I recently moderated a web forum with SAP's Birgit Starmanns on SAP's disclosure management functionality. Birgit took questions on the timetable for XBRL compliance, the application's integration with SAP financials and costing, the rapid-deployment solution for the application, and other topics.
For the full Q&A, you can view the questions and Birgit's responses in the Financials Forum or read excerpts from the transcript of the Q&A below.
Gary Byrne (moderator): Thank you for joining us today!
In today's Financials Forum, we will be asking SAP's Birgit Starmanns questions on new options from SAP for automating financial and regulatory reports, including XBRL submissions
and quarterly reports. I invite you to ask your questions as well, as you consider how this will affect your financial teams.
I'd also like to thank Birgit Starmanns for taking questions today for readers of Financials Expert and members of Insider Learning Network. Birgit is a frequent contributor to Financials Expert, and she also spoke at the Financials2012 event in Las Vegas just a few weeks ago. She wrote an article in Financials Expert detailing the new SAP BusinessObjects Disclosure Management solution.
Birgit, do you want to start with a quick overview of the challenges of compiling financial reports, and why an organization might turn to a financial disclosure solution? And how have XBRL requirements affected this process?
Birgit Starmanns: Thanks for the question, Gary! The challenges that we see are that it is time-consuming for companies to gather data from different sources; the process of combining financial figures with narrative/unstructured data is usually done via cut-and-paste, which often results in errors. In addition, if a report is sent out internally for approvals, multiple inconsistent edits may be requested, resulting in even more manual adjustments.
XBRL is involved because many companies have begun to look at automating the disclosure process because of the mandate to file financial statements with regulatory agencies in the XBRL format. If the tagging of information is outsourced, there is also a risk of last-minute adjustments resulting in inconsistent information between the financial statements (such as an annual report) and the XBRL instance document that is filed. Ult
imately, the same process of bringing together the financial information with narrative benefits the production of both the annual reports as well as the electronic filings.
BeckyMoores: What is the time table for having the capabilities to use this functionality for an enterprise governmental unit? I assume that's down the list of priorities but is there any idea of when?
Birgit Starmanns: Hi Becky,
The timetable will vary by country. There are over 30 countries that currently have XBRL initiatives in place. For the U.S. SEC, 2011 was the year by which all public companies needed to file in XBRL format; in the first year, the level of detail is only "level 1" tagging, and by the third year that a company files in the XBRL format, it must be "level 4" tagging. Level 1 means tagging a footnote as a single block of text, level 2 means tagging each significant accounting policy, level 3 means tagging each table within a footnote, and level 4 means tagging each amount (e.g., the value, label, rounding - thousands vs. millions, currency, etc.).
Mark Chalfen: What are the tools that are generally used by clients who currently don't use Disclosure Management?
Birgit Starmanns: Hi Mark,
Most companies use Microsoft Office software to bring together the key figures (from a financial or consolidation system) and enter the narrative manually. For approvals, those are often tracked in e-mail systems (such as Microsoft Outlook), making it difficult to keep track.
With Disclosure Management, we also leverage Microsoft Office as a tool, but we deliver an add-in which allows financial team members to access the functionality of Disclosure Management from within Word/PowerPoint/Excel in order to maintain only one version of the truth, as well as an audit trail.
Mark Chalfen: Have you seen examples of clients who use Disclosu
re Management for local entity reporting (monthly management packs) as well as group packs for the main board and shareholders?
Birgit Starmanns: Mark,
Yes, I have seen companies use Disclosure Management for management reports -- it is ideal for executive board packages where it is necessary to bring together financial key figures, narrative, as well as graphics. This is a use case that is actually getting more and more interest from our customers.
Gary Byrne: Birgit, in your article, you state that the information flow of SAP BusinessObjects Disclosure Management includes three stages: gathering the information (inputs); managing the revisions, validations, and approvals of the information (processing); and generating reports in various formats.
Which of these stages poses the biggest challenge to finance teams and how does SAP BusinessObjects Disclosure Management help the teams meet these challenges?
Birgit Starmanns: Gary,
Actually all three stages are almost equally challenging.
For the inputs, most companies have more than one source of data (such as different consolidation systems or general ledgers), plus the narrative information. Disclosure Management allows you to gather all of the information in one place, so that it can be used in all relevant financial reports and statements.
For the processing, the benefit of Disclosure Management is to ensure only one version of the truth -- team members can check out only their sections, which ensures that others cannot make conflicting edits. And we also enable an audit trail of all changes to each version, as well as for the approval process. The workflow enables the collaboration and notification of team members when changes have been made.
For the output, the benefit is that once the information has been consolidated and validated, it can be used for multiple reports, so that it is not
necessary to re-validate for each output format (PDF, MS Office, XBRL, HTML).
harsh1209: How does this capability integrate with other core SAP financials and costing?
Birgit Starmanns: Disclosure Management integrates with financials and costing in that the information serves as an input (source) into the disclosure process. Disclosure Management is a tool for the disclosure/reporting process; we do not actually post financial entries there, so there is no write-back that is needed.
Mark Chalfen: Birgit,
Thanks for reply -- do you have any measures for the benefits the solution can provide a global organization?
Birgit Starmanns: Mark,
Yes, there are definitely benefits. Gartner published in 2010 that they estimate a process cost savings of 30% for companies. We have actually seen a few customers achieve even higher cost and time savings, both for the creation of the annual reports as well as board packages.
Mark Chalfen: Birgit - in terms of the 30% cost saving, how does this translate into a ROI? 3 months or 3 years?
Birgit Starmanns: Mark,
We are actually working with a few customers as well as our Value Engineering organization in order to come up with some ROI figures...stay tuned, I hope to be able to publish something soon. One customer (whose story is already published in German) expects a 20% savings within the first year, so the ROI is not as long as 3 years!
Scott Wallask: Hi, Birgit
We know that many folks in our audience work with multiple consolidation systems. For these companies, how will the Disclosure Management solution support that from a technical perspective? And does the solution help financials users understand where the data is being pulled from?
I agree, most companies have more than one consolidation system, and sometimes these are heterogeneous systems (SAP and non-SAP). With Disclosure Management, we can pull information from multiple consolidation systems; we then place it into the data repository within Disclosure Management. From there, it is leveraged in multiple financial reports and statements.
The link to the source system is done in the initial set-up -- for example, a query into SEM-BCS or a link to our BPC consolidation system. The financial team members can then just click a button to refresh the data; they have visibility of the source of the data, and can refresh either all data (from all source systems), or they can select one data source by name and just refresh that.
Mark Chalfen: Could you share some insight into how the product could evolve -- what are the areas you are focusing for product development?
Would there be a link to a mobile app -- potentially for approval of content, or to download the final content? Most senior managers like their shiny iPads and rather than play Angry Birds they could do something useful on them!!
Birgit Starmanns: Mark,
In terms of the roadmap, we have already made enhancements -- for example, localizing into additional languages, additional regulatory requirements (such as the E-Bilanz in Germany) and usability (allowing for XBRL tagging not only in Excel, but also in Word). We continue to focus on usability and tightening the integration to other SAP solutions.
I have heard them ask for mobile requirements -- we have a proof of concept demo that we have put together for a customer, although it is not standard at this time. (Nice comment on Angry Birds :)
Have a few more questions:
1. How much time may it take for a customer already on SAP ECC to build this cap
2. Is it part of SAP BI?
3. Apart from internal reporting, does Disclosure Management also facilitate external reporting as per different GAAPs like IFRS and US GAAPs?
Birgit Starmanns: Harsh,
For a customer to implement Disclosure Management, we typically estimate about 3 months. One customer actually implemented at the same time that they were generating their Q3 reports.
Disclosure Management is part of the EPM (enterprise performance management) suite. It is a separate application.
Disclosure Management definitely facilitates external reporting. It supports all accounting standards (e.g., IFRS, US GAAP, Indian GAAP, Chinese Accounting Standards, etc.), both through financial statements as well as XBRL filings. We have several starter kits for the various accounting standards to help facilitate the XBRL tagging.
Many thanks for your reply. So if I understood correctly, since this is part of a separate EPM app, it may work independent of SAP BI. In other words, a customer who is not using SAP BI for reporting may still implement this for financial reports. Is this statement correct? Thanks.
Birgit Starmanns: Harsh,
Yes, that is correct - this is a separate application. Where SAP BI allows you to do analytics, Disclosure Management implements the collaboration and audit trail needed for external disclosures, and provides the capability for XBRL disclosures.
Mark Chalfen: Can you provide some more information around the pending RDS for Disclosure Management?
What is the scope -- what extra steps would you need to perform?
Birgit Starmanns: Mark,
The RDS has actually just been released! The scope includes tying Disclosure Management back to either t
he BPC consolidation system or the FC consolidation system (FC - Financial Consolidation, also an EPM solution from SAP). It also includes the pre-tagging for IFRS, as well as pre-defined reports. The additional steps would primarily be any additional reports that a company needs; also, if the accounting standard is not IFRS, there would be some additional work for the initial XBRL tagging for the other standards (although you could leverage an existing starter kit for this).
Mark Chalfen: The RDS sounds interesting -- has this been released for all countries or just the US?
Does the link to BPC link to 7.5 or 10?
Birgit Starmanns: Mark,
The RDS (rapid-deployment solution) is not limited to the US. Either version of BPC will work. The official name is "SAP rapid deployment solution for financial close and disclosure management."
Heather Black: Hi, Birgit,
We are hearing a lot about the challenges of unstructured data -- and it comes up again here with financial disclosures.
Do you have any tips for financials and IT teams as they try to identify and collect unstructured data when trying to automate the financial disclosures? Are organizations you work with usually clear on what data they need to collect, and from what sources? Or perhaps you have some advice on the less obvious data or creative uses for unstructured data?
Birgit Starmanns: Hi, Heather,
Most companies know which data they need to collect, but are still managing the narrative in a word processing document.
For unstructured data, we actually have a solution called "Notes Management" which is most often used with either BW or SEM-BCS. It allows companies to capture unstructured data, or break down accounts into additional details, while validating the informatio
n against a consolidation system.
M.S. Hein: We have readers who are dealing with maybe 20-30 reviewers of a quarterly report, for example, with multiple changes along the way. Do you have any advice for best practices for migration of this workflow to Disclosure Management?
Would this solution significantly change this workflow for the financial or corporate reporting team? What about the new process for the reviewer?
Thanks so much!
Birgit Starmanns: Hi, Margaret,
The workflow that a company currently has can be built in Disclosure Management, there is no need to change the process of the corporate reporting department. For each step, you can define who the next person is who needs to either edit or approve a particular chapter or entire statement. There may be a series of editors, followed by a series of approvers. After one person has completed their task (editing or approving), a notification can be sent to the next person. You can also drive the status of the chapter (or entire statement) based on where you are in the editing and approval process.
harsh1209: Thank you, Birgit, for valuable info. And thanks, Gary, for scheduling this informative session.
Gary Byrne: Thanks to all who followed today's discussion!
A full summary of all the questions will be available here in the Financials Forum and in the Financials Group. I encourage you to join these groups for ongoing information and additional resources, and you can post your questions at any time here in the Financials Forum. You can also review Birgit's article in Financials
And finally, thanks again to Birgit Starmanns of SAP for joining us today!