Review of 2011 – a year of surprising innovation

19th December 2011

Despite the economic gloom and doom 2011 has been surprisingly buoyant in respect of the business systems market. This is the year in which performance management has established itself in the Cloud, that the Last Mile of Finance has been embellished by several solutions for Disclosure Management and Social Media capability has made its first serious appearance in finance applications. But it is also the year in which XBRL – now mandatory for so many companies – has yet to receive the attention it needs to fulfil its promise of greater comparability and transparency.  In his review of 2011, Gary Simon, FSN’s managing editor looks at the initiatives, trends and vendors shaping the market.

Cloud computing has had a chequered history.  Despite compelling technical and business reasons for shifting to a Cloud-based environment, uncertainty, coupled with real concerns over economic models (principally whether software vendors can actually make money) has limited progress in a business setting.  Traditional ‘on-premise’ suppliers have been keen to retain lucrative perpetual licence fees but the influx of many cloud vendors coupled with a real willingness by customers to dip a toe in the water has shifted the pendulum (probably irreversibly) in the direction of on-demand applications available for rent over the web.

The shift to Cloud has been aided and abetted by a tough global economy. Cloud based offerings provide the lure of fixed costs (or at least known costs), scalability and the ability to pay only for what you need.  Add in the ability to cede responsibility for maintenance, upgrades and operations to a competent third party and the Cloud becomes overwhelmingly attractive despite reservations in some quarters about security and confidentiality of data. Evidence seems to suggest that the latter concerns are over-played and that corporate data may be better looked after by a custodian in the Cloud, rather than in-house operations.

So Cloud computing is lifting off courtesy of innovative and agile new market entrants – dragging reluctant global ERP vendors kicking and screaming behind them into territory they would rather avoid for fear of cannibalising their traditional revenue streams. Infor seems to be an exception (see interview with its CEO Charles Phillips earlier this year) since it appears to be relatively indifferent between on-premise and cloud-based solutions having done the maths and found a satisfactory economic model that benefits the company and its customers.

The noticeable trend this year is that ERP Cloud vendors have successfully broken out of the SME market where for obvious reasons they first gained a foothold.  The second trend is that a small clutch of performance management vendors has established the critical mass necessary to turn the tide away from on-premise solutions. Adaptive Planning, Host Analytics and, more recently Anaplan, are creating the new market (see FSN Feature).  Anaplan is particularly noteworthy because of the pedigree of its owners and backers, lending real legitimacy to this sector and taking it to a new level.  Early signs are that this company in particular is breaking into blue-chip customers with an offering designed to cater for the higher end of the market. (see FSN’s product review). Anaplan end users that FSN has spoken to seem to appreciate the ability to develop the applications for themselves, i.e with little IT involvement.  This is also proving attractive for hard pressed IT functions that are keen to offload development projects that can be carried out in a secure and robust environment by users without their help.

Disclosure Management is this year’s hot topic in financial reporting with several suppliers introducing new offerings which seek to streamline and improve the productivity of the cumbersome process of assembling statutory reports and electronic filings (including XBRL – see below). Clarity Systems, now absorbed into IBM, has been leading the field for more than two years (see FSN Product Review) but Oracle and Tagetik have made a concerted effort to level the playing field with comprehensive offerings of their own.  Oracle, with its ERP foundation seeks to bind the ‘Last Mile of Finance’ into the complete financial reporting supply chain (see FSN’s white paper).  On the other hand, Tagetik a very agile operator plays off a single unified computing environment which ensures that numbers and narrative are propagated uninterrupted along the entire length of the financial reporting process.  You can read about this here.

An interesting twist in the Last Mile has been the launch of a solution called AFRM (Accelerated Financial Reporting Management) from Silicon Valley Accountants which is based on an Enterprise Content Management solution (loosely translated as document management software) called OnBase from Hyland Software.  The beauty of this solution (see FSN white paper) is its elegant simplicity, i.e. it hits the nub of the problem in the Last Mile – i.e. marshalling documents and co-ordinating the activities around them without having to integrate complex technology. As a result customers FSN has spoken to highlight the very rapid payback and greatly improved control over the process.

Embedding Social media in business systems is perhaps one of the most interesting developments of the year.  One of the greatest challenges facing the software industry is making its solutions attractive to Generation Y – the school leavers currently joining the workforce. Currently there is a huge disparity between the accessibility, speed and responsiveness of consumer applications compared to their business equivalents.  Younger workers steeped in Instant Messenger, Blackberry Messenger, Twitter, Facebook and so on, will not appreciate inert business applications.  Infor has been at the leading edge of integrating Social Media into its applications (see FSN Feature), putting considerable effort into the user interface and providing a range of integrated communications and search capability.  Although Social Media is in its infancy in a business setting its value will become increasingly evident as users discover the possibilities it opens for increased usability, collaboration and productivity.

The focus of XBRL this year has been on the basics, i.e. the timely submission of e-filings to regulators.  With most companies coming to terms with the new requirements little time has been devoted to the wider issues of reporting transparency and comparability.  Yet the founding principles of XBRL were to democratise information, i.e. to make information more readily available and accessible so that investors could more easily compare the performance of companies – not merely to serve regulators with the information they need to carry out their role.  It remains to be seen whether XBRL will live up to its promise and whether, in addition, companies themselves will benefit from the investment they are making in new XBRL capable systems and processes.

Finally, for those that cannot live without spreadsheets FSN has launched a new book this month called, “Maximising the Impact of Accounting & Financial Spreadsheets for Finance Users”. It is authored by spreadsheet guru, Simon Hurst and will take your spreadsheet skills to a new level with ideas for dashboards, reports and other applications.