a time when organizations have really pared
their finance departments, why the renewed focus
on financials in mySAP ERP 2005?
Director of Solution Marketing,
mySAP ERP Financials,
SAP Labs, LLC
Effective financial management still remains
a hallmark for any high-performing organization.
Unfortunately, most financial managers are
being asked to do more with less and address
an entirely new set of needs that didn't
exist a few years ago. So, at SAP, we're
focused on helping finance leverage their existing
resources and investments in order to address
a changing business climate. With mySAP ERP
2005, we provide a single, integrated financial
management platform that is flexible enough
to address current and future needs in finance.
We envision mySAP ERP 2005 as the "Swiss
Army knife" for
finance — a single solution that helps
companies in multiple ways:
- It's open and flexible enough
to use in different markets and address different
- It's one solution that enables
companies to adopt best practices
across the organization.
- It's a single source of the truth
for financial managers to set strategic plans
and budgets and to make financial information
transparent to the rest of the organization.
the one-stop shop to address financial
compliance, manage internal controls, and
deliver higher quality audits.
We see ourselves as the only provider that can give
an organization a complete set of operational finance
tools — in addition to a set of financial compliance,
corporate performance management, and analytical tools — all
built on a unified platform. The only one.
Q So SAP is, if you will, addressing
the past, present,
and future of financials: The "past" is
the traditional financial tools and processes that
will be optimized in mySAP ERP 2005; the "present" is
the tools to make financial data and analysis and financial
compliance visible to everyone based on their role;
and the "future" is a single platform that
can change and grow as you do.
your standard financial processes — these aren't
going anywhere. So more and more companies
are looking to become more efficient and reduce
the costs of running their day-to-day processes.
What is SAP doing on this front?
Let's set the stage: The Hackett Group measures
the average cost of finance in companies running at
1.26% of revenue.1 This year's percentage actually
exceeded 1% for the first time in quite a while. The
highest-performing organizations are running finance
for a full third less, at anywhere between 0.7% and
0.8% of revenue. How are they taking that 0.7% and
applying it? According to Hackett, world-class organizations
spend less on technology, but not by using less technology.
One way to do this is to standardize on a single enterprise
platform, instead of continuing to employ multiple
platforms and piecemeal applications.
SAP provides that single platform to enable our customers
to get the greatest level of performance out of that
less than 1% or so. We also give them the tools to
master the small things, like closing books faster,
getting down to a zero-day close, getting their DSOs 2
in the top-tier performance category within their industry,
all while being able to strip out all of the IT costs
associated with finance in terms of managing multiple
systems and harmonizing data.
spoke of making finance transparent to the rest of
the organization, a capability promised by SAP as
well as competitors. Do you have an example of what's
different with mySAP ERP 2005?
One of the unique things about the mySAP ERP product
line, including the 2005 release, is that it combines
industry-specific operational processes with core financial
management capabilities in one product. So what that
means for a leading athletic footwear company, for
example, is that they will have the ability, with one
product, to support very specific operational processes
for the footwear business. They can then take that
operational data, map and marry it to the financial
performance data, and create product performance
models and reports for their executive managers and
line managers — the people who understand where
products are going, what the most profitable products
are, and what designs are driving profitability.
Or take the example of an emerging mid-sized, consumer-technology
company that looked to SAP for a single platform to
address myriad operational challenges in finance, including
the ability to produce reliable financial reports as
they prepared for their Sarbanes-Oxley requirements.
It's a very different game than a few years ago,
when it was acceptable to implement standalone solutions
for financial reporting and performance management.
Today, companies are starting to see these capabilities
as a mainstream activity of finance. SAP, with mySAP
ERP 2005, recognizes this trend and gives you one solution
for both operational and analytical aspects of finance.
about the ability to anticipate change and roll out
solutions quickly and effectively? Can you give us
an example of that?
Anticipating and being prepared for new business challenges
is where the whole concept of Enterprise Services Architecture
(ESA) really becomes meaningful from a business standpoint.
What it means for a finance organization is effectively
being able to add a new process or capability without
having to install an entirely new family of software
products, or having to worry about how any current
piece of software is going to work with any future
piece of software. It's more about how to apply
a process that they had seen within their industry
or perhaps from their competitors, how they can emulate
that within their own business, and how their IT environment
can support that process.
Here's a practical example in the area of corporate
governance and compliance: Phase one of the Sarbanes-Oxley
compliance challenge was the documentation exercise
around Section 404 in order to support the sign-offs
required by Section 302. We acknowledged that yes,
that's a mission-critical process, and we provided
that capability within the platform. But what quickly
happened, as companies now look at phase two Sarbanes-Oxley
challenges, is that they identified an area like segregation
of duties, which is a very painful, expensive process
that involves extensive testing and subsequent reporting.
The SAP platform affords customers the ability to take
a partner solution, for example, combine it with their
existing mySAP ERP environment, and plug in a Web application
that specifically addresses segregation of duties testing.
Now, the results are reported over into the SAP Management
of Internal Controls (MIC) product. It's a perfect
example of how, if you made the early commitment to
SAP, it opens up your options and also lowers the total
cost of implementing these new software services to
address a new challenge.
are the easy opportunities for finance teams to gain
an edge with mySAP ERP 2005? Where will the innovations
of 2006 come from, so to speak?
One pressing pain point we're hearing from our
customers is the ability to — in an almost frictionless
manner — transfer data and financial information
between their organization and other organizations.
This is very expensive and painful for some companies.
As an example of what I mean, let's look at traditional
accounts payable, accounts receivable, and cash management
processes. It's amazing to me that even with
the advent of electronic business processes for order
entry, purchasing, and inventory management, the vast
majority of companies still rely on paper and the mail
system for payments. These paper-based, manual processes
remain ripe for innovation and represent "low-hanging
for cost savings in finance.
I see components in mySAP ERP 2005, like SAP Invoice
Management, SAP Biller Direct, SAP Dispute Management,
and SAP Treasury and Risk Management, combined with
core order management and inventory management capabilities,
as providing a powerful combination that can reduce
transactional costs, accelerate payment cycles, and
reduce days sales outstanding for companies in many
Or if you look in the areas of treasury and cash management,
getting a real-time pulse of what your cash position
is still remains a major issue, especially for global
organizations. The pain point is typically around the
exchange of information between an organization, its
subsidiaries, and the respective banking organization.
It's a very expensive process to get bank information
and real cash position information mapped back into
the corporate books. Typically, this doesn't
happen on a daily basis — it happens
probably on a weekly or monthly basis. Companies compensate
by carrying higher levels of working capital than they
need to. Within mySAP ERP 2005 is the ability to improve
the efficiency of managing complex global banking relationships,
which, over time, will enable large organizations to
optimize cash positions more effectively and drive
down the cost of working capital.
data and information to flow more freely will place
even greater importance on fraud prevention and audit
control, right? We have heard a lot of noise about
financial compliance and Sarbanes-Oxley. Where does
compliance rank in terms of SAP's
We see compliance as core to any business. If you fail
compliance, you're out of business. For executive
managers, this means possible jail time and heavy fines — it's
serious business. SAP is doing a lot of things to help
companies in this area. First, we are adding new capabilities
for audit management, internal control documentation,
and better financial reporting. Second, and probably
more importantly, we are leveraging our application
platform technology, SAP NetWeaver, to bring partner
solutions into the fold. We provide a new solution
called SAP Compliance Calibrator that works as an extension
of mySAP ERP 2005, and with it we enable other compliance
management vendors to support customer needs in the
areas of compliance and fraud prevention.
of these innovations speak to where enterprise finance
is going, to a world where the boundaries between
what is traditionally finance and what is within the
realm of the rest of the organization are breaking
down. If financials is changing, how must the organization
Let's talk about analytical insight for a second.
As you know, in the world we live in today, we're
constantly wishing we had some data or research to
support a particular decision. So typically what we
do is call on finance or an analyst to spend a week
or two creating a managerial report for us to consume.
If we can compress that decision cycle, make it real-time,
make it a matter of minutes instead of weeks, that's
a fundamental shift — that's
how we effectively disperse the capabilities of finance
into the hands of employees.
If I think about it from a finance-centric point of
view, that really changes the responsibilities of what
finance needs to deliver to the enterprise. They
have to collect the right information and subsequently
distribute that information to the organization.
As you can imagine, that's
not an easy challenge. It's very easy to distribute
all the information, but it's very tough to distribute
just the right information that will guide decisions
in the proper way, consistent with corporate strategy.
So in many ways it's a twofold change: Line employees
will have the ability to think like finance people,
and finance people are going to have to think very
carefully about what kind of information, KPIs, and
metrics they need to provide to their organization
in order to set the right strategy.
Tools of the
Thanks to several key enhancements, such as
consolidated planning and better integration
with Microsoft Excel, mySAP ERP 2005 improves
the efficiency and automation of standard financial
functions while at the same time offering tools
and analytics to break outside the boundaries
of traditional finance departments. The result?
Getting the right information into the hands
of the right people to enable them to make
the right decisions, regardless of where they
may sit within an organization.
The new features and functionality of mySAP
ERP 2005 include:
- Express Planning — Express
Planning is a guided process that automatically
unites financials with people and projects,
and integrates with the business planning
and simulation functions of SAP NetWeaver
Business Intelligence. mySAP ERP
2005 also enables workflow to handle
the approval process, so that the
entire planning process is captured
within the ERP system.
- Role-based analytics — Role-based
work centers provide employees with access
to their inbox, task lists, and transactional
capabilities, as well as process-specific
analytics to aid decision making. For example,
mySAP ERP 2005 provides credit managers
with a tool that enables blocking or unblocking
of customer orders based on an analysis
of customer behavior (risk, credit status,
payment status, etc.).
- Adobe Active Forms — mySAP ERP 2005 utilizes
Adobe "active-form" technology
in order to streamline and improve the
usability of certain financial processes,
such as budget entry, invoice management,
purchasing, and order entry.
- Business insight — Since
mySAP ERP 2005 is
built on SAP NetWeaver, customers can
access all the advantages of SAP Strategic
Enterprise Management (SAP SEM) and SAP NetWeaver
Business Intelligence through one solution.
This has major implications for customers
seeking to improve financial consolidations,
budgeting and planning, and corporate
performance management with a single solution.
- Financial collaboration — mySAP
ERP 2005 also looks beyond the bounds
of the company for the latest collaboration
approaches. SAP Invoice Management
and SAP Biller Direct can be used to
automate accounts payable (A/P) and
accounts receivable (A/R) processes
and improve collaboration between customers
and suppliers. As a result, companies
can lower error rates
in payments, eliminate duplicate payments,
speed up payment cycle times, and lower the
overall cost of A/P and A/R.
- Mendocino — mySAP
ERP 2005 will be the first
SAP solution to take full advantage
of the Microsoft Office integration capabilities
delivered by Project Mendocino. Customers
will be able to improve travel
and expense management processes, improve
distribution of analytical reports, and streamline
self-service capabilities through improved
from the desktop.4
1- The Hackett Group, 2005 Book
of Numbers (2005).
2- Days sales outstanding, a measure of efficiency of a finance organization, compares sales against accounts receivable within a given period.
3- See "Transform Your Cash Flow Processes
with Financial Supply Chain Management" by J|rgen Weiss
in this issue of SAP Insider (www.SAPinsider.com).
4 - See "SAP as Easy
as Opening Email? Introducing Project Mendocino" in
this issue of SAP Insider (www.SAPinsider.com).