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Becoming a Top Performer: Why Companies Are Still Investing in Core Financial Management Processes

by James Fisher | SAPinsider

July 1, 2011

SAP has not been sitting still when it comes to innovating the core SAP ERP Financials capabilities that are the bedrock of many organization' transaction processing and financial reporting. This article explores four areas in which this innovation has been especially powerful: invoice-to-pay and e-invoicing, financial risk management for commodities, travel management, and a shared services framework.
 

Now that businesses have emerged from the worst of the economic downturn, they are once again spending on IT and business process improvements — especially in areas where there is a demonstrable ROI and where planned implementation times are not too long. A briefing paper from benchmarking and advisory group APQC suggests that many large organizations will likely invest in their financial management processes, since weaknesses in areas like payables, receivables, and budgeting are no longer acceptable1.

Through its research, APQC discovered some key differences between top and bottom performers across various criteria, such as the proportion of manual journal entries and the general accounting cost per journal entry line item. Sometimes, the difference between top and bottom performers is significant (see Figure 1), indicating that many organizations need to focus on low-hanging fruit, like improving the time needed to complete monthly consolidated financial statements, before moving to bigger projects.

Figure 1 Some differences between top and bottom performers in financial management

How can companies master that low-hanging fruit and move into the top performer category? SAP offers the tools to support this initiative — we certainly have not been sitting still when it comes to innovating the core SAP ERP Financials capabilities that are the bedrock of many organizations’ transaction processing and financial reporting. Let’s explore four areas in which this innovation has been particularly powerful.

1. Invoice-to-Pay and E-Invoicing

It is not uncommon for large businesses to charge their suppliers a penalty fee for submitting paper invoices instead of electronic ones. Such a disincentive usually sets suppliers on the road to electronic invoicing, or e-invoicing, an area in which SAP has driven innovation by collaborating with Crossgate and OpenText.

For example, the automation of the accounts payable process through e-invoicing is fully supported by the SAP Information Interchange application by Crossgate, which connects suppliers and customers with out-of-the-box connectivity, regardless of data standards. This allows users to electronically exchange invoices and other documents directly from their SAP applications. The SAP Document Access and SAP Archiving applications by OpenText also enable scanning and imaging of paper documents and store the images, which are accessible through downstream image processing, with the posted transaction.

2. Financial Risk Management for Commodities

The activities of analysts, the global demand for commodities, and US regulations like the Sarbanes-Oxley Act force companies to develop new commodity risk control and mitigation strategies and improve related financial reporting processes. After co-innovation with a European customer with global mining and metals trading interests, SAP Treasury and Risk Management now provides specific functionality to help companies mitigate commodity price and availability volatility and meet relevant government regulations.

This single platform for managing commodities, as part of a complete portfolio of other treasury applications, enables improved visibility and accuracy to help companies deliver more predictable earnings — while the straight-through processing of hedges alongside all other treasury transactions enables easier control and compliance, as well as considerable productivity gains.

3. Travel Management

Rising fuel prices and the globalization of today’s business arena are increasing business travel expenses. Companies need to control their travel budgets, enforce travel policies, and reduce the amount of time employees spend scheduling trips. SAP Travel Management streamlines these processes, reducing administrative tasks for employees and helping companies realize significant savings. Because of its close integration with SAP ERP Financials and SAP ERP Human Capital Management (SAP ERP HCM), SAP Travel Management links all phases of travel management in one integrated process. It also includes role-tailored user interfaces, including a web application for travelers, travel arrangers, and managers; a graphical user interface for expense administrators; and reporting dashboards for travel managers.

New mobile technologies enable further gains. SAP Travel OnDemand uses functionality from OpenText Travel Receipts Management for SAP solutions so travelers can, for example, upload images of receipts with mobile devices and submit an expense report into SAP ERP Financials.

4. Shared Services Framework

With companies loosening the purse strings for larger-scale projects with long-term paybacks, many CFOs will be revisiting their shared services strategy as a way to both further reduce costs and free up staff to focus on more value-added activities.

The way companies implement shared service centers varies so no two configurations are identical. Some pursue best practices in dedicated single-function service centers; others use multifunction service centers to minimize infrastructure costs. Although companies take several different approaches, one thing is clear: They are once again seeing the value of moving to a shared services approach for finance and treasury functions — and SAP is there to provide a framework that ensures compliance, drives process performance, and provides comprehensive reporting.

The SAP Shared Service Framework rapid-deployment solution for financials is an integral part of SAP’s multifunctional shared services platform that spans HR, finance, and IT. It integrates financial transaction applications into the service center environment, with an emphasis on driving service excellence, improving process efficiency, and reducing costs. And with all functions based on a single platform, there is more scope for cross-training so staff can be flexibly deployed.

Benefits Within Reach

These are just four of the areas in which SAP is driving innovations in core financial processes — and with the new, transformational power of in-memory computing, there will be many more in the coming months. Becoming a top performer in core financial processes is more than feasible; the application of new technologies means that service enhancements and cost reductions are always within reach.

Visit www.sap.com/solutions/business-suite/erp/financials to learn more about SAP financial management software.

James Fisher (james.fisher@sap.com) is Vice President of Marketing for Enterprise Performance Management and Finance Solutions at SAP. James has over 15 years of experience in the enterprise group reporting, compliance, and performance management industry; previously, he held global and EMEA marketing and consulting roles at Business Objects, Pricewaterhouse-Coopers, and KPMG.

 1 Mary Driscoll, APQC, “The Benefits of Streamlining Financial Management Processes — The Soft-Dollar Benefits Can Turbo Charge the Hard-Dollar ROI” (2011, www.apqc.org). [back]

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