Friday, October 5, 2012

SAP Financials OnDemand .. A Primer

Hello folks,

Maybe you have heard that we are just about to launch an exciting new member of the SAP Cloud family at SAPPHIRE NOW in Madrid in November. As we gear up for this launch, I am writing a series of blogs to formulate my thoughts about the solution. Today I'd like to give you all a basic primer on what SAP Financials OnDemand is all about.

I think the first thing to address is the role of a modern finance department and what issues and challenges they face today that prompted us to develop a brand new solution for this space.

Some of you might think that the area of finance has been around for such a long time that the processes of basic accounting, reporting, controlling should be well under control. Why should there be such an urgent need for renovation? Here is why. Research has shown, that most finance departments would like to move away from being purely operational to becoming more strategic. CFO's are being tasked to become more of a driver for sustainable and profitable growth for the entire enterprise. The reality today is, however, that most finance professionals are actually "stuck in reporting hell". Instead of rapidly analyzing information and providing insight to executive management for real time action, teams of highly trained professionals spend much of their time in data consolidation, aggregation and, often, redundant corrective action based on the fragmentation of systems and general ledgers that has accumulated over the past decades. This is the reason why we felt the time was ripe to develop a new Financials Engine that can drastically transform this area.

Let me give you one example where we can really help with this new solution: Many large companies have systems with potentially 1000's of general ledger accounts. For example, enterprise would typically have a General Ledger account for meals and entertainment that gets replicated for each department, and sometimes even at the project level. This large and proliferating number of accounts is unwieldy, hard to report against, and frankly not agile enough to deal with today's demand for a modern financials department. Another problem is the common software development practice of  using a so-called "coding block" to embed meaning within a string of numbers such as 09092000307652. In this case the first three digits 090 could mean company code, then a department code 920, then an expense type 0003, etc. This deep meaning embedded in a string of numbers was invented at a time when memory was scarce, storage was at a premium and financial systems were built for experts. This "hangover" from older system architectures persist today and can make financial systems very hard to change.

So how are we addressing these issues (among a ton of other things which I will cover in later blogs) with SAP Financials OnDemand?

Above all, SAP Financials OnDemand is based on an innovate In-Memory architecture using SAP HANA.  SAP HANA is a completely new way to extremely rapidly store and retrieve information in it's rich, native format using a flexible approach to reflect multiple real-world attributes and business dimensions. Using SAP HANA powering SAP Financials OnDemand, enterprises can drastically increase the flexibility in which they store and retrieve general ledger entries, giving them virtually unlimited flexibility to report on any business dimension they chose. The idea is to enable enterprises to get out of the game of generating a scattered landscape of many many specific-purpose and potentially rigid general ledgers. The idea is to minimize, if not completely doing away with time consuming and complex reconciliation! With SAP Financials OnDemand enterprises can fundamentally simplify the task of creating a single source of truth that is not only much more flexible, but also drastically easier to use and more relevant for everyone in the enterprise.

Are you bored yet? I would not blame you since this stuff is usually reserved for experts. Let's bring it back to the end user level, to average Jane and Joe, if you will. Most of you are probably working in jobs where you would like to have accurate real-time information ready at your fingertips any time and anywhere. But you still don't have that. How come?

Isn't it true that there are great analytical and business intelligence tools out there? Yes!
Isn't it true that there are data warehouses, and data marts that provide multi-dimensional reporting for anyone in the enterprise? Yes and Yes! There has been tremendous progress over the last 40 years to get data out of systems and to aggregate them, enrich them and deliver the information to a great  set of tools.

But ...

What's important is that the transactional systems that are the source for these business intelligence tools are mainly intended to run todays's billion € a second globally connected economy. THEY WERE BUILT FOR TRANSACTIONS. And these systems will stay in place. They will continue to be enhanced. And they will continue to feed the "Analytics Farms" and Business Intelligence engines that feed decision making today.

But what about brand new systems for new companies, new divisions, new joint ventures and new projects? Should we go accept the limitations of pure transactional systems, the limitations of rigid coding blocks, the limitations of the need for aggregation, the limitations of separate reporting systems? I don't think so. And there is no need to do so any longer.

With SAP Financials OnDemand you will get a system that is built on 40 years of experience with providing the heavy lifting needed to power financial transactions for the global economy. But SAP Financials OnDemand was not built around just transactions, compliance and reporting. It was build around the concept of a single, trusted source of truth that can be the foundation for insight and collaboration for everyone in your enterprise.

It think this basic value proposition is captured fairly well in the following short video clip produced by the team gearing up for the launch.

I hope this short blog has given you a bit of perspective of what we are trying to do with SAP Financials OnDemand. I look forward to your questions and comments

CHHO, Vierkirchen, Oct. 5, 2012

Thursday, October 4, 2012

A Financial Engine is like a tree ... a different view

Whenever we talk about software, no matter if it is developed for on-premise deployment or for the cloud, we marketeers usually invoke a lot of technical analogies: Control rooms, cockpits, traffic hubs, infrastructures, diagrams on screens, data on mobile phones, etc. The perception seems to be that it's all about technology, its all about data, it's all very clean and sterile. I really don't like that very much.

Last evening I was thinking about the global economy and the new role of the "strategic" CFO that is going beyond the classic back-office job of accounting, budgeting, planning, controlling, reporting, governance and compliance into the much more strategic role of enabling sustainable and profitable growth for the whole enterprise. And I was thinking: "Why can't we - for once - use a different analogy for explaining how a modern Finance Engine needs to work?" The analogy that came to mind was the picture of a tree.

"A tree?", you might ask. Let me try to explain my thinking here.
(a) A tree has a strong foundation in its root system. The root system is deeply embedded in the environment and provides stability and nutrition to the entire organism. A modern Finance Engine also needs to be deeply rooted in the enterprise environment, being able to extract information from all business areas to provide a single source of truth.

(b) A tree is supported by a strong but flexible trunk that grows every year in a structured way. This is comparable to the foundational capabilities of a modern Finance Engine that provides all the reliability, security, governance and basic accounting capabilities needed for an enterprise CFO to not only run their business, but to stay compliant and provide data to everyone in the enterprise, in a format that is easy to consume (Tree Nutrition, ironically, is called sap).

(c) A tree is also characterized by its system of branches, supporting leaves or needles and/or fruit. In a modern Financial Engine this analogy relates to the ability of the tree to reach out to all areas of the business, even the smallest leaf to enable bi-directional communication and production.

(d) Last but not least, a tree is usually embedded in a rich and vibrant ecosystem, for example a forest, partaking in a system of sustainable and dynamic interchange, synergy and often symbiosis. This could be related to the capability of a modern Financial Engine to be easily connected to other systems, be it in a business-to-consumer or in a business-to-business context.

You are probably already thinking about the 59 ways this analogy does not make sense.

"This silly analogy misses this, and it distorts or misrepresents that .. ".

Go ahead, critique, find fault, correct away to your hearts delight... ! I am fine with that! I think analogies are most useful when they stimulate a new way of thinking about something. For me it helps me think about launching our newest addition the cloud family, SAP Financials OnDemand. By thinking of the solution being like a tree, it makes me remember a number of key things we need to absolutely respect:
  • If we want to put a new tree (new financials engine) into an enterprise, we need to respect that there is already a tree in place with an existing, deeply embedded root system, branches, and symbiotic relations with its internal and external ecosystem.
  • When you put in a new tree, you typically start with a small tree that's carefully nurtured and protected and allowed to grow alongside the existing tree until its ready stand alone and to bear fruit.
  • You have to put a tree into the appropriate environment. Putting a palm tree into northern Alaska does not make a lot of sense. Nor does it make sense to place a new Financials Engine into an industry that requires specific, deep industry adaptations out of the box that the young "tree" might not have grown.
The list could go on, but I will stop the analogy right there. After all, this is just my personal blog about the random thoughts of an enterprise marketeer, looking for feedback and inspiration from the global hive mind.

In my mind, the analogy will live on, however. Don't be surprised if we put pictures of magnificent trees or forests at the front of our customer presentations. I personally think it is important to think about Financial Engines not in terms of technology, but in terms of an organic system that has to flex and grow, that exist in a sustainable fashion inside an ecosystem, and that is, simply stated, a beautiful thing to look at and enjoy. 

Walldorf, October 4, 2012

Tuesday, October 2, 2012

The New Financials Engine for the 21st century

As we go through the positioning and messaging process for SAP Financials OnDemand (our latest addition to the SAP Cloud portfolio), I am reminded of the big innovation wave of the 90’s when Michael Hammer’s Business Process Engineering book took the industry by storm, and created a huge wave of demand around transformation projects as well as Enterprise Resource Planning (ERP) software, which made SAP the market leader we are today.

I think we are just at the beginning of a new, huge, very similar innovation wave for financial software (the perfect storm of innovation if you will), because of the convergence of a lot of concurrent technology trends, including In-Memory, Analytics, Big Data, Cloud, Mobile and Social. 

"Yeah, Yeah", you're thinking, "here we go again with a marketeer yakking away about innovation .. we've heard it all before ..."

Really? Let me lay out my thought process here ...
  • The ERP systems of the 90’s were built around transactions, not decision-making or analyticsà leading to lot of pain of transformation and integration
  • They were built for transparency and governance/compliance, not for collaboration and instant action à leading to frustration and delays
  • They were built for finance experts, not for everyone in your company à leading to duplication and losses in translation

The world has moved on. Business processes have moved on. People’s work style has moved on. Enterprises still need all of the foundational capabilities listed above in their trusted financial backbone (Transactions, Transparency, Governance/Compliance, Financial Excellence) but, more than ever, need to add support for the 21st century style of work as well. Finance has to move out of the boring but essential back-office paradigm of operations and reporting and move into a key position for driving growth and change in enterprises. But how? 

In comes SAP Financials OnDemand, which is already shipping in its first iteration, and will hit its first refresh in November of 2012. Here is a short overview of the system characteristics which I personally think offer a very interesting case for taking a closer look. 
  • Single Source of Truth
    • Reconciled data (true data) along multiple dimensions reflecting the real world in real time
  • Real Real time
    • Based on In-Memory technology, designed for analytics, and doing away with the separation between transactional and analytical data stores
  • Intuitive
    • Designed to be easy to use for anyone in your business, not just the financial experts
  • Mobile
    • Native support for mobile devices including iPad and Windows8, getting the informaton to the people whereever they may be
  • Collaborative
    • Built-in workflows and community support so people can take immediate action
  • Open
    • Embedded process library with open integration links to processes beyond the the scope of the built-in order-to-cash and procure-to-pay scenarios
    • Extensible architecture based on Web-Standards
    • Software Development Kit
  • Extensible
    • Other SAP Cloud Applications easy to "clip on" (SAP Travel OnDemand, SAP Sales OnDemand, etc.)
    • Available Application Connectors for non SAP applications, Payroll, Sourcing, etc.
    • Easy business-driven configuration (Click-to-Adapt technology)
  • Global Compliance
    • Global Accounting Standards (IFRS, US-GAAP, ..)
    • Internal controls built into the processes
    • Localization for multiple languages, currencies, ...
  • Trusted Cloud
    • Cloud Certifications in Germany, US ..
    • Trusted Data Centers around the world
  • SAP Ecosystem
    • 40 years of business process excellence
    • 1000's of partners in global ecosystem
I think if I were a CIO, I'd take a serious look at this right now. A system built by SAP, that can DRASTICALLY simplify my general ledger landscape and EXPONENTIALLY  increase my speed and flexibility in terms of reporting for everyone in my business?

Does that mean people will throw away their existing financial systems and upgrade to SAP Financials OnDemand over night? Heck no! Of course not. Trillions of € are invested in these systems and they form the backbone of the global economy. That would be like trying to do a heart transplant on a marathon runner  WHILE HE IS IN THE RACE. Impossible. But. What IS possible, is to kick-start a new wave of process engineering, or financials re-engineering, if you will. In a an approach of open co-innovation, where we'd look at your specific business situation, identify the opportunities together, focus on the fast moving areas that need accelerated innovation more than others ... and get it done. I am personally excited to be part of this new wave. I missed the fun and excitement when this happened in the 90's (I was playing with databases and middleware then). But I am not going to miss this one .. actually, I am the Launch Captain for the November refresh. 

The Launch is coming. Get on board, you don't want to miss this one ...

CHHO, Walldorf, Oct 2, 2012