Andy: Welcome to our webinar, the latest in the series of webinars for the finance executives that we’ve entitled The Digital Office of Finance. For the next 40 minutes or so, we’re going to be focusing on a particular area of concern for many executives, and that’s around providing good quality management information into the business. We’re going to be focusing primarily around budgeting, planning and analytics – all of which will enable us to drive better performance into our businesses.
To introduce our speakers today: my name is Andy Campbell. I’m a solution evangelist here at FinancialForce. I’m really pleased to be joined by two colleagues. One is Corey Bidmead the VP of Global Channels at our partner Vena Solutions, and my colleague and overall wizard Analytics Evangelist Joe Thomas. So, Corey and Joe, welcome to the webinar today. Delighted you could join us.
To start the webinar, though, we have to put up our standard disclaimer, which effectively says: if, through this webinar, we’ve stimulated your appetite and you decide to make a purchase – invest in some products – then, please, any decision that you make to purchase needs to take account of current features and functions that are currently available.
So, our agenda for today: we’re going to be going through looking at challenges going on in the world of finance. We’re going to be talking about the management information lifecycle, and then getting into some detail around budgeting, planning, revisions. Then finishing off with some advanced analytics. There is an opportunity to send us questions through the chat function. So, if you’ve got any questions, then just put them in the chat function and we’ll pick them up through the event.
So, to start off: digital transformation. If it’s done right, it’s like turning a caterpillar into a butterfly. But when it’s done wrong, all you really get is a fast caterpillar.
Everybody’s talking about digital transformation at the moment, and I think COVID – the pandemic – has acted as a catalyst. It’s speeding up initiatives, it’s speeding up people’s willingness to invest and to do things differently. Historically, that might have been focused on front office initiatives. But more and more the case, people are looking at the back office as well, and thinking about what improvements we could make within our finance and operational systems to make things better.
I think a key focus has been – as far as finance is concerned – is the importance of cash management in these difficult times, as organizations are looking to survive, and then to thrive.
But that’s not the only challenge going on in the world of finance. At the macroeconomic level, there’s all sorts of issues going on: uncertainty and change. Not just COVID, but also things like Brexit. Obviously, the situation with the anticipated new change of government in America. Decisions and influence changes used to take years and months, and now it’s a case of weeks and days. Organizations need to be able to flex and respond to address that.
Secondly, we think about the services economy and how that’s becoming much more important for many organizations, and that implies new and complex business models, new ways of pricing, new ways of billing that we need to be able to deliver against. That, in turn, means that areas – things like revenue recognition, increasing changes in compliance, and regulatory requirements such as ASC 606 or IFRS 15. So, the landscape is becoming more and more complex, as well as the business mandate as well.
So, the role of the finance director’s changing; the role of the CFO is changing, moving away from being sort of hands-on managing the purse strings, moving away from just looking at core accounting functions. It’s becoming more of a value-added business partner, helping the organization to make better decisions in order to be more profitable. That requires different skills. It requires different tools. If you’re going to be a more agile business, you need to be able to respond with agility to what’s going on in the marketplace. And, frankly, our systems, in a number of cases, are unable to provide the support that’s required. They’re unable to adapt to this new future. They can’t scale, and the time has come when you just can’t cut it with old legacy systems and with bolt-on things around the outside of it. We need to have a truly integrated solution in order to provide what our business is demanding from us.
That is what we talked about in the first webinar, when we talked about the whole Digital Office of Finance, having a complete set of tools that you can choose the pieces that are most important for you that enable you to take a full and holistic view of everything that’s required to be a CFO in a modern digital business.
The first area that we’re going to be looking at is the first tier on that picture, which is around management information. What I mean by management information is it’s the entire lifecycle. The entire lifecycle of information throughout the year that our executive team will look to run the business. It starts at the top; it probably starts before the start of the year when you’re thinking about your overall plans. You’re looking at your current levels of performance, you’re looking at your strategies for the future, and you’re thinking about, “What are we going to be doing for the year ahead?” That means we’re looking at our budgeting processes, we’re looking at our forecast, we’re developing some models, we’re coming up with our view of the world, we’re distributing that information, and managing the processes as we go through.
But, like all good plans, they change. They change throughout the year. There is a cadence of review that may be on a monthly or quarterly basis, or it may be based around a specific occasion when things need to be remodeled.
So, the first piece of the jigsaw is to think about how we structure that planning piece. But that’s not everything. Once we’ve got those budgets – those plans – in place, we need to think about other dimensions. We need to think about reporting. We need to think about providing good quality management information to our line managers. We need to think about what we’re going to do when those forecasts come out slightly wrong, and we need to revise based around market conditions or market opportunities.
Then, lastly, the final third of the pie, is to look at the more advanced decision-making tools that can really help us add value to the enterprise. That’s not merely things like sort of dashboards that are much easier and much more intuitive for users to use, but also more advanced technologies that provide us with analytical tools to give us a predictive year of the future, to use artificial intelligence to be able to understand trends and come up with next best actions and those kinds of things. So, really utilizing technology to enable us to make better decisions within the business.
So, that’s the whole picture. That’s the whole life cycle. The first part of the pie – looking at that first piece around planning, budgeting, and forecasting – that’s a special situation where one of our partners, Vena Solutions, delivers. So, I’m really delighted to be able to ask Corey.
Corey, Vena. How does it fit into the overall business landscape and this agenda of business transformation?
Corey: Right. No, perfect, Andy. Thank you. You’re right. It’s really about the office of finance and how we empower those individuals, the CFO, and those team members, to kind of use the technology to go and help transform their business. I love that you caught that the world today is a little bit unsettled, and there’s a lot of changes happening within their business, and they’re going to need to be able to react quickly. Not only from a user standpoint but also, how quickly can the technology change to their need to help enable them to move forward?
So, when Vena was founded, we really wanted to focus on the core that we’re here to partner with our clients, to give them a technology that’s flexible, to partner with other partners – like FinancialForce – to provide an integration layer (that we’ll talk about later) that helps make their life a little bit easier from the start to the finish. Now, you kind of talked about that full-spectrum around the year. It’s important to understand that it’s not just budgeting for a single three-month cycle. You need to forecast; you need to do some reporting. We need to be able to talk back and forth with our partners and our customers on an ongoing basis to take advantage of that. So, that’s where we focus.
This is a platform technology that will help empower our customers to grow forward.
So, can we actually move to that first slide? Let’s focus on a few of those key topic areas. So, really, what we’re going to look at here is that platform technology. Right? It is more than just a complete planning solution. We actually look to some of the other disparate processes that our customers can grow into. But, if we look here, we really will look at the finance-led planning first. This is the core budgeting, it’s the core finance function, that we all have to go through. Sometimes, that’s very high-level, sometimes it’s really granular, and Vena’s going to help them do that quickly. Plus, be able to do that with a large group of people and have visibility. “Well, am I 80% done? Am I 30% done? Who am I waiting on?” Right? We’re going to help clean up a lot of those pain points.
Then, you’re right. We’re going to leave that and lock it down, but it doesn’t end there. We actually have to keep going throughout the years; so, we’re going around that wheel and talk about different extended planning. We’re going to talk about what comes next beyond planning. What else could I help the business with within that solution set?
So, here, you can see, it could be everything from revenue out to some other financial close. Right? All things that are the responsibility of that office of finance that, put in a platform, is going to be able to help them with.
So, first and foremost, let’s start back on that finance-led planning. So, this is going to be that budgeting. Right? We’re going to bring new driver-based analysis. We’re going to be able to move that into a rolling forecast. Maybe they want to go as deep as going an F1+11 and F2+10. We’re going to help them do that. What about “what if” modeling? Right? There are so many changes happening right now. This is probably going to be the biggest benefit to a lot of people. What if the currency’s changed? What if I add a company or divest in a company? How quickly can I make those changes?
So, these are all core focus areas of Vena that will help you if you have five users or 500 users that are contributing to this process.
Now, let’s leave that and move to the next section, which is that extended planning. So, what is extended planning? These are all the other types of complementary or disparate processes that are happening either beside the budgeting process or as part of it. Typically, you send it out to another group and they give you some numbers, and they put that back – like workforce planning. Well, of course, we have to put a labor budget together. It could be one of my highest costs in the company! So, of course, it has to be accurate and I want to be able to track it.
So, then, Vena, what we’re going to do is some workforce planning. It could be down to the person level. I can plan for promotions and terminations, because it’s the most critical thing to my biggest costs, in some cases. We’re going to help do that. Maybe it’s just around cash flow planning. Everyone’s going to be worried: “What about cash? What about the financing?” Right? “How do I control my organization’s cash flow for the next few months?” We’re going to help with that.
But then, as you move through, you’re going to have things like revenue, they do capital expenditures. All of these are typically spreadsheet-based processes within the Office of Finance. All right? I’m going to go through some core things in a little while – a couple of core building blocks – that are going to help our customers solve these other disparate processes using that Vena growth engine that’s in the platform.
So, let’s kind of think about beyond planning. So, we’ve got all the budgets done. We’ve done all our forecasts, and we’re moving forward. But there are some other complementary business processes that you might think you can utilize Vena for down the road. To be honest, most of our customers start with a budgeting and forecasting pain point and need, and we’ll help them solve that. They really do embrace the technology and move forward. They might be doing things like account reconciliation; they might be doing things like project management, tax provisioning, or maybe they have some sales compensation they have to look at. These are all, again, repeatable processes within the organization. But, with some of these core building blocks with a Vena engine, we’re going to be able to help them use that and solve those problems within the same platform. We’re just looking to provide value to the customer.
Here, as we move through it, how do we enable them to do that? We’ve been talking about tax and revenue and expense, and there’s a lot of data sources, typically, and a lot of different groups of people within an organization. So, here’s a great way to look at it. Vena is that single point of entry. We’re on the left, having all these operational departments being able to come in a controlled and secured way, accessing just their portion of the spreadsheets – or their portion of the workflow tasks that are assigned to them. So, I look after labor, and the next person looks after expenses. I can control that securely.
But then, on the right side, it’s all about the important data connections. Right? To help people do a better budgeting and forecasting job, I need to give them accurate data. So, the key thing as a ready-app partner like Vena to FinancialForce is to provide that data synchronization. So, we can bring in our general ledger data. We can bring in our transaction data, deliver it to the user in a very simple, easy to use, way. We can also check for new accounts. So, every time an account gets added in FinancialForce, it will automatically appear on the Vena spreadsheets for the users. That’s eliminating maintenance. Right? It eliminates errors. It does expedite their process and lets them move on to some of the more value-add items that you spoke to. Like actually spending time on analytics in the business.
So, here, you can see where FinancialForce we’re going to have our CRM Salesforce connection, but we obviously have the other connections. We could maybe be looking at a data warehouse, POS. Whatever your business requirement is, we’re going to bring all those datasets together in a nice, synchronized way.
All right. So, now we’re going to talk about that workflow engine I referred to. This is one of those core building blocks. So, how can we help an organization solve their budgeting and forecasting? Right? How can we make it extremely flexible if their business changes? Maybe they want to grow, maybe they have to divest the company. Right? How do I do that? It’s all around this core workflow. This is a simple, drag-and-drop, right-click approach. I can build a workflow in seconds. I can update that workflow by adding in a new task, adding in a new document, assigning it to a person, all by double-clicking on one of those little icons. So, I can quickly change my business needs and have them trickle out to my users instantaneously. That’s real-time action.
This same workflow can then be redesigned. All right? I can have another workflow for account reconciliation or another workflow for project management. This is where we talked about these other disparate processes, all wrapped around a simple, flexible, easy-to-use workflow system that allows me to change it for my needs.
So, once we’ve created that workflow, we need the users to interact, and they’re called contributors. So, again, we’ve simplified it. A user logs into a browser, and what they’re going to see is only a list of tasks that are actually assigned to them. So, there’s my security kicking in. So, they know they have ten things to complete. They can be told what the due date for those ten things are. If something is overdue, they’ll get notified. Right? The manager will be notified. But it’s all about delivering to the user just the instructions, just the workbooks, and just the tasks they need to complete.
Then, of course, as we finish those tasks, the managers got visibility now. They know that they’re 80% done, and this one individual is trailing behind, and then they can follow up with that. For the first time, they actually get to see where they are in that process.
So, we did talk a little bit about the embracing of Excel. We did choose Excel as an amazing canvas to perform most of our budgeting reporting. Right? Now, we know a lot of people are moving away from some of the pain points of Excel. Right? We all know that Excel is not a database; it doesn’t offer great collaboration or workflow. That’s what the Vena platform provides. We solve all of those problems with the platform.
But the Excel interface is extremely flexible. I can go in and create different graphs. I can go in and create a different layout, create my own formulas if I want. What we did is we took the best part of Excel – just the canvas – and we connect that to a central database, and we solve for all the pain points and leave all the best points about Excel. Again, you’re going to be able to roll this out, and your users already know how to use Excel. Your managers know how to design in Excel. So, it’s not going to require a lot of training. Right? It’s going to increase those users’ acceptability of a tool that much faster.
So, here’s a quick view of what that looks like. So, you are going to be able to design in Excel headers, footers, colors, formats, anything you normally do. You can reuse any Excel document you have today, but as part of the benefit, we’re going to reduce a lot of duplication. I do not need ten copies of a workbook for ten different people, because my workflow controls that, my security controls that. As a manager, I’m only going to have to look after one copy of that workbook. v
Now, I have now saved myself so much time and efficiency, but we’re going to leave those users in that friendly Excel experience. Then, layer in additional functionality. They can drill down on numbers; they can see the prior edits. They can compare and say what changed, and see cell-by-cell what the numbers were, or what the comments were previously. So, we layer in all these value-add features to help people explore and analyze within those numbers. But, we solved for all of the downsides of Excel by putting in a nice central database, integrating with FinancialForce, providing a workflow that’s flexible. Those are solving all the problem use cases, and we’re leaving just the best of the flexibility of the canvas here.
All right. Perfect. So, hopefully, we’ve been able to articulate at least at a high level that Vena is that one platform technology that can power the Office of Finance to solve their business processes. Maybe not just limited to budgeting, but kind of thinking of that Office of Finance as full-spectrum, full-year transformation as we go through and as our business changes, giving you that technology to help embrace and expedite change within the organization.
Andy: That’s great, Corey. Thank you very much, indeed. It’s easy to see that it’s not just managing a budget process; it’s looking after plans and much, much more. It looks at projects, it looks at workforce models. They’re all sorts of different capabilities required as part of this whole process. The key point about doing this in the way which is integrated, in a way that is secure, and it’s well-managed, as well as being easy and engaging for people to use. So, really insightful. Thank you very much.
But, that first part of the pie is just the first part of the pie. There are still some other pieces to go. We need to think about once we’ve got those budgets, we’ve obviously got to produce some statutory reports coming out of it. We’ve got to provide some management information on a daily, weekly, monthly basis to our line managers and other executives. We’ve got to take into account the fact that the world is changing, and we need to revise some of these things on an ongoing basis. We also need to look at more of the advanced capabilities as well and where AI comes to really add value into the service that we can offer into the business.
So, I’d love to hand it over now to Joe Thomas to give us a bit more on the further two-thirds of the pie. Joe, over to you.
Joe: Great. Thanks, Andy.
I want to touch a little on reporting versus analytics. No one’s saying you’re not doing this today; we recognize that you are all doing this. You wouldn’t be in your jobs in Finance if you’re not doing it. I just want to make sure we’re all on the same page and make sure you understand where we, at least, think a Digital Office of Finance hastens these processes.
When I say we’re all doing this, I think the earliest records we’ve ever found of human writing was an inventory report in Sumerian around wheat. Right? That’s an inventory report; it’s being able to track it. I bet you, if they kept digging, they’d find the planning report that says, “Wait! We have this much wheat and these many people? How many more people do we need to bring in?” That’s the difference between reporting and analytics. We very much appreciate the Vena relationship.
At FinancialForce, we don’t have a budget engine. We don’t have a planning engine. Yet, when we partner with Vena, we get access to that data that, in other scenarios, it might be looking at 10, 12, 15 separate spreadsheets. When you can have an engine of a core set of that data, it makes reporting and analytics very simple.
Ultimately, you need both. Right? Reporting’s going to tell you what? Well, how much inventory do I have right now? How much revenue did I bring in yesterday? How many open invoices do I have? Each of those is a number. It’s 12, it’s 50, it’s 200,000,000. But if you don’t know “what was I at least year?” and “what did I plan for?” Those numbers are fundamentally less important.
Reporting is that “what.” Analytics is that “why” and “how.” Basically, taking data into information as reporting, but using analytics to drive actions and recommendations. If I’m just looking at a single number or a single digit, or something that I’ve generated a year ago, it probably isn’t terribly helpful. Particularly in this time of COVID, I can only speak to our experience at FinancialForce. Our fiscal year started on February 1. To Andy’s point, we did a lot of planning in December and January. We had a slightly different idea of how 2020 would go. Right? As soon as we got into March and April, we had to go back and redo all of our planning. Now, if that was just a static spreadsheet. If we had to sit there and bring in data from multiple spreadsheets, that would have been a lot harder. The Vena engine, having that nicely organized, makes things a lot easier for both reporting and analytics.
Andy, if we want to go to the next slide.
So, the first thing we’ve done is we’ve taken technology – in this case, the technology formerly known as Einstein from Salesforce, now known as Tableau CRM. We’ve gone and used that technology to build financial reports. You say, “Hey, great. I do financial reports in spreadsheets. I’ve got some other technology I’m bringing in.” What the Einstein technology lets us do is go directly against transactional data without having to build a galactic data warehouse, without having to spend a lot of money building a Financial Data Mart. We’re going directly against the transactional data that exists within FinancialForce. Every piece of data that comes into FinancialForce gets time stamped. Every piece gets validated and reconciled. So, it’s relatively simple to build out a balance sheet or income statement in multi-currency for multi-companies. To be able to calculate that on the fly, being able to go at huge volumes of data, I think it’s the data I’ve seen for the Einstein Technology says it goes up to 100 billion rows. Try that in your spreadsheet or your financial statement generator!
But, still being able to drill down to the transactional data itself. So, I could be sitting there in a balance sheet and take that all the way down to a journal entry. I could be looking at an income statement, and take that down to an individual invoice without having to spend the multi-millions of dollars and two years it would take to build a data warehouse. So, having that fidelity at your reporting level only makes things easier.
So we’ve also done this for analytics. Reporting is great, giving me that moment in time, telling me where I am right now. But show me how I”m doing versus, perhaps, my budget. Right? The very first analytic that I think most people in finance do is budget to actual. When you have that nicely organized data from Vena, combined with the transactional data within FinancialForce, we can do that type of analytics very easily. Being able to look at things over time. That’s one of the places where standard Salesforce reporting really struggles, but to do to things like as-of-aging, and to be able to do periodic and time series.
The other piece that is fairly unique within the financial world that I’ve seen is your analytics and your reporting are always going to be in sync. Because we use the same data set, we use the same technology, we use the same data to flow. Instead of having what I see in most cases two separate spreadsheets, or in a lot of cases for some of our larger customers, one set of technology for financial reporting and another technology (a BI tool) for analytics. Those are never in sync. They are always in sync with FinancialForce. So, we keep that planning and budget data in Vena. We bring it into FinancialForce when we need it, and then we’re able to do some pretty interesting analytics by looking at things by time, by region, by product, being able to drill down all the way to the transaction or to an individual level – is something that is fairly unique within the delivery of financial data.
I think predictive, Andy, is constantly teased out here – this forecasting and AI. So, we’ve done that for financials as well. We’re able to leverage the predictive capabilities of the Einstein platform to be able to look at things like revenue and margin and optics, and EPTA, be able to see that pretty clearly. What are we using here? A linear-weighted regression. We can apply seasonality. So that I can sit there and look at… Here I’ve modeled a traditional software company. Q1 is your lowest quarter, Q2 and Q3 are the same, Q4 is your hockey stick. Would this be able to predict something like COVID? No. But the more historical data that you have, the more that you can look at your actual plan and actual budget, and be able to understand where there is a variance, who are your best planners within the organization, who has the lowest forecast variants and be able to let them help you model with some data here that’s more machine-driven, I think, gives you that ability to improve any of the planning or forecasting that you’re doing.
Two new things that came out as part of our fall release – which, by the time of this recording, is going to be out for about a month – cash flow. I mean, I think Andy started, at the very beginning, as, “Hey, where do you start? When do you start these planning cycles?” I can tell you, we used to track cash flow on a weekly basis at FinancialForce. It was a fairly convoluted process and probably took an hour, an hour and a half, to look at it.
In the time of COVID, that shifted to sub-daily, where any sort of material transaction we did, we would look at cash flow. So, we started using the Einstein technology for this about six months ago. We productized it as part of our fall release: to be able to look at our cash flow and to be able to forecast it going forward. The advantage of being on-platform with partners like Vena, with partners like Salesforce, is that we get a great look at front and back-office data. Key data for you to do cash flow forecasting are things like opportunities, payment histories, those sorts of pieces. A large volume of data – even customer sentiment, that language that people are using when they submit a case or when they ask questions. Ultimately, being able to forecast that with some scenario analysis is…We’re pretty proud of what we’ve done here as part of our Fall 2020 release.
Understanding when and where. Am I going to be okay this week versus next week? Hey, I know that I have deferred payments with some people, or I’ve changed someone that normally pays me annually to quarterly or even monthly. Being able to bring that sort of level of detail into a set of analytics and make it as simple as possible to use, ultimately, is going to really help in terms of tracking your cash flow and being able to give you some confidence going forward.
Andy, I think I’ve got one more slide here. That’s the other side of the table. If that’s the cash flow in. One of the things that we’ve seen people struggle with is really forecasting services revenue. Services revenue is a lot more difficult to forecast than I would say traditional product or tangible goods revenue. Right? You know when someone buys something. Generally, you can recognize the revenue as soon as you ship it from your warehouse or it gets delivered from some third party. Services doesn’t work that way; you have milestones. You have different models around time and materials, versus milestones, versus fixed-bid, versus work for service. Being able to understand how much work that you have in your pipeline, how much work you have that isn’t scheduled. A lot of things around forecast revenue. Forecast is only as good as the data you’ve got. It’s only as good as your revenue recognition rules as well. So, being able to bring those various components together and see how accurate your previous forecasting has been.
It’s one thing to forecast. Any of those forecasts can’t just be one-and-done. Understanding who are my best forecasters? Am I lowering my forecast variance? Because just having a moment in time, having that single forecast, you’re off by 10% or 20%, you might as well just be guessing. As much as you can go make forecasts, understand where your variance is, understanding where the pitfalls are, understanding how to lower that, that’s ultimately what the Digital Office of Finance is trying to do. Give you data in a quicker fashion, allow you to make decisions faster, and be able to track. Vena makes it a lot easier for us by having that engine anchored around that forecast planning and budgeting data.
Andy, that’s what I’ve got from my side.
Andy: That’s great, Joe. Thank you very much. It really completes the pie with all of the various components coming together in one complementary fashion.
So, where are we? To summarize: the world is changing, the world is changing fast, digitalization is here and is extending into the back office as well as the front office. It’s impacting finance. As a result, the finance function needs tech; it needs good tech. It needs joined-up tech. That’s where the Digital Office of Finance. One key element of that, obviously, is the executive layer bringing and servicing all of that data into an easy-to-digest, a powerful, impactful set of tools. That’s what the combination that you’ve seen today is able to deliver.
So thank you very much indeed, to my speakers: to Corey and to Joe. Really appreciate that.