THE�CLOUD�TAKES�INTELLIGENT FP&A TO NEW�HEIGHTSINTELLIGENT FP&A YIELDS NEW VALUE FOR FINANCE LEADERS AND THE ENTERPRISE

2 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS

FOR MANY COMPANIES, the problem of planning,

budgeting, and forecasting is more complex

than ever, driven by shifts in markets, technology,

organizational behavior, and commerce itself.

Managers now wrestle with massive amounts of

business-activity data from within and outside their

companies. In an environment of moving targets,

they execute business plans in pursuit of near-term

performance targets while also working toward

longer-term strategic objectives buried in the out-

years of company forecasts. The professional life of

today’s managers is more 24/7 than 9-to-5, and as

a result managers depend on access to timely and

accurate information, to analytical power, and to

one another to succeed.

This crisis in business planning flows in part from

trends in global commerce. As they develop and

produce their offerings, companies have come

to rely on complex supply chains of vendors and

strategic partners to provide inputs and services at

exactly the right time and place. Markets are rich

with information on sources, availability, and prices.

Customer data is similarly information-rich. As a

result, business planners are called to use all that data

to forecast and report the performance of multiple

delivery channels to markets that are always in flux.

The good news is this: A new generation of

business planning technology offers the promise

of higher-quality business plans, more robust

analytical capabilities, closer collaboration, faster

decision-making—and ultimately, better business

performance. To fulfill this promise, many companies

implement dynamic planning, budgeting, and

forecasting systems with a view toward empowering

managers to do their best work together. In addition,

they take full advantage of next-gen technology

by deploying it in the cloud, where vast amounts

of data, analytical power, and collaborative

functionality come together in a secure, scalable,

and readily accessible environment.

For a detailed discussion of the use of next-gen FP&A technology, see SAP’s briefing, “DYNAMIC PLANNING—CRISIS AND OPPORTUNITY FOR THE FINANCE FUNCTION”

3 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS

NEW TOOLS BRING NEW PRODUCTIVITY TO THE FINANCE TEAM

AS COMPANIES EMBRACED TECHNOLOGY over

the past 30 years, the role of the CFO and the

corporate finance function has shifted dramatically.

No longer focused simply on historical performance

reporting, the CFO’s mandate increasingly requires

real-time, contemporaneous reporting of financial

and operating results, and in the years ahead,

the scale and scope of finance’s responsibility

for performance is likely to expand further. “The

modern Office of the CFO now includes both the

accounting and finance functions, and it’s well

into a transition from reporting what happened

days, weeks, or months ago to reporting what

is happening now,” Says Jeff Hattendorf, Chief

Operating Officer and Principal Consultant at

Macrospect, an Elite SAP partner. “In the near

future, this transition will encompass predicting

what will happen.”

Accordingly, finance teams now seek to take full

advantage of tools that distill vast volumes of data into

valuable information for use by managers in making

operating decisions, by C-suite executives in setting

strategy, and by investors and analysts, who insist on

timely and accurate data to support their buy, hold,

and sell decisions. Intelligent, cloud-based finance

solutions are an essential tool for companies to take

control over their data and derive valuable insight

from it. These tools typically draw on companies’

on-premises systems as well as external data sources.

Using in-memory technologies and other analytics,

they simplify the process of converting vast volumes

of financial and operating data into information to

support a new level of business decision-making.

This expanded capability to make well-informed

decisions isn’t an incremental improvement—a “nice

to have” refinement of managerial oversight. It’s

increasingly a central part of a company’s ability

to generate value and a source of competitive

advantage. Indeed, “Organizations that are able to

embrace change and build capacity and capability

within their companies are going to be the winners

in our new more unpredictable world,” says Brian

Kalish, the former Executive Director at AFP and the

Founder and Principal of Kalish Consulting. Intelligent

FP&A applications allow corporate finance teams to

prepare plans, budgets, and forecasts more quickly

than ever. Perhaps more important, however, is their

ability to deliver the return warranted from their

massive IT investments in recent years.

“�ORGANIZATIONS�THAT�ARE�ABLE�TO�EMBRACE�CHANGE� AND�BUILD�CAPACITY�AND� CAPABILITY�WITHIN�THEIR� COMPANIES�ARE GOING TO BE THE WINNERS IN OUR NEW MORE UNPREDICTABLE WORLD.”�

—BRIAN KALISH, THE FORMER EXECUTIVE DIRECTOR AT AFP AND THE FOUNDER AND PRINCIPAL

OF KALISH CONSULTING

4 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS

The exponential growth in data from digital enterprise

is coupled with widespread adoption of mobile

technology by employees. In addition, companies have

higher expectations for employees’ engagement with

their professional lives. As a result, managers in finance

and lines of business are increasingly called to make

well-informed decisions regardless of their location

or the time of day. “Thanks to the widespread use of

mobile computing, people work wherever they happen

to be—at the office, at home, at the grocery store,

on a plane or train, or elsewhere,” says Hattendorf.

Doing so requires access to timely and accurate

information from more or less any location, and as a

result, companies equip their teams with the tools they

need to be effective. “We live in a 24/7/365 globally

connected economy,” says Kalish, “and we want to

have people, processes, tools, and technologies to

really thrive in the twenty-first century.”

The aspiration of Kalish and others requires more

than remote access to companies’ current systems.

To enable high-velocity decision-making, companies

need to provide continual access not to data but to

meaningful, well-structured, thoughtfully explained

knowledge to support human decision-making by

professional staff. “It’s not about generating data and

reports for the sake of generating data and reports,”

says Kalish. “It’s about acquiring data, converting data

into information, transforming that information into

knowledge, and then using that knowledge to make

better, faster, smarter business decisions.” And by

building such capabilities, he says, companies realize

improvements in the quality of their decision-making

and the productivity of their teams: “The advances

we’re making in technology permit us to move low-

value activities off the desk of FP&A professionals

and to free them to focus on the analysis, decision

support, and business partnering and advising.”

“WE�LIVE�IN�A�24/7/365�GLOBALLY�CONNECTED�ECONOMY,”�SAYS�KALISH,�“AND WE WANT TO HAVE PEOPLE, PROCESSES, TOOLS, AND TECHNOLOGIES TO REALLY THRIVE IN THE TWENTY-FIRST CENTURY.”

5 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS

UNLEASHING THE POWER OF COLLABORATION

THIS MANDATE TO FOCUS ON HIGHER-VALUE

activities requires finance teams to work more

closely with their peers in line-of-business and other

functional roles. Finance should use its technical

expertise and organizational independence to ensure

a company uses Intelligent FP&A as a solution—

not as another a contributor—to the problem of

widely distributed managerial decision-making. Eric

Smit, SAP’s Vice President of Analytics, Americas,

and part of the firm’s Global Center of Excellence,

says that finance is uniquely qualified to lead the

conceptual decision-making and governance of

company data and to serve as a “master data

fiduciary” that oversees the use of operating and

financial data. “Finance can lead the effort to

master organizational data to ensure quality and

consistency. Finance can be the hub to lead the

definition of a customer, product, supplier, process,

employee, contractor, inventory item, fixed asset,

and legal entity. The finance team can also facilitate

agreement on data controls and access protocols.”

By doing so, companies retain authoritative

control over the meaning of information as it is

analyzed and used by managers throughout the

organization, without compromising users’ ability

to work freely with meaningful data.

A cloud-based collaborative intelligent FP&A solution

allows companies to overcome the organizational

silos of information and decision-making. “By putting

everyone on the same cloud-based system, you are

pulling finance and the lines of business together. It

really helps create a single ‘environment of us’ rather

than an environment of ‘us and them,’” says Kalish.

And as a result, he adds, “you’re able to streamline

business practices and efficiencies because there is

no translation between the system you are looking at

and the system I am looking at.”

The results of such a shared system and single

version of business information allow closer, more

productive collaboration between line-of-business

and finance leaders. The financial planning and

analysis process involves many stakeholders, each

of whom has expertise and discretion over business

operations, including daily decisions that affect

revenue, expenses, and capital investments. And by

involving these business owners in the budgeting

and forecasting process, companies are more likely

to maximize ownership of the forecast and results.

This greater ownership flows from a single system of

business information, and from tools that encourage

managers to work effectively together. Says SAP’s

Smit, “the cloud technology that enables this

collaboration teamwork includes a shared corporate

calendar, chat features, and advanced analytics tools

for model optimization—all of which is packaged in

one easy-to-use application.”

6 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS

SECURITY AS A SHARED RESPONSIBILITY

COMPANIES, INVESTORS, AND REGULATORS are

concerned about data security, and rightly so. As

technology permeates commercial activity and the

volume of data grows, so too does the risk of data

breaches, hacking, and theft of intellectual property.

Cloud-based systems are likely to be more secure,

not less, than on-premises systems, say sources

interviewed for this briefing. “Putting everyone

on the same team on the same system raises the

consciousness of the importance of security because

now it becomes everyone’s responsibility,” says Kalish.

While data security was IT’s problem in the past,

cloud-based systems raise the bar for security, largely

because the cloud permits a higher and more uniform

degree of technical security, auditability, and access

control. “By definition,” adds Kalish, “you’re minimizing

individual points of vulnerability and weakness.”

Companies need to balance the need for data

security with the need to allow the access and

collaboration required for brisk decision-making.

Technical solutions go a long way toward ensuring

systems are immune to unauthorized access, and,

says Smit, “large cloud vendors are experts in

maintaining compliance with regulatory standards

along with frequent updates to software and

systems.” The human dimension of data security

is often equally important, and, “FP&A users in

the cloud should adopt role-based access control

and train users on social engineering, and clearly

communicate policies to all stakeholders,” adds Smit

7 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS

FROM CONSIDERATION TO ACTION

THE CASE FOR INTELLIGENT FP&A seems

compelling. By adopting the next generation

of business-planning technology, companies

are able to harness the power of their financial

and operating data with advanced technology.

Artificial intelligence and massively powerful

in-memory processes allow Intelligent FP&A

applications to deliver insights beyond those

available through conventional technology and

human analysis. Eric Smit at SAP argues the right

technology can deliver business insight faster

for a broader range of decision-makers: “Finance

can use machine learning to explore historical

data patterns and make predictions. Advanced

analytics tools are now easy to use and allow for

rapid scenario modeling to hone the precision

of the forecast. Non-statistically-savvy financial

analysts can model complex relationships with

a few clicks and find empirical relationships that

would be difficult to uncover manually.”

What’s more, a well-governed FP&A system in the

cloud encourages collaboration between finance

and line-of-business managers, and allows them

to conduct their professional lives efficiently

in a 24/7 business environment. And by taking

advantage of the power and security of the cloud,

companies are able to improve and accelerate

their decision-making while balancing security

with user access and functionality.

Companies that are ready to move to Intelligent

FP&A often find that a hybrid solution of

cloud and on-premises technology is the best

near-term solution. Most companies with

modern IT systems are able to adopt these

solutions quickly, says Jeff Hattendorf, thanks

to vendors’ work to enable “easier integration

of modern, on-premises systems with cloud-

based solutions.” He recommends companies

with older systems weigh the costs/benefits of

integrating older systems with more modern

solutions against more ambitious and perhaps

disruptive migration of legacy systems (and

data) to modern solutions.

In addition to technology strategy, companies

need to make hard decisions about business-

planning processes as they deploy Intelligent

FP&A. “When adopting Intelligent FP&A solutions,

companies must determine the value of company-

specific planning processes—their ‘secret

sauce’—versus more generic processes,” says

Hattendorf. “Is the value of a process specific to

the company actually higher than the ability to

plan more broadly and frequently? The answer

for most companies is a blend of the two. Sales

and operational planning are often part of the

“secret sauce” that helps the company stay ahead

in the marketplace. Overhead and other expense

planning is often less strategic and more readily

adapted to standard planning processes.”

Finally, when evaluating the cost of Intelligent

FP&A, companies typically evaluate the total

cost of ownership by assessing the infrastructure

savings realized from eliminating cost from

on-premises hardware and hosting activities,

along with technology licenses and labor costs

associated with a broader group of business

users. However, Brian Kalish concludes, “I’m

not aware of anyone who is out there saying

you should put new enterprise applications

on-premises. You’ve got to be scalable from a

security standpoint. The cloud is safer. It offers

universal upgrades. And it’s accessible whether

you’re in Vietnam or Vienna.”

“ FINANCE CAN LEAD THE EFFORT

�TO MASTER ORGANIZATIONAL DATA�TO�ENSURE�QUALITY�AND CONSISTENCY.”���—ERIC SMIT, SAP’S VICE PRESIDENT OF ANALYTICS,

AMERICAS, AND PART OF THE FIRM’S GLOBAL CENTER OF EXCELLENCE

8 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS

ABOUT THE SPONSOR

As market leader in enterprise application software, SAP

(NYSE: SAP) helps companies of all sizes and industries

run better. From back offi ce to boardroom, warehouse to

storefront, desktop to mobile device -- SAP empowers

people and organizations to work together more effi ciently

and use business insight more effectively to stay ahead

of the competition. SAP applications and services

enable more than 355,000 businesses and public sector

customers to operate profi tably, adapt continuously, and

grow sustainably.

For more information, visit www.SAP.com.