bad economic times—while the output from BI might change, the need is always there. Particularly since the recent massive demise of dot-com's, the depressed economic times, and the stringent Sarbanes-Oxley Act (SOA) reporting regulatory requirements following up the high-profile corporate fraud scandals (such as Enron, Tyco, and WorldCom) have additionally increased executives' focus on understanding and managing corporate performance.

New disclosure rules are prompting companies to share information faster (for example, accelerated filing of 10Q quarterly statements and 10K annual reports, report sales of stock by executives (insider trading) within days of the transaction, expanded list of "significant events" to include changes in debt ratings, inclusion of financial results of partnerships in earnings reports, etc.), and sophisticated data-collection and data-analysis applications come in handy in that regard. Given that the BI tools have neither been terribly complex nor expensive to deploy, but have still been helpful in facilitating the decision-making process, they have lately become considered necessary rather than as a luxury. Also, decisions are nowadays increasingly made at ever lower levels in organizations. For more information, see Business Intelligence Success, Lessons Learned.

To that end, various enterprise business intelligence (BI) solutions enable organizations to track, understand, and manage enterprise performance, and they leverage the information that is stored in an array of corporate databases/data-warehouses, legacy systems, and diverse enterprise applications. The latest evolutionary step introduces the concept of corporate performance management (CPM) (often interchangeably referred to as enterprise performance management [EPM] or business performance management [BPM], too), which is an emerging portfolio of applications and methodology with business intelligence (BI) architectures and technologies at its core. Historically, BI applications have focused on measuring sales, profit, quality, costs and many other indicators within an enterprise, but CPM goes well beyond these by introducing the concepts of management and feedback, i.e., by embracing processes such as planning and forecasting as core tenets of a business strategy.

For the above reasons, the vendor landscape remains diverse, with every vendor, including many ERP aspirants, touting some (or nearly total) CPM capabilities. Thus, the arms race to marshal the most complete CPM platform has lately intensified; see BI Market Consolidation Compared to ERP Market Consolidation.

Enterprise Applications—The Genesis and Future, Revisited Part Four: Another Step in ERP Evolution

2009-12-04T01:26:00.002-08:00

Hence, enterprise resource planning (ERP) has entered another step in its evolution. While ERP packages traditionally excelled at combining financial control with multi-plant manufacturing and distribution coordination, they generally lacked extended planning and flexible execution functionalities beyond the four walls of the enterprise that can enable one business process today but change rapidly to handle tomorrow's new models. They were also often found lacking when it comes to delivering special financial features such as robust budgeting or international consolidation, summarized data for analysis and trending, as well as in handling real-time, physical events that occur on the factory floor, as opposed to the transaction-oriented bookkeeping functions (see Financial Reporting, Planning, and Budgeting As Necessary Pieces of EPM).

Therefore, there has been the imperative for the new generation of enterprise applications to be more customer-focused and to extend beyond the enterprise through e-commerce interaction and collaboration with business partners. The key to the Internet-driven, dynamic trade environment is agility, which is where traditional ERP packages have stumbled in the past. Thus, early ERP adopters discovered to their dismay that implementing these systems was only the first step toward creating a competitive information technology infrastructure. They and new users alike are now looking for significantly more comprehensive functionality—from advanced planning and scheduling (APS) (see Glossary*) and manufacturing execution systems (MES), to sales force automation (SFA) and even broader CRM;, to business intelligence (BI) and business-to-consumers (B2C); and business-to-business (B2B) e-business tools to name only some —and demanding that they be integrated into their ERP backbone (see Can ERP Meet Your eBusiness Needs?).

Users' visions of ERP are evolving from tactical to strategic, and users are no longer willing to choose between integration and function, since the "one-stop-shop" offering should mean that the releases are synchronized and the integration is maintained amongst all the components. ERP users who have gone live in the past several years have been making purchases of extended-ERP products (bolt-ons) to provide tangible return on investment (ROI) for their multi-million dollar investment. Recently, the enterprises have begun to analyze the viability of IT investments in a quantified manner, instead of doing only feasibility studies, which would consider only whether implementation of a system is possible but not whether it makes viable business sense. For more information, see Justification of ERP Investments; Part 1: Quantifiable Benefits from an ERP System.

Therefore, in response to the above-mentioned inadequacies of ERP software, a new breed of the above-mentioned specialized software has long emerged, named collectively as "ERP extension" software. These components can either be installed standalone or bolted onto existing ERP instances. They can usually be implemented relatively quickly and at a relatively low price, with much more immediate and quantifiable cost savings to the user. Accordingly, during the last several years, the functional perimeter of ERP systems has begun an expansion into these adjacent markets, as most ERP vendors have been busy developing, acquiring, or bundling new functionality so that their packages go beyond the traditional realms of finance; materials planning and management; and HR/payroll management.

As a result, many pundits have also jumped at the opportunity to name this new evolutionary phase by inventing names and acronyms like extended-ERP, ERP II, enterprise business applications (EBA), enterprise commerce management (ECM), comprehensive enterprise applications (CEA) and so on. More important than this contest for creating the catchiest buzzword, possibly in the unofficially accepted ideal form of TLA (three letter acronym), is the fact that most of these notions signify the evolution or enhancement of ERP, rather than its replacement or obsolescence.

Namely, we believe that, within recent years, ERP has been redefined as a platform for enabling collaborative e-business globally. Originally focused on automating internal processes of an enterprise, extended ERP systems increasingly include customer and supplier-centric processes as well. The conclusive evidence of this redefinition is the move of all major traditional ERP players into CRM, e-commerce, and SCM applications, which is the best illustrated by SAP's SCM revenue exceeding the former leaders i2 Technologies, Ariba, and Manugistics.

Enterprise Applications—The Genesis and Future, Revisited Part Three: 2000s—Back to the Future

2009-12-04T01:26:00.001-08:00

Integrated enterprise resource planning (ERP) software solutions became synonymous with competitive advantage, particularly throughout the 1990's. The idea behind ERP systems was to replace "islands of information" with a single, packaged software solution that integrates all traditional enterprise management functions like financials; accounting; payroll; human resource (HR) management; and manufacturing and distribution, and thereby ensure enterprise-wide transaction system coherency. Knowing the history and evolution of ERP within the broader enterprise applications concept is essential to understanding its current use and its future developments. The following is the genesis of enterprise applications by era.

ERP systems should help companies become leaner by integrating the basic transaction programs for all departments, allowing quick access to timely information. However, ERP inherited MRPII's basic drawbacks, which are the assumption of infinite capacity and the inflexibility of scheduling dates, preventing companies from taking full advantage of speedy information flow.

This brings us to the still ongoing phase of users' disillusionment and their consequent wising up, while the vendors had to take the school of hard knocks and adapt accordingly or fail. Namely, the growth and heydays of ERP throughout the most of the 1990s had been a direct result of the fierce global competition, shortening product life cycles, highly distributed operations, and information-driven management that largely characterize today's business environment. The vast majority of companies have always hoped to purchase an information system as a product, not as a collection of technologies, components and services. Leading ERP vendors have been relatively successful at that stage because they had attempted to build such a product.

A typical ERP system indeed now offers broad functional coverage nearing the best-of-breed capabilities; vertical industry extensions; a strong technical architecture; training, documentation, implementation, and process design tools; product enhancements; global support and an extensive list of software, services and technology partners. While it is not a system-in-a-box yet, the gap between its desired and actual features is becoming smaller every day.

However, ERP vendors have by and large not fared so well lately. The initial plight of the vast majority of ERP vendors was mostly attributable to the Y2K-problem caused market slowdown that started in the fourth quarter of 1998 and continued in full force throughout 1999 and 2000. Indications of it winding down finally surfaced late in 2000.

Particularly affected was license revenue, and the market (with some honorable exceptions) was dramatically less expanding and profitable during 1999 and 2000 than in 1998, measured in the total raw dollar revenues and net income. But, the 2000s have proven to be even more adverse years in the entire enterprise applications market. Following the whopping growth rates of the late 1990s, and the short-lived spending surge on sexy e-business-related technology in 2000, hard times worldwide and in almost all sectors have since subsequently morphed into harrowing times for all enterprise systems providers alike. While the biggest and richest vendors have been able to hang onto flat new sales, potentially modest declines, or in other cases, potentially modest growth, only the lucky or the most apt few with a true differentiation in a selected number of markets (such as warehouse management systems [WMS]/supply chain execution [SCE] or strategic sourcing) (see Glossary*) have bucked the trend and have recently shown some enviable growth (see The Hidden Gems of the Enterprise Application Space).

Enterprise Applications—The Genesis and Future, Revisited Part Two: 1990s—Enterprise Resource Planning

2009-12-04T01:25:00.000-08:00

Integrated enterprise resource planning (ERP) software solutions became synonymous with competitive advantage, particularly throughout the 1990's. The idea behind ERP systems was to replace "islands of information" with a single, packaged software solution that integrates all traditional enterprise management functions like financials; accounting; payroll; human resource (HR) management; and manufacturing and distribution, and thereby ensure enterprise-wide transaction system coherency. Knowing the history and evolution of ERP within the broader enterprise applications concept is essential to understanding its current use and its future developments. The following is the genesis of enterprise applications by era.

By the time each functional area of a company had developed its integrated software program, the need for tightly integrating them became obvious. The next major shift during the late 1980s and early 1990s was that "time to market" was becoming increasingly short, as the shift from �Fordist' mass production to nowadays' prevailing mass-customization (see Glossary*) principles and mindset has irreversibly changed the society and economy standards. Lead times expected by the market continued to shorten and customers were no longer satisfied with the service level that was considered world class only a few years earlier. Also, by the 1980s, competition from Japanese manufacturers and their philosophy has caused US and West European enterprises to look for new efficiencies using information technology.

Namely, customers were demanding to have their products delivered when, where, and how they wanted them. Companies were therefore compelled to develop and embrace the philosophies of just in time (JIT) and closer supplier partnerships as a way to remain competitive. During the same time frame, the cost of goods sold (COGS) was shifting drastically from labor to purchased materials. Consequently, planners needed to know materials allocations or finished goods' available-to-promise (ATP) values, immediately after customer order entry. On the other hand, buyers needed to know the sales plan several months in advance in order to negotiate prices for individual materials. Empowerment of employees was needed to provide the agility that was required to compete in the market.

Hence, the need to develop a system with tightly integrated programs that would use data stored on one common database and would be used enterprise-wide (such as, actions in one department's program driving actions elsewhere), became the highest priority for IT professionals. No longer was it tolerable to submit a request to the IT department and wait several "man-months" of programming time to obtain this critical information. This common-database, company-wide integrated system was named enterprise resource planning (ERP), as companies realized the need to see the entire picture.
APICS still defines ERP as follows:

"1) An accounting-oriented information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders. An ERP system differs from the typical MRPII system in technical requirements such as graphical user interface (GUI), relational database management system (RDBMS), use of fourth-generation language (4GL), and computer-aided software engineering (CASE) tools in development, client/server architecture, and open-system portability;

2) More generally, a method for the effective planning and control of all resources needed to take, make, ship, and account for customer orders in a manufacturing, distribution, or service company."

Given many new very recent functional and technological developments, which will be analyzed in other upcoming articles, many may rightly consider certain parts of the above definition as somewhat outdated or not all encompassing. In general, the second part of the definition holds true, given traditional ERP involves software packages that by and large automate and support the processes of the administrative, production, inventory, and product development aspects of an enterprise.

Enterprise Applications—The Genesis and Future, Revisited Part One: 1960s—Pre-Computer EraIntegrated enterprise resource planning (ERP) software solut

2009-12-04T01:23:00.000-08:00

Bridging the Reality Gap Between Planning and Execution Part Two: The Manufacturers' Perspective

2009-12-04T01:22:00.000-08:00

Despite the fact that many manufacturers have invested in enterprise resource planning (ERP) systems and supply chain management (SCM) systems, most continue to use inopportune batch reports and pesky spreadsheets to manage their operation's performance. These have proven to be inefficient and error-prone methods of supporting decision-making, resulting in a reliance on "educated guesswork" rather than on accurate dynamic analysis to align decisions with strategic objectives. For that reason, some innovative enterprise software vendors intend to do the same for manufacturing and operational decision-making as has already been done to financial decision-making by some business intelligence (BI) applications. (See Financial Reporting, Planning, and Budgeting as Necessary Pieces of EPM).

Manufacturers today need to react quickly in order to remain efficient and competitive, given that the biggest problem they face is that change is the only constant in manufacturing. For those who are lucky, only minor changes will happen between the "as planned" and "as executed" worlds. These changes are the usual minor but endless variances that exist between planning and forecasting in the "ideal world" and manufacturing in the "real world." For all the investments spent on sophisticated supply chain planning (SCP) and manufacturing-planning tools, almost proverbially, the only sure thing about a forecast is that it will be wrong, by and large. Years ago, in business, many minor variations could be ignored as margins were sufficient to accommodate many suboptimal decisions or manufacturing processes, such as keeping increased safety stocks or frequently expediting. But in today's world of often razor thin margins, the variances between plans, real customer demand, and forecasts must all be spotted, and manufacturing success can be determined by the speed and effectiveness of the response to even minor changes.

Sometimes, however, the more serious changes, which disrupt routine tasks of planning and forecasting, manufacturing, delivering, and invoicing standard orders, result from significant unplanned events that occur either within the company or elsewhere throughout the extended supply chain (e.g., a supplier is late, supplies are wrong or of unacceptable quality, a manufacturing line is still unexpectedly busy or is down, there is a last-minute order change, etc.). The risks can be high, ranging from lost margins to loss of customers or erosion of competitive market positioning. Speed and effectiveness in response to these changes can determine the difference between profit and loss in manufacturing an order, or they can determine margin size in a manufacturing cycle or run.

In addition to the above minor and major changes, manufacturers face a third and typically more powerful change to the business itself. Namely, to remain viable and prosper in today's ruthlessly competitive global markets, manufacturers must continually reinvigorate themselves and even occasionally reinvent themselves. Fundamental business changes range from new product introductions and promotions to new corporate goals and objectives; to new target customers, continually changing customer demands and new supply chain partners; and even through to merger and acquisition (M&A) activities and structural changes to the business itself.

Some manufacturers try to cope with possibly the most difficult yet pervasive of all forces in business—never ending change—by trying to leverage the strategic information systems they have been using to control, manage, and optimize the "as executed" state of their business, such as ERP systems, or SCE systems available respectively from their ERP vendors and a broad array of pure play SCE players. However, it has been extremely difficult for them to deal with day-to-day events in real-time with a transaction-based ERP system that relies on batch processes to extract the data they need. It can be daunting for a manufacturer to get real-time notification of a supply chain event, understand its impact, and take the appropriate action given traditional ERP and or execution applications do not really provide this capability. Almost every enterprise has huge volumes of information flowing through their enterprise systems, but only few possess the tools to quickly exploit their wealth of data and thereby optimize their operational and corporate performance.
Most manufacturers will have gone a step further in addressing this problem by deploying some level of strategic planning or forecasting systems to help them forecast and model the "as planned" state, in solutions ranging from a variety of business intelligence tools, such as Cognos, Hyperion, SAS, or Business Objects, all the way through comprehensive SCM solutions, such as those from Manugistics or i2 Technologies, or again from their ERP providers. If one considers traditional business intelligence tools, they merely do a prodding analysis of historical data after the fact, but one cannot count on the future to look like the past, which has been the shortcoming of some forecasting methods as well. Therefore, more up-to-date information is a requirement.

On the other hand, best-of-breed SCP solutions may not be the answer, as they require a significant investment in both software and integration. Sometimes the solutions to improve manufacturing effectiveness are so complex and costly that they overwhelm any benefits that they might provide, such as when engaging consultants to, for example, scrutinize modeling revenue, cost, and supply chain capabilities, with breaking products into families and analyzing the channels they are sold through and the geographies they cover. Frequently, the exorbitantly high cost and complexity keeps companies from realizing the potential benefits that these systems promise.

Additionally, there are still significant barriers to an easy deployment of SCP systems, as they are based on cumbersome proprietary algorithms and heuristics that take a long time to master and harness to work, forcing companies to have full-time �rocket-science' expert consultants on the premises to interpret the results and to keep the application in tune with the business processes it supports. Therefore, the use of a traditional APS method that is non memory-resident and latent in itself, as a basis for all decision-making, is becoming increasingly unsound. Due to the growing visibility of supply chain information, the necessity of SCM has also progressively become more the provision of real-time information. Still, early supply chain event management (SCEM) systems, while crucial to increase visibility and raise flags, have lacked the ability to figure out resolution processes in the applications and their subsequent impact on operations.

Bridging the Reality Gap Between Planning and Execution Part One: The Problem

2009-12-04T01:21:00.000-08:00

The demand for near real time supply chain collaboration will, in turn, place an increasing emphasis on any company's ability to immediately commit itself to promising orders' delivery dates on a global basis and to consistently meet those commitments ever after. This available-to-promise (ATP)/capable-to-promise (CTP) aptitude will be made more complex as companies rely on an increasing number of business partners and suppliers to procure raw materials, assemble, and deliver finished goods. One should therefore take into consideration many more constituencies at both ends of the supply chain and within the organization, such as in research and design or engineering, sales, marketing, and finance.

For example, there is the need to drive suppliers and sourcing initiatives as far back into the design process as possible to ensure the lowest possible cost and the highest possible quality and delivery performance. Hence, product lifecycle management (PLM) and customer relationship management (CRM) are now a part of the supply chain equation, as are operational functions like procurement, supplier performance, spend management, and contract management. In fact, most traditional supply chain thinking has taken place on the supply side, involving operations planners and factory managers. SCE is, therefore, gaining increased awareness lately among companies that realize that planning can do only so much without the ability to make the correct and timely decisions and execute on the shop floor, in the warehouses or within the entire distribution chain.
Yet, planning and execution in the supply chain are slowly but surely converging because no plan is useful if it cannot be executed. The irony is that the best plan cannot help when there is a shortage of certain items, though such an event is the reason for having a plan in the first place. Thus, it would be too na�ve to dismiss the need for proper planning. Regardless of how responsive a SCE system may be, waiting for chaos to happen and only then trying to act would be equally disastrous. It is the same as compiling nearly ideal plans (through cumbersome algorithms) and never doing anything about executing them or never obtaining feedback about their outcomes.

There are disturbance factors that make plans vulnerable, such as unplanned, demand increase from a customer; an engineering change as a result of a field failure; a capacity constraint from a production line or work center failure; inventory shortages or supplier notification of late order; and simple acts of nature. One should then imagine the complexities of coordinating and optimizing available resources within companies that produce thousands of diverse products that are sold through diverse channels and that are comprise of even more thousands of parts and components, each of which is sourced from a multiplicity of suppliers.

Thus, enterprises have for some time now begun to move beyond simple applications for balancing supply and demand to technologies that let them quickly analyze the impact of various decisions to improve product margins, lower costs, and so on. Consequently, operations such as sales and operations planning (SOP)—which aligns the production plan to the fulfillment plan to the product availability plan—needs to be a dynamic document, not a "set in stone" series of Microsoft Excel spreadsheets filed away for later analysis of variances to plans. Businesses need to determine the reason for these variances through analytic and other tools for planning revision.

Evidently, as supply chains become more dynamic and operate in near real time, the lines between planning and execution continue to blur, which bodes well for their functional convergence. Thus, some SCE vendors have started to move beyond pure execution to offer some planning and optimization capabilities, often with the "adaptive" moniker.

A new requirement is that beyond making plans happen, adjustments need to take place quickly with the ability to tweak the system to respond across a variety of organizations and functions. Companies need real time information from execution systems to develop and adjust optimal plans, while the execution side should benefit from more realistic plans for some readiness sake, rather than merely reacting after the fact in a firefighting fashion. The demand-driven supply chain requires a single, consistent, demand-based plan that optimizes marketing, inventory, and replenishment decisions.

We believe that planning and execution will become inseparable in a trend that will see ERP, SCP, SCE, supply chain event management (SCEM), PLM, CRM, MES, and analytics and CPM (i.e., decision support tools and multidimensional analysis on information aggregated from all levels of the commerce chain, and an extensive sets of predefined performance indicators, as well as strategic planning or forecasting and balanced scorecard functions) coming together into an adaptive system. Harnessing this technology should lead to the so-called "self-healing" or adaptive supply chain—when a software engine monitors all the numerous events taking place supply-chain-wide, identifies and escalates exceptions, sends notification, and reacts appropriately to those exceptions, ideally (and only in the long term) without human intervention.

The future will thus see a blend of real time event management (i.e., execution side for the tactical time horizon) and SCP with its strengths in inventory management and capacity planning (i.e. planning or optimization side for mid-to-long-term horizon), as to enable the successful execution of the plan given current conditions.