Why CFOs are looking to new solutions to fill the gap between ERP and CPM

13th April 2016

There is a tendency to compartmentalise financial systems planning into ERP or Corporate Performance Management (CPM). But as businesses strive for greater levels of automation and productivity some are finding that systems that were previously considered the workhorses of the finance function are no longer able to deliver what they need.

 

 

 

ERP and CPM have always been a ‘moveable feast’. They have evolved over the years to meet changing demands and expectations and the chances are that today’s applications would be unrecognisable from the offerings of 20 years ago.  Improvements have been seen in reporting, controls, workflow and time & expense management. Similarly CPM has developed into profitability management, predictive analytics and risk management.  Newer, compact and more unified application suites such as Tagetik, Prevero and Board have replaced the cumbersome mega-suites of the past. Yet despite all of these improvements there are still gaps in the CFO’s armoury and chief amongst these are specialist financial close activities, intercompany processing, task management, revenue recognition, royalty management as well as tools that help bring order and accounting control to disparate data sources.

Solutions which exploit the gap have been driven by increasing business complexity, the cloud and a renaissance in Best of Breed (BoB) applications.  Whereas the mantra of the past has been to promote everything in a single application suite from one vendor, organisations impatient to make a step-change in productivity are increasingly turning to BoB applications, especially in the cloud.

Take for example, BlackLine, a thrusting company that built its successful reputation around reconciliation management (both the very high volume variety and high risk balance sheet reconciliations). It might be unglamorous in the eyes of some, but reconciliation management saps huge amounts of management and auditors’ time as well as leaving companies exposed to financial misstatements and risk.  And despite the obvious need it isn’t handled well (or even at all until very recently) by some of the more popular ERP applications. Now with a strong foothold in global 2,000 companies, BlackLine has built out its solutions to cater for some of the other notable gaps between ERP and CPM such as intercompany processing and even journal processing – matters that contribute greatly to control and the speed of the financial close.

Aptitude Software is another software house that fills a profound need in the systems landscape enabling CFOs to put their arms around diverse transactional and other data sources that don’t fit the mould of traditional general ledgers. With regulation and compliance showing no signs of abating financial services and other highly regulated industries are under immense pressure to gather and assemble new data, integrate it with existing data sources, store it for longer and accommodate more onerous disclosure and filing requirements.

Adding to the picture of business complexity is the impact of the digital economy.  As organizations continue to entice new customers with novel business models, increasingly personalized products, services and sales channels, back-office systems often struggle to keep up.  ERP systems are being left behind, unable to cope with very high data volumes or complex calculations.

Put simply, the general ledger does not have the agility or store of transactions to provide real-time insights or reduce time-to-decision and neither do traditional business intelligence tools which sit astride the general ledger. 

In the face of this complexity Aptitude Software’s Accounting Hub is a welcome innovation, helping hard-pressed CFOs to regain control over diverse and scattered data. It complements general ledgers by capturing accounting and non-financial data sources at a very granular level and, by applying unique business rules, transforms and enriches the data into dependable financial information which can be used to drive decision-making and reporting.

So what’s the moral of the story? It seems that CFOs need to raise their sights beyond traditional solutions.  Not every business requirement fits neatly into the category of CPM and ERP.  If CFOs are to maintain the momentum of continuous process improvement then they are going to have to venture into the new territory for the innovative solutions they need to satisfy regulation, compliance and increasing business complexity.

By Gary Simon, BSc, FCA, FBCS, CITP

A "Top 10" PowerProfile “Most viewed LinkedIn leaders UK” 

CEO of FSN and leader of The Modern Finance Function Group on Linkedin with more than 45,000 members.

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