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Updated: 10 min 18 sec ago

How companies can improve their corporate financial report

Thu, 04/17/2014 - 11:32

In two previous posts, we have discussed some issues with annual reports and financial reviews of companies in Vietnam. What can be done to improve them? Preparing a financial report is an art that requires authenticity rather than a motive to polish a company’s image.

International standards

ACCA has stated in its 2012 study on annual reports: “IFRS itself has the concept of neutrality at its heart, which we believe is the right approach to ensuring unbiased reporting”. Since a major factor affecting the value of corporate financial reports in Vietnam is transparency, it is recommended that Vietnamese businesses aim for international standards. However, IFRS adoption has yet to be made mandatory for companies apart from public listed and state banks, which is why there are still practical limitations.

A notable example of successful IFRS application alongside the Vietnamese Accounting Standards (VAS) is Bao Viet Group. As quoted in an article by the Ministry of Finance (*), Bao Viet Group appreciates preparing its financial reports under IFRS to increase transparency and aid investors in comparing its performance with other IFRS compliant companies in the region.

Risk reporting

After the financial crisis, risk management has become a major concern, which is reflected in corporate financial reports. This is an aspect that Vietnamese companies seem to lag behind. Many companies only include risk reporting at a basic level, while they should do the following instead:

  • Quantify risks instead of purely identify them
  • Adopt a risk management mindset
  • Devise a risk management scheme
  • Develop risk KPIs

The importance of risk in corporate financial reports is emphasised in the aforementioned ACCA report, in which 71% of participants thought companies should report more on potential risks.

Investor relation

“Investors should be positioned as the most important audience for the report, and need to be better engaged in its future evolution” – ACCA, 2012.

In Vietnam, the Investment Relation (IR) department is not a common notion, which is why information presented in annual reports may not be crafted to suit investors’ taste or may be missing. Companies should therefore, let IR specialists be a bridge to the needs of investors and translate them into their corporate reports.

====================

(*) By T.Phung, published on Oct 18th 2012

***

For insights from users of financial reports themselves, read about the aforementioned study from ACCA called “The road to real-time reporting”.

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Points of caution when analysing annual financial review in Vietnam

Mon, 04/07/2014 - 11:26

In the previous post, we have touched upon the current issues with annual reports in Vietnam. The financial review in an annual report, including financial statements and footnotes, is of particular interest to investors. Nonetheless, there are differences between the way this section is approached in Vietnam and in Western countries such as the US and UK due to legal, social, cultural and political dissimilarities.

Limitations of the annual financial review

Regardless of country, there are certain points of caution investors need to remember when analysing the financial review.

    1. Inflation could lead to variances financial data recorded in the financial statements, especially when they are only published on an annual basis.

        2. Changing market conditions also affect a company’s performance, causing variances in financial ratios.

            3. Management can take advantage of complex accounting standards to actively create favourable financial ratios, which renders the whole annual report ineffective as an objective assessment tool. This is noted in the findings of an ACCA study (2012) on annual reports, in which 68% of respondents claimed the document is overly complex due to reporting standards, and the number of people who agreed that standards encouraged transparency was roughly equal to that of opponents.

                4. A mixture of very good and very bad ratios can make it difficult to gain an overall perception of a company’s financial situation.

                    5. For large-scale companies operating in various, if not very distinct sectors, it is hard to build and apply a meaningful industry average ratio system.

                        6. Currently, there have been no agreed standard calculations of some ratios, which may cause problems when referring to different sources.

                          Zooming into Vietnam

                          Due to inherent dissimilarities in socio-political and economic landscapes, even though Vietnam has strived to follow international standards, there are some points investors need to keep in mind:

                          1. The first challenge when analysing financial statements of companies in Vietnam is a lack of industry average statistics for comparison, which may reduce the significance of assessing a company’s financial performance.

                          2. The second issue is a lack of separation between operating costs and interest expense in the income statement. Thus, readers rarely analyse using financial leverage ratios, unless they are important to the bank and creditors so preparers have to find a way to separate these expenses from financial activities expenses.

                          3. The Return on Equity (ROE) ratio attracts much attention from investors and shareholders. However, the financial statements only state the net profits while in reality, not all net profits belong to the shareholders as the company has to establish other funds. Therefore, ROE may cause distorted expectations for shareholders and investors.

                          4. The credibility of figures on the financial review is not high, even for audited reports. This signals a loophole in the law regarding financial auditing. Meanwhile, for Western readers, the role of external auditors in verifying information from companies is crucial, as confirmed in the aforementioned ACCA report.

                          5. In Vietnam, analysis of financial reports is rarely done by top management for the purpose of internal assessment; rather, it is by external parties such as banks or stock companies.

                          ***

                          In the next post, we will discuss what companies in Vietnam can do to improve their corporate financial reports. In the meantime, to learn about the state of annual reports in Western countries to achieve real-time planning, read the aforementioned report from ACCA “The road to real time reporting” today!

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                          Rethinking the real value of annual financial reports in Vietnam

                          Wed, 04/02/2014 - 10:34

                          Annual report – As sad as it may seem, the concept of preparing/using the document is still a grey area in Vietnam. According to the Ministry of Finance, to date there are 1,690 public companies in Vietnam, 704 of which are listed in 2 stock markets. However, in 2011, only 21 out of 695 listed companies sufficiently met mandatory regulations regarding information disclosure.

                          Why annual report?

                          Preparing an accurate and transparent annual financial report is not only significant in building a company’s reputation but also in improving business and operation management. Once a company becomes a public listed, its mission to feed investors with complete information in a professional manner is crucial, not to mention compulsory. The format is similar to the 10-K form in the US, detailing a company’s history; statement from the chairman; report from the management board; financial review; footnotes to financial statements; audit report; report on related parties; report on organisation and human resources; information about shareholders/founder/board.

                          A harsh reality

                          An ACCA report (2012) on the perception of annual reports has pointed out some criticism from users in the UK, US and Canada. Specifically, the surveyed participants tend to think the annual financial report is too long, too backward looking, too complex (in terms of reporting standards and legal requirements) and too general purpose.

                          The landscape is quite different in Vietnam. Although there is no methodical research conducted on the matter, it has generally been agreed that transparency is the biggest problem of annual reports. There is an unhealthy amount of doubt about the document’s value to investors, or readers. The market is used to being spoon-fed with word of mouth or rumours rather than structured, audited reports from companies themselves. Hence, this provides fertile grounds for some organisations to dominate due to a lack of transparency, e.g. by hiring non-credited auditors to give their reports a shiny seal of approval, or bribing consulting firms to shed a favourable light on their customer satisfaction report.

                          Another issue is a sizeable number of companies have a vague idea of how to prepare annual financial reports. The data in these documents is not rich enough, with missing or inadequate information about risk management, proposed actions or investors’ relation.

                          A positive sign

                          Although annual reports have not been rightfully embraced, change is already on the way in Vietnam. A notable example is the Best Annual Report Award, which has been given to those with the highest quality reports (mostly in terms of transparency) over the past 5 years. The contest, currently open to listed companies, is hoped to grow to a national scale by 2015.

                          Stay tuned to our next blog post where we'll discuss about the points of caution when analysing the financial review of companies in Vietnam.

                          5 levels to build successful collaboration with social ERP (part 2)

                          Tue, 03/25/2014 - 12:36

                          According to SIG (2014), analysts are predicting that social media and social apps will become a more significant component of the ERP landscape. Becoming more social can improve your company’s agility and facilitate competitive advantage. Making your enterprise social brings the power of the back office to the front office, helps customers collaborate, and drives growth.

                          However, as manufacturing industry requires a great deal of team work and individual performance, therefore the need for collaboration within the organisation is even higher, and social ERP system comes in as the solution.

                          In the last post, we discussed about 2 among 5 levels of collaboration that manufacturers need to go through in order to gain full benefits from collaboration and their social ERP system. Today, we are going to mention more detailed about the remaining 3 levels of collaboration to help manufacturers increase productivity.

                            3.      Design and engineering collaboration

                              Design, as we know it, is a discipline and process that make the business produces better for the people who use it and is an irreplaceable part of engineering. However, many manufacturing companies encounter difficulty in controlling and sharing design information with key stakeholders. This problem is especially hard to deal with in distributed engineering and design teams, outsourced manufacturing or multitier supply chain network. Although some companies have data management system to control the situation, design information is still scattered among many systems and scores within the organisation. This causes critical issues for manufacturers since they cannot have design information on time, result in delaying the entire engineering process and profit loss.

                              As a result, design and engineering collaboration is having a key role in this context. It helps improve and streamline processes across your discrete manufacturing processes to support product development, from the draft scratching time to the market launching period.

                              You can get that with an advance product life cycle management solution (PLM) within a social ERP system. It functions as a connector between all activities in the engineering process, from design to production. You can gain both foresight and insight about your products, in order to manage the engineering and production process in an effective and cost-saving manner.

                                4.      Vendor and customer collaboration

                                  When a company works with their vendors, they turn over some control of their operation. The vendor could be a supplier or manufacturer of the product, a broker who manages the customs entry or even a consultant who provides the tariff classification of the goods. In all cases, the vendors play an important role in the importer’s supply chain.

                                  On the other hand, customers can be considered as our manufacturing-goal setter, since manufacturers produce based on forecasted customer demands, and customer trends for seasonal products. With the right information about customers delivered at the right time, manufacturing leaders can make decisions as accurate and timely as possible.

                                  A dynamic ERP system will provide web-enabled vendor self-service portals and give manufacturers and their vendors the ability to identify current status as the manufacturing process is moving towards common goals, and from that, save time, effort and money. In addition, manufacturers and vendors can team up as one object and power up to serve customers better.

                                    5.      Reporting and analysis collaboration

                                      After making decision, as a result, you need to build strategy from it, while digging deeply in a vast amount of relevant information to gain knowledge from different perspectives to have the best insight about organisational business process. Without comprehensive, unified collaboration framework, manufacturers will be more likely to spend more time making the decision, not to mention all the activities followed.

                                      Business Intelligence (BI) system will help you combine pre-built integrations with pre-built integrations with pre-configured content and easy customised reports for easy information proceeding. BI system will also help to present information in a friendly and responsive interface visually, so that manufacturing leaders can easily get accurate information and generate deeper, more valuable reports and analytics more than ever.

                                      Collaboration in manufacturing: altogether as one

                                      Collaboration brings on the table the flexibility and transformational benefits in multiple functional areas such as R&D, operations, Customer services and sales to the manufacturing industry more than ever. With collaboration, all disparate resources from human genuity such as people, systems, customers, vendors, to the means of information power such as analytics & reports, design and engineering, will work together as one and give you the overall power to succeed in rapidly changing environment today.

                                      This is the end of our series “5 levels of collaboration in manufacturing”. Find out the detailed discussion in our full whitepaper today!

                                      //

                                      5 levels to build successful collaboration with social ERP (part 1)

                                      Fri, 03/21/2014 - 13:18

                                      In the last post, we have introduced the basic understanding of social ERP and collaboration concept in manufacturing as well as their benefits. Of course, manufacturers cannot build a successful collaboration strategy without a pragmatic, goal-oriented strategy to take the best advantage from social ERP.

                                      There are many types of collaboration, and each type requires different tools and priorities, and companies need to pay enough attention to all types of collaboration in order to have a unified collaboration strategy before moving to the next goals.

                                      The most effective strategy for building a successful manufacturing collaboration platform can be approached in 5 parts, together with each type of enterprise collaboration.

                                        1.      Collaboration between employees.

                                          This is the baseline level of collaboration, where we can know in simpler term as “social business”. For organisations not in manufacturing industry, they may need collaboration in this level only. However, in manufacturing processes, it requires more than mere conversations between employees. They need to structure conversations around business activity and incorporate business transaction information to achieve effective manufacturing.

                                          The importance of linear, process-based tools such as activity-based costing, business process re-engineering, and total quality management for enhancing individual performance has long been known widely in the manufacturing industry. However, high individual performance doesn’t equal to high organisational performance.  It is a whole different story, since globalisation has made the common ground in the business world to change. And the role of collaboration is more important than ever, especially to manufacturers nowadays.

                                          Although collaboration is the heart of any manufacturing businesses, most companies in Vietnam are still cannot figure how to manage it more effectively. According to McKinsey (2006), effective collaboration only happens when there is harmonious combination of high individual performance, team performance and organisation-wide performance.

                                          A dynamic social ERP system which has the ability to deliver collaboration into your business processes can help. As the next generation of ERP systems emerges, social applications are proving their value in connecting businesses internally and with customers. Not the same as integrating ERP systems with external social-media sites, social ERP apps mirror the functionality of online social networking tools. The interface may act like Facebook, but it is secured and maintained with your ERP solution.

                                          Social ERP tools can facilitate collaboration and communication among employees and partners using your ERP system. Connecting people quickly and easily enables them to proactively solve business problems together.

                                            2.      Collaboration between systems, resources, and things

                                              Supporting systems and resources are also important to the business development, along with people performance in the organisation. According to Gartner (2013), a top-performed manufacturer need to leverage internal intelligence together with knowledge to provide all parties with up-to-date status of progress.

                                              As a result, your system should be as collaborating as your employees do in level 1, by using industry standard interfaces to accelerate your overall business process. You need to develop a framework to connect different systems, resources and necessary things to keep manufacturing smoothly and consistently. You need a powerful platform to support all integration services, cloud services, mobile services and advanced reporting services within a single, unified framework.

                                              In this level, employee collaboration is not enough, but to incorporate information from all business systems and resources with your own people’s knowledge. In turn, you get all benefits from your social ERP system, while gaining the ability to use multiple solutions as one, which helps you to easily address all aspects in your business.

                                              Stay tuned to our next blog post about 3 remaining levels of collaboration for high-performance manufacturing, and how to pull all levels of collaboration together with the help of social ERP system. Or you can see it all now by downloading our full whitepaper “5 levels of manufacturing collaboration” here!

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                                              Social ERP as the new manufacturer essential in 2014

                                              Wed, 03/19/2014 - 10:54

                                              The rise of new social media platform such as Facebook, LinkedIn, Twitter, Tumblr and many more is create an evolution in every aspect of the world, including business. ERP is not an exception of the tide of social media sweeping across the technology world. Today, the software applications will be expected to have the ability to provide users the communication and interaction needed within the organisation the way they’ve done in Facebook and other platforms.

                                              The marketplace is changing quickly as the demand for information is more critical than ever. There are notifications, data of changes, announcements and many, many more information are made in one hour that organisational leaders need to know to have insight about the path their company is heading to.

                                              For example, order entry data can be view in spreadsheet from the production demand forecasting system, and you need to know the production plan, which may be stored in the routing systems to plan work through many production operations. A business may have thousands of work centres and operations. But do the two systems match? Of course not! It’ll take a very long time to find and pick the information you need in many system available. Social ERP comes in as a solution for this situation.

                                              What is social ERP?

                                              In simplest term, social ERP is an integrated software system that organises customers, employees, suppliers and partners of a company under the same umbrella. It has all traditional features of an ERP system with additional feature of social collaboration within the system itself, allows users to easily discuss, share and connect with each other when necessary.

                                              Why manufacturing collaboration different

                                              A recent Aberdeen report in 2013 stated that: “organisations that have implemented social ERP saw over twice the improvement in profit margins over the past two years than organisations that have not implemented social ERP.” This is not to say that the success of one organisation depends on the implementation of a social ERP system, but to indicate that social ERP system enables organisations to plan, work and meet dynamic challenges more effectively and become more profitable.

                                              In another report from Aberdeen, top manufacturing executives continue to recognise the importance of manufacturing collaboration. Specifically, 43% executives expect improved collaboration to yield shorter time-to-market new products, while 29% aims for improve innovation process and 26% expects to reduce operational costs.

                                              Today, as manufacturers are struggled with the lack of skilled labours, while still have to grow without costing more for employments, they need to take advantage of shared dialogues and effective collaboration. Evidently, a highly collaborate manufacturer will have the ability to:

                                              • Create a big picture of what is going on in every process to make right decision at the right time.
                                              • Access to all data in anywhere in the world in real-time.
                                              • Create good work relationship throughout the organisation and thus increase the trust and believability in shared data in the system.
                                              • Notice critical activity and who are subscribed to that and have work arranged more efficiently.
                                              • Enhance organisational culture and employee relationship.
                                              Conclusion

                                              The qualities that lead to success in manufacturing revolve around rapid mastery of the combination of human judgement, precision engineering and financial accuracy, all united in a highly synchronised framework focused on business goals. All manufacturers need a richer, deeper collaboration architecture that incorporates broader business functions than newly popular social collaboration tools usually provide. However, the collaboration processes needs to be workflow, not an afterthought. In the next posts, we will going to discuss to detail about collaboration process and how to pull it all together to achieve highest performance.

                                              Or you can find out now in our full report:

                                              Financial leadership: Financial management essentials

                                              Wed, 03/12/2014 - 15:51

                                              Research shows that globalisation trend is growing. With all the technologies, internet and the vehicles they empower from e-commerce to social media, the world continues to be smaller since information now is more accessible, and business opportunities follow it become broader to catch.

                                              Deloitte LLP (2013) found that in their report “Building on the BRICS”, direct investments poured in the new emerging markets such as Indonesia, Malaysia, the Philippines, South Africa, Thailand, Turkey and Vietnam, reached $39 million in 2012.

                                              This reflects a brand new levels of opportunity for companies at all shapes and sizes. Globalisation now becomes a standard and necessary way of doing business.

                                              However, despite the commonplace of globalisation today, this does not mean the business process is any less complex. Some companies still struggle to seek for success as they are less prepared than other larger organisations. But there are still SMEs who have reached a decent position in the market in spite of their smaller capability. It is clear to us that, regardless company size or market characteristic and opportunity, being prepared is always essentials.

                                              In this first post of our Global Financial Leadership series”, we’ll explore one of the most essentials in high-performed financial leadership: human resources, to help companies to focus on the growing challenges of globalisation.

                                              Problems in recruiting and retaining talents

                                              According to US Bureau of Labour Statistics, the unemployment rate in CFO position is 1.8% and 4.6% for accountants, compared to 7.9% overall rate in the US, and the same situation is happening in many place in the world. However, as the Olympics has just ended and World Cup is coming, the demand for accounting talents is growing strong again (Duke/CFO Magazine Global Business Outlook survey, 2013).

                                              The survey also indicated that attracting and retaining top talent are still one of the top concerns of CFOs’, especially for multi-national organisation where financial process are varied and difficult to manage.

                                              Hugh Johnson, CFO of Pepsi Co. Inc., said that as many companies are expanding into new emerging markets, they have to compete over skilled financial professionals regularly. Moreover, when companies are able to fill in the talent gap, they have to deal with new needs right after that because the businesses grow rapidly.

                                              Reasons and solution

                                              According to Paul McDonald, Executive Director of Robert Half Management Resources, there are 3 main challenges as reasons to cause this trend:

                                              • Unhappiness with management
                                              • Limited advancement potential
                                              • Lack of recognition all factor ahead of the company

                                              These challenges, as a result, indicated that a solid talent management process is critically necessary for all companies; and technology is considered to be an essential component to achieve this.

                                              Evidently speaking, a recent study from Tower Watson indicated that “technology is integral to improving the delivery of talent management and total rewards program” while Deloitte predicts that global HR service delivery models will be the new focus, in order to take advantage of the social media reach and replace silos HR/talent system.

                                              Clearly, having a comprehensive system and the right tools will help support CEOs and CFOs to manage the most valuable asset of the company – Human Resources - in the most profitable way to compete in global marketplace. There are 6 basic ways to use technology for effective production and job satisfaction to drive the business forward:

                                              • Getting unified views of talent
                                              • Improving technology user experiences
                                              • Removing IT as the gate keeper of information
                                              • Closing the gap between technologies for business and casual uses
                                              • Optimising knowledge from all levels
                                              • Reducing bureaucracy

                                              In the next posts of our Financial leadership series, we will discuss further about these 6 ways to help business attract the best and brightest. Stay tuned!

                                              Don’t want to wait? Download and read our full blog post now!

                                              //

                                              Building a BI strategy: Taming data to gather information power

                                              Thu, 03/06/2014 - 14:56

                                              Gartner’s 2008 CIOs survey highlighted that Business Intelligence (BI) is now one of the top priorities in business. BI is known to have positive impact on business performance of an enterprise, dramatically improving the ability to accomplish the mission by making timely and smart decisions at any level of the business.

                                              Additionally, Forrester Research has provided a foreseeable future in their recent report that we are competing on information, where “all products and services continue to become more commoditised in our global economy”. As a results, if the two businesses share the same marketing personas and customer insight, the one who has earlier information will have significant advantages over the other. That’s why we need BI.

                                              Updated BI and analytical tools, empowered by the Nexus Forces – social interaction, mobility, cloud and technology – now have the ability to perform data democratisation throughout the business, thus combine individual capability for higher performance. 

                                              "An effective information network is like spider web. It gives the spider all movements of its prey to prepare for a good attack."

                                              Unfortunately, despite all technology innovations in data and information management, companies are still held back. Technological advancement is only on pace with a minority of businesses, while still keep a far distance ahead for others. Furthermore, BI challenges are based on not only the company size, but also its sophistication level around data analytics.

                                              Most companies encounter the problem of integration in their BI strategy execution. As business grows, the organisation capabilities as well as changing technology base have left companies with complex system landscapes. They have so much data at hand that they don’t know where to start with, and have no idea to optimise the values of those data. They end up being overwhelmed by silos and have so little chance to manipulate the data into valuable information.

                                              However, middleware technology came out recently as a solution for integration problems. This technology is able to quickly and easily connect disparate systems into one whole, where companies can upgrade or even fail to execute without taking down all installed applications.

                                              With integration forced into the picture, companies need to drive further to adopting additional BI strategies by their position on the evolutionary scale. Here are 3 common organisation categories and their identical BI strategy to empower organisational data management process.

                                                1.      Tactical

                                                  Definition:  Companies focused on tracking and measuring projected business performance against actuals. They prioritise the need to meet basic reporting and regulatory requirements over assessing “how and why” of decision making. This action is time-consuming, a manual processes and an outdated technology.

                                                  Key strategies:

                                                  • Set clear goals for data analytic activities to get information and analytics controlled on one certain business area.
                                                  •  Get buy-in from key stakeholders by including them from the beginning in the BI strategy process and providing them clear insight on how things change to avoid conflicts.
                                                  • Start small by identifying areas that are most affected because of lacking information or data and focus on solve the solution in that area only. This gives you solid foundation to expand your efforts.

                                                   

                                                    2.      Strategic

                                                      Definition: Companies use data to steer businesses rather than measuring the past business performance. They still rely on IT for the use of BI and analytical tools; thus limit the in-depth use of information.

                                                      Key strategies:

                                                      • Expand the availability of user-driven BI and analytical tools through the use of packaged BI solutions to reduce the dependence on your IT department.
                                                      • Reduce the amount of time that employees spend finding information and increase the analytical time to maximise the power of data and information.
                                                      • Provide a foundation for the long term by applying technologies that are flexible enough to adapt with the market while not change your organisation processes.

                                                       

                                                        3.      Driver

                                                          Definition: Companies master the art of collecting information and moved on to the process of how best to take advantage of it. They are working to put analytics to the hand of employees with BI and analytical tools. However, as the amount of data and information rise, these businesses must find the right path to manage all of it.

                                                          Key strategies:

                                                          • Investing emerging technologies that can take your BI efforts to the next level, which should include social business and big data to give your control on data democratisation as well as data management for better business performance.

                                                           

                                                          Conclusion

                                                          Business Intelligence and analytics solutions are widely considered by CIOs and analysts in top organisations around the globe because of their capabilities to manage a great amount of data without frustrating your employee working process. By taking steps to data democratisation, companies can now put the power of information to the hand of any end-users, bottom-line get the most of information values and enhance business performance as a whole.

                                                           

                                                          This is the end of our blog series “The democratisation of data: how information can give power to your people”. More detailed discussion around data democratisation topic is discussed in full in the whitepaper. Click the button below to read more!

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                                                          Staying competitive by optimising existing processes and technology investment

                                                          Thu, 02/27/2014 - 10:50

                                                          In the previous posts of this “Managing your business in a volatile climate” blog series, we discussed about a renewed focus on risk management, business forecasting and new technologies that businesses can leverage to stay competitive in a volatile market. In this articles, the last post of this series, we will discuss about improvement of businesses responsiveness to volatility by capitalising on core processes and technology investment.

                                                          It is important that fine-tuned processes can encourage business agility, and help businesses to take advantage of fewer options and opportunities as they arise. But, the question is: “What are the processes that can make a difference”. To some extent, the answer is varied from industry to industry; but, there are a common set of processes shared by all industries that can confer significant economic, operational, and strategic advantage.

                                                          Working capital management

                                                          Being able to manage working capital effectively can help businesses improve margins and provide enough funding to meet the challenges of volatility head-on. The research “Source to Pay (S2P), done by FSN in October 2010, reports that “unapproved spending on unauthorised suppliers typically accounts for around 38% of all transactions in a business that does not have its purchasing under effective control” which leads to a scarification of approximately 11% in negotiation discounts if placing these orders with approved suppliers. Hence, businesses need to leverage applications that can provide 24/7 access to tools like online-catalogues, custom pricing, and paperless supplier orders and dramatically improve their procure-to-pay (P2P) efficiently. Likewise, suppliers can capitalise on the same system to control their supply chain, improve service, and reduce paper flow and bottlenecks.

                                                          Profitability management

                                                          Businesses can turn the mere management of profit margins into a powerful strategic tool by coupling traditional activity based costing (ABC) with transaction-based profitability. Put it in another way, for example, profitability management give businesses exceptional strategic capability by allowing profitability to be traced over the lifetime of a customer, to position a new product and service offerings, and to modify customer price plans in response to customer attributes and market volatility. As a result, businesses can redefine their relationships with customers, identify the unprofitable accounts and high maintenance relationships to discourage or put more focus on a specific groups of customers who bring higher profit to the businesses.

                                                          Performance management

                                                          Finely tuned performance management can bring greater business agility and competitiveness. As such, the ability to get away from cumbersome spreadsheet-bound activities help businesses deliver report results to both internal and external stakeholders more rapidly and in accelerated timescale. Businesses can also be provided superior insights as well as a high level of confidence in management reports, disclosure and findings, which allow them to tap into variety of sources of capital and make acquisition on more favourable terms than their competitors.

                                                          Business Intelligence (BI)

                                                          Business Intelligence combines a set of theories, methodologies, architectures, and technologies that transform raw data into meaningful and useful information and critically help accelerate business decision making process. To stay competitive, businesses need a unified analytical platforms of performance management and business intelligence applications where both systems can share structural information such as account codes, organisational hierarchy, and cost centre. Only having that, businesses can move towards a more powerful and responsive analytical capability.

                                                          Moreover, workflow and other collaborative tools can help businesses link users in different functional areas to overarching business process, which allows seamless transmission of information between them and increase visibility of process across an entire business. As a result, businesses can improve their responsiveness to market changes.

                                                          Dashboard and scorecard are the two important components of BI. They provide a valuable way to distil vast quantities of information into meaning full KPIs, measurements, and charts, which form an essential component of an analytical platform. This platform help drive attention of decision makers to areas that need attention as well as actionable information, which they can use to make smarter decisions.

                                                          In conclusion

                                                          Market volatility, taking it positively, can provide unique opportunities for growth and owning market share. The key to riding out volatility is to not only balance risk but confidently take it on. In additional, recent changes in technologies can help improve business performance, make better forecast and decisions. Henceforth, to thrive in a volatile economy, businesses should be willing to do what it takes in difficult circumstances while optimising available technology to turn market uncertainty into competitive advantage.

                                                          Read the whitepaper “Managing your business in a volatile climate: A CFO’s guide to turning market uncertainty into competitive advantage” for a full and detailed discussion of:

                                                          • How to manage your business in a volatile climate
                                                          • What new technologies can bring to maintain competitive advantages
                                                          • How to staying competitive by optimising existing processes and technology investment
                                                          //

                                                          Leveraging new technologies to maintain competitive advantages

                                                          Tue, 02/25/2014 - 16:15

                                                          In our last post on how to manage your business in a volatile climate, we mentioned that organisations can focus on measuring the right things, forecasting accurately and managing risks to its advantage and achieve their goals. In this articles, the second post of the series “Managing your business in a volatile climate”, we will discuss how new technologies can help businesses maintain their competitive advantages.

                                                          Nowadays, 3 key trends in digital business namely Big Data and Analytics, Digital Marketing, Social media tools and various delivery platforms such as cloud computing and mobility, are considered strategic priorities for business. As such, most C-level executives believe that these new technologies can help boost operating profits by 10%, according to McKinsey Global Survey: Minding your digital business. Additionally, a survey from FEI-Oracle webcast (August, 2012) report that mobile (46% of the ranking), cloud computing (33%) and Big Data (14%) are highly ranked by CFO in terms of bringing business value. Even though social media and networking are two key trends, CFOs are still sceptical about the social business (only 6% CFOs vote for these technologies). Let’s have a detailed look into each of these technologies and see how it can significantly shape the way companies operate and compete.

                                                           

                                                          Cloud computing

                                                          There are some advantages that the cloud can bring to business which are understood by many CFOs such as the ability to yield responsibility for overseeing, managing, operating, and supporting the computing environment. Also, the cloud offers businesses a more malleable process coupled with scalability, flexibility and agility that gives them the ability to respond to market volatility. Nowadays, CFOs don’t view the cloud as a cost-saving platform any more. In contrast, the cloud can bring strategic benefits. For example, it help businesses get critical growth initiative up and running quickly regardless of whether they use the cloud to quickly upgrade to a new application, or simply use it to deliver new mobile or analytical capabilities.

                                                          Big Data

                                                          Big Data is not an entirely new term. CFOs are accustomed to dealing with increasing volumes of information. However, Big Data has become more unique and urgent due to four main reasons:

                                                          • First, there is a widening gap between the opportunities afforded by Big Data and the companies’ capability to exploit them.
                                                          • Second, there are unprecedented volatility and continuous change in the economic, regulatory and market that leads to intense interest in the technologies and technique that help analysing market trends quickly to stay ahead of competitors
                                                          • Third, having big success in retail, healthcare, and financial services sectors, Big Data is believed by some market observers to be the catalyst for entirely new growth opportunities, products, and services
                                                          • Last, there is an intense shortage of personnel with deep analytical skills who can leverage the full value from Big Data initiatives
                                                          Social media

                                                          Initially, social media are only used to accelerate, broaden brand awareness and crowd-sourcing. Nowadays, businesses use social tools to enhance collaboration, knowledge sharing, and crowd-source innovation. There are cutting-edge systems that allow social business capability where information is shared and conversations are organized into streams across the organisation. Staff can save time searching for the documents, discussions, and details that matter most, and gain the security provided by traceable communication. In turn, it changes the way that individuals work and help businesses respond more rapidly to change and volatility.

                                                          Mobile computing

                                                          According to a CFO Magazine survey in Jun 2012, 89% of CFOs rank mobility as the number one technology of importance to their company’s success over the next three years. Reasons are, mobile technology allows to retrieve information from corporate system in real time, in any way and anywhere on decision makers’ mobile device where decisions can be made immediately. Additionally, mobile device is no longer seen as the endpoint of an information flow, yet it can be equally considered a data generation point that use location specific information and images to enrich corporate data on people, customers, suppliers, products and personnel. Thus, mobile technology will be the key to smarter and faster business decisions which, in turn, brings productivity gains and business agility in a challenging volatile economy

                                                          In summary, businesses not only have to define and rightly measure own KPIs, perform more frequent and accurate forecasting, and manage risk effectively, but also they should leverage new technologies namely Big Data and Analytics, cloud computing, social media and mobile technology to maintain competitive advantages and thrive in a volatile market.

                                                          Read the whitepaper “Managing your business in a volatile climate: A CFO’s guide to turning market uncertainty into competitive advantage” for a more detailed discussion on these technologies and figure out how you can leverage them to maintain competitive advantages for your business.

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                                                          Motivating the Millennial Shopper: The role of technology in making a purchase decision

                                                          Tue, 02/25/2014 - 10:30

                                                          The millennial shopper has been characterized as an elusive being -- we know they exist, but we seem to have trouble catching them, at least for a prolonged period of time. Predicting their actions is an even greater challenge. As a result, retailers have formed a number of myths around millennial shopping preferences -- some that border on superstition -- and many approach these myths as reality.

                                                          The truth is, most of these beliefs around millennial shopping preferences don't hold water. In fact, they produce, perhaps ironically, retailer behaviors that subconsciously turn millennial shoppers away. According to a June 2013 report by Accenture, millennial shoppers are expected to spend approximately $600 billion annually. That’s a significant annual spend that retailers just can’t afford to miss out on.

                                                          To help retailers more effectively attract and engage the elusive millennial shopper, Retail Pro International and Merchant Warehouse, a leading provider of payment technologies and merchant services, teamed up to determine, address and bridge the knowledge gap between merchants and millennial shoppers. What we found is that this gap is much larger than we expected. Despite significant advances in retail technology, including expanding beyond in-store mobile payment options and into in-aisle interactions, retailers aren’t leveraging the full potential to drive new and loyal millennial shoppers to their stores.

                                                          Based on our survey results, here are the top ways millennials are engaging with technology, and how retailers can learn from this to more effectively build loyal millennial customers.


                                                          1. Whether online or in-store, it’s about finding the right product at the right price.

                                                          Lesson number one: not all millennials are created equal, but many of them are information-seeking shoppers. This group tends to gather more information on products before making decisions than any other demographic. In fact, 60 percent of millennial shopper respondents in our survey said they conduct pre-purchase research through retailer websites, 57 percent said they turn to Amazon, and 55 percent use word-of-mouth. That’s a lot of research!

                                                          Another key finding is that despite the role of online research, not all millennials will make those final purchases online. More than 90 percent of millennial respondents said there are some products they just prefer to buy in-store -- like apparel, footwear and home goods -- and others they prefer to buy online, like electronics.

                                                          An important conclusion for retailers to draw from these findings is the importance of creating a universal -- or omni-channel -- customer experience, one that enables these millennial shoppers to find the information they need to help them make a purchase decision, whether it’s online or in-store. This seamless process provides customers with an easy-to-navigate shopping experience, while also giving retailers a deeper level of insight into purchasing preferences. For retailers, insight into customer purchasing preferences helps build and deliver personalized shopping experiences and, from an inventory perspective, helps to more effectively manage the supply of products readily available to meet customer demand.


                                                          2. Many millennials prefer to shop alone.

                                                          Nearly 80 percent of survey respondents reported they prefer to shop alone. Understanding the role research plays in the millennial shopping activity, this presents retailers with a significant opportunity to essentially become the shopping companion. Knowing that millennials are less likely to be concerned about interactions with peers at the check-out counter, retailers can turn a basic transaction into an interaction by delivering proactive customer engagement, led by insights from the point-of-sale (POS) system.


                                                          3. Technology enables retailers to use discounts as part of the initial engagement process.

                                                          Coupons and discounts have seemingly always played a role in attracting new customers. Almost 50 percent of survey respondents reported they'd be willing to go to a retailer location to use a coupon if it offered at least a 20 percent discount, while 17 percent said they'd appreciate any discount as an incentive to walk in the door.

                                                          And perhaps a very interesting note for retailers, 63 percent of millennial consumer respondents said they’d be more likely to “check in” on various social channels if they were to get a coupon or discount for doing so. This could open the door to a number of exciting new ways for merchants to engage with new and existing customers.

                                                          Today’s payment and commerce technology solutions, however, present retailers with the ability to take coupons and other discounts to an entirely new level, using them as a unique engagement point to educate customers on what’s available based on their preferences. Tapping into a customer’s shopping history, and understanding their history with an individual retailer -- including preferences and brand loyalties -- introduces an incredible opportunity to deliver a seamless, universal experience. It also gives retailers the opportunity to pitch them on new products that might interest them, further building that relationship as the companion for the solitary shopper.

                                                          The bottom line: the millennial shopper is not the mythical creature many retailers have made them out to be. Millennials are simply a little different, but certainly approachable. Advances in payment technologies give retailers a new opportunity to attract and engage the millennial shopper by providing an omni-channel shopping experience. And retailers can become the millennial shopper companion by creating a personalized experience, delivering valuable insights into new products and offering discounts available to help them make a purchase decision.

                                                           

                                                          This article originally appeared on RetailPro’s Newsletter, TRG’s partner.

                                                          You can check out our Retail Management solution here.

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                                                          Key benefits of IFRS

                                                          Tue, 02/25/2014 - 05:00

                                                          For many companies, especially those that have multinational operations, complying with International Financial Reporting Standards (IFRS) is synonymous with extra workload. Whether the company has already begun the adoption process or are bracing themselves for a major change, they should know that IFRS, in fact, are not as scary and daunting as they seem. Businesses should develop a mindset that faciliates IFRS transition by understanding key benefits of IFRS. The two primary groups that can benefit from IFRS adoption are:

                                                          Investors and investment institutions

                                                          With IFRS in place, investors get greater financial and operational transparency so they can more accurately compare the health and performance of one company with that of others, and, as a result, make better fact-based investment decisions. If a business can convey a promising outlook, the pool of potential investors and lenders will expand.  

                                                          Compliant companies

                                                          After implementing IFRS, businesses will be able to measure their operations and company finances more precisely, setting the stage for improved business performance. They will also gain better insights into the operations of their competitors, customers, and partners as they make the transition. Some specific benefits of IFRS compliance include:

                                                          • Improved financial reporting and tax planning: Under IFRS, companies will produce a standardised and consistent set of accounting and financial reports for complying with local statutory and consolidated requirements. This will help improve the analysis of financial reporting and tax planning processes.
                                                          • Improved day-to-day operations: Businesses will get faster access to more in-depth financial performance information to use in analysing and making better decisions about day-to-day operations.
                                                          • Better managed resources: By standardising processes and accounting, companies will be able to standardise and streamline accounting systems across the enterprise and reduce the cost of auditing and statutory reporting.
                                                          • Improved financial controls: By standardising the approach and control over statutory reporting, businesses will reduce the risk of penalties and compliance problems enterprise-wide and in individual countries.
                                                          • Lowered cost of capital: Increased insight into financial results and adherence to high-quality financial standards, as specifed by IFRS, can benefit both companies and their investors with reduced cost of capital.  

                                                          ***

                                                          After contemplating the benefits of IFRS, the next step for businesses is to understand what changes are expected in preparing their financial statements as well as considering how they should approach the IFRS transition. Find out more in the whitepaper “Adopting IFRS: A challenge for some. Well worth it for everyone.”

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                                                          //

                                                          Boosting hotel revenue and customer satisfaction with self-service technology

                                                          Mon, 02/24/2014 - 09:32

                                                          Nowadays, travellers are also becoming more tech-savvy. Hence, self-service technology namely mobile apps, check-in kiosks and lobby touchscreen become the important tools that bring opportunities to increase sales and bookings for hotels. According to Taylor Short, who researches hotel management systems for Software Advice, hotels are figuring out that meeting a tech-savvy travellers’ expectations for connectivity and independence not only increase customer satisfaction, but also open up new revenue channels that didn’t exist before. In this article, we will walk you through how these self-service technology can help hotel boost revenue and increase customer satisfaction.

                                                           

                                                          Check-in kiosks

                                                          Taylor Short shared that offering an incoming guest the ability to check-in on their own through a kiosk in the lobby can keep the customers happy. Travellers can do their self-check in at these kiosks, redeem special offers if they want to upgrade rooms or add hot deal packages like bed and breakfast stays or romantic packages during check-in. In turn, hotels can improve their opportunity to upsell rooms, cross-sell hotel amenities or promote partner businesses with exclusives that drive more revenue.

                                                          Mobile apps

                                                          Most travellers are using their mobile devices such as smart phones and tablets, both for personal and business issues like checking mails, posting to social media or playing games. Hence, there comes the mobile apps reign. “Mobile apps offer a brand new level of communication with guests, no matter where they are. Some hotels use this feature to strategically reach out to guests, say when the bar or restaurant is experiencing a slow period to offer a free drink in hopes they will stay and buy more, or offering an exclusive room upgrade to guests who just hopped off a plane.” – said Taylor Short. Thus, hotels can use these applications to increase customers’ convenience. For example, the app can be customised to enable finger-tip access to room and guest services, special offers, local recommendations and even flight status information. Moreover, mobile apps enable mobile ordering capability. As such, guests can use the app to order in-room dining, schedule yoga or spa packages.

                                                          Lobby touch screens

                                                          Unlike check-in kiosks and mobile apps, which allow quick check-in capability and give guests access to a knowledgebase that help them during their stays, lobby touch screen is the primary asset for hotels to promote amenities and attractions that drive more direct revenue. Similar to the mentioned self-service technology, hotels can also leverage these screens for more service offerings such as upsell rooms, cross-sell hotel amenities, recommendations for local businesses or even special hotel events or happy hours deals. Not to mention, they can be used for selling advertising space that will bring more dollars to the business.

                                                          In short, hotels can drive more revenue by using these self-service technology as a primary tactic to increase customers’ satisfaction. As such, with these technology in place, hotel can now streamline check-in processes and provide easier access to all offers and amenities that guests want. Thus, by implementing these self-service technology, hotels can boost revenue while increasing guest satisfaction.

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                                                          An introduction to data management and democratisation

                                                          Thu, 02/20/2014 - 11:56

                                                          Knowledge is power. Knowledge is everything to make things happen, and eventually, going smooth and strong, straight to success! For many years, knowledge has been an eternal goal and target of mankind, not to mention businesses. Without knowledge, which in this context is business visibility and insights, companies cannot know if they are succeeding or failing, and may get lost forever.

                                                          This “knowledge is power” philosophy has urged organisations to obtain more values from data management. In fact, many businesses are viewing data and information as the next frontiers for their competitive differentiation. However, finding and analysing the right data for relevant and strategic information is not easy, even for top-notch organisations.

                                                          Data, data everywhere

                                                          According to McAfee and Brynjolfsson (2012), about 2.5 exabytes (1 EB = 1 bil. GB) of data are created each day, and that number doubles every 40 months, and this is not just the data in the Internet alone. How can we manage such a massive amount of data, not to mention generating those data into information?

                                                           

                                                          “You can have data without information, but you cannot have information without data.”

                                                          Daniel Keys Moran

                                                          Recent study by IBM (2010) found that key executives spend 70% of their time on data finding, which left only 30% for data analysis. Moreover, the US is also facing the shortage of 140000 to 190000 deep-analytical-skilled workers to increase the information analytical productivity. Hence, they has to find new systems and ways of communication to automate the data management process: Business Intelligence (BI).

                                                          Organisational data management: the ugly truth

                                                          Surprisingly, in fact, most companies are still using IT as the gatekeeper of BI and analytical tools because all these tools are too complex for an average employee to use effectively, even in organisations that have various data management applications in place. They all need IT assistance to access to data and information via BI tools, and as the data analytical process is hard and time-consuming, employees can only complete the reports for top executives only.

                                                          This creates a barrier for employees to access to relevant data whenever they need, so the decisions are made with isolation and untimeliness, which leads to uncertainty in the executions of the decisions and bring the  higher risks.

                                                          The solution: data democratisation

                                                          Data democratisation is the process of spreading business information and the tools to analyse them to a broader audience. In simpler terms, democratisation is about putting information right in the hand of people who need it through a variety of channels.

                                                          Data is mined from tools and applications created for the sole purpose of assimilating information and help people make better strategic decisions. Rather than analytics acting just as an afterthought to determine a product or campaign’s success, the democratisation of data will help more right decisions made – big business decisions, not just online display RTB, made in real-time.

                                                          With the help of social interactions, mobility, cloud and information – the “Nexus Forces” – BI and analytical tools has made a democratisation revolution that has major impact on how business work with the ability to provide:

                                                          • End-user analysis across the enterprise: Updated BI and analytical tools have friendly and easy-to-use interfaces that enable users to freely analyse, track, present data, produce customised reports and more without high technical skills. This way, any user can analyse data and information with lesser help from IT department; thus, save time and resources for the company.
                                                          • Mobile access to business intelligence: Mobility enables users to access to data anywhere, anytime, which increase the productivity as well as the timeliness of the decisions made from the data available.
                                                          • In-context business intelligence: data and information is automatically and directly transferred to end-users during the process, which eliminates searching effort through a massive amount of data,
                                                          • Alerts and exceptions: Systems are set up to monitor certain business areas based on stakeholders’ rules and restrictions. This provides people information and ability to take action to quickly identify potential risks and improve performance.
                                                          • Integration with social business: Social business focuses on enhancing business collaboration, which is very similar to data democratisation. It gives employees access to data in various ways in a short time.
                                                          And the benefits: what can businesses get from data management and democratisation

                                                          Data management with democratisation via BI tools enable business to transit from being reactive to proactive – by widely connect business processes and information together, and allow better and faster decision making. Specifically, the future benefits of data democratisation with BI tools will:

                                                          • Bring faster response time across many areas of businesses
                                                          • Increase productivity
                                                          • Enhance customer service quality
                                                          • Better decision making
                                                          • Improve strategic planning

                                                          just by delivering the right information to the people, at the right time, in the right place.

                                                          You’ve come to know the definition of data management and democratisation, what next? Stay tuned to our next blog post “Building a BI strategy: Taming data to make analytics consumable and valuable” to transform data to information, and ultimately, the power of knowledge.

                                                          Can’t wait? Download our full whitepaper to find out now!

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                                                          What to look for in a global finance system (part 3)

                                                          Wed, 02/19/2014 - 16:21

                                                          Organisations that seek globalisation inherently face the challenge of managing their business operations in various locations. Hence, visibility into overall financial data and performance is of utmost importance. According to a study by Aberdeen Group in 2011, improving visibility is the most popular strategy companies use to aid their global expansion quest.

                                                          In order to improve visibility, international financial solutions should be deployed

                                                          When decision-makers can access the data they need anytime, anywhere, chances are they will be more equipped to devise better plans and strategies. This is how the finance department contributes to business growth, by fulfilling both core and strategic financials.

                                                          Previous articles have listed some criteria for effective international accounting software, including the ability to handle multi-company accounting and multiple charts of accounts. Here are the last few points to remember:

                                                          Reporting using multiple accounting standards

                                                          GAAP, IFRS and local accounting standards require different accounting treatments. Thus, international financial solutions should allow different books for recording transactions under these various accounting rules. Automating the process of closing these books and creating financial statements and reports by using multiple accounting standards also helps companies save time and effort without risking errors.

                                                          Supporting different levels of corporate reporting

                                                          International financial solutions should offer a consolidated headquarters view as well a consolidated statement of several subsidiaries at an intermediate level. Management should be able to view and analyse these reports right at the source. Built-in analytics in accounting software are a plus for global financial management.

                                                          Supporting global access

                                                          Financial management software that allows web-based access can help companies avoid incurring costs from installing the system individually at all branches or at branches with limited on-premise support. Having a system that can be installed locally, deployed centrally and accessed globally gives businesses a competitive advantage without compromising security and reliability. For extra accountability, audit trail reports should always be available.

                                                          ***

                                                          Too many things to evaluate? The best-in-class international financial solution is closer than you think. Take a quick preview now!

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                                                          What to look for in a global finance system (part 2)

                                                          Tue, 02/18/2014 - 16:14

                                                          The finance department is facing mounting pressures to not only increase process efficiency but also rise to a more strategic level. A finance transformation is even more urgent when it comes to international expansion. In fact, a study by Aberdeen Group in 2012 indicated that the need for agility to account for market volatility is the top pressure impeding global expansion.

                                                          With effective international accounting software, businesses should be able to adapt to change without changing

                                                          Businesses with effective international accounting software will realise that change does not necessarily mean upheaval; it can be a growth opportunity instead. To build upon the last post, which touches upon issues such as multi-company accounting,the checklist for global accounting software continues:

                                                          Supporting multiple charts of accounts

                                                          According to Ventana Research 2011, “Maintaining multiple charts of accounts may prove to be both simpler in the long run and more productive,” despite some saying that it is best to have one chart of accounts only. The rigid approach of a single chart of accounts is especially unsuitable for companies with different lines of businesses, those in joint-venture arrangements or those acquiring businesses in different countries. Thus, international accounting software should be able to handle simultaneous charts of accounts.

                                                          Handling multiple calendars

                                                          It is a fact that businesses around the world do not operate on the same fiscal year. To save time from having to recast figures into different calendars, businesses with multinational operations should implement a financial management system that can create local, regional and consolidated reports for management or statutory purposes as needed.

                                                          Handling tax complexities

                                                          For companies operating in various countries, international accounting software should be able to handle the complexities associated with different tax regulations, and help defending tax audits. Apart from addressing issues such as multiple entities, charts of accounts, calendars and depreciation schedules, their system should be configured to be tax-aware. In other words, it should provide enterprises with automated maintenance of rules and rates.

                                                          ***

                                                          Check back on this blog for the last article in this series. Can’t wait? Get a sneak peek at a world-class global finance solution now!

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                                                          How to manage your business in a volatile climate: a CFO’s guide

                                                          Tue, 02/18/2014 - 13:40

                                                           

                                                          “The only predictable thing about life is its unpredictability” – Unknown

                                                          In the last decade, so many events had happened that brought unbridled change and volatility to the world’s economy. Business have been facing wildly fluctuating rates of decline and recovery across the globe. A “Growth markets forecast” done by Ernst & Young in 2013 has pointed out that insolvencies rose by 178% during 2008-9 recession in the US versus a 57% rose in the UK. Fortunately, during the past years, insolvencies has dropped fast and the rate in the US is falling 20% faster than that of in the UK. In addition to these changes and volatility, over-regulation, constant imposition from regulators and global standard-setters have brought complication and complexity to the systems and information that organisations need. This leads to the need to absorb and synthesise information so to manage risk more effectively. So, how companies should respond to volatility and what they need to do to enhance their competitiveness, financial performance, productivity in a volatile business climate?

                                                          There are 3 important aspects that organisation need to keep in mind when it comes to responding to uncertainties in volatile climate:

                                                          • Measure the right things
                                                          • Forecast more frequently and accurately
                                                          • Manage risk for competitive advantage

                                                          Below are discussions of how to do it effectively and efficiently:

                                                          Measuring the right things

                                                          The quality of an organisation’s data management and its key performance indicators (KPIs) are crucial to how an organisation respond to change and market volatility. As such, these helps the organisation align their business process with its strategy. Unfortunately, it is hard to view the overall strategy and check its integrity, especially for large and complex organisations. Too often, these organisations have too many KPIs and old KPIs can go unchallenged whilst new leading indicators of performance need to be developed at the same time. So, the tendency is to rely heavily on trusted finance indicators of performance rather than less familiar non-financial ones. The problem is, non-familiar indicators are often tightly linked with future finance performance. Henceforth, organisation need to measure both financial and non-financial KPIs in order to have better data management capability.

                                                          More frequent and accurate forecasting

                                                          When facing with a fragile global economy and increased volatility, increasing the frequency of forecasting, constantly testing the “what-if” scenarios, and assessing risks are important things to be done. In fact, sustainability growth is achieved depending on how accurate an organisational forecasting capability is. A majority of organisation are now clinging to traditional budgeting and forecasting method to indicate their principal performance, which lead them to nowhere but prevention to forecasting accuracy. In order to achieve forecasting accuracy, rolling forecasting methods are suggested. According to the report, “Forecasting with Confidence” from EIU/FPMG 2007, 40% of the surveyed organisation believe that they will increase their forecasting confidence using rolling forecasts method. The main reason is, according to FSN (2013), “by providing a comprehensive cross-functional view of the forecast enhances the quality and the robustness of the projection, thus improving confidence when navigating unprecedented volatility”.

                                                          Managing risk for competitive advantage

                                                          In a volatile economy, opportunities continually ebb and flow. The ability to carefully select opportunities to act ahead of agile competitor can help create a competitive advantage that is sustainable in the long term for businesses. However, alongside opportunities, greater risks are at present. Tackling risks can be done by adopting best practices, tools and technique as well as leverage an appropriate blend of organisational structure, process and technology. Moreover, organisations need to understand and quantified the nature of the risks while developing key risk indicators (KRIs) and risk mitigation measures to monitor and report on risk containment. Crucially, KRIs should be incorporated into forecasts and reported together with the financial results to which they relate.

                                                          In extremely volatile market, organisations should look beyond limited sensitivity analysis in their planning and forecasting to better risk management. Being managed in the right way, risk management can give organisation better opportunity to pursue new products, business acquisitions and ventures in foreign markets with confidence.

                                                          In conclusion, organisations’ management processes are normally insufficient to turn volatility to advantage. That means, few organisations are able to drive growth and sustainability consistently. In addition, management teams are more risk averse in a fragile economy. However, keeping your business alive in a volatile climate is a doable job. As such, organisations can focus on measuring the right things, forecasting accurately and managing risks to its advantage and achieve their goals

                                                          Read the whitepaper “Managing your business in a volatile climate: A CFO’s guide to turning market uncertainty into competitive advantage” to find out more on how should companies respond to volatility.

                                                          //

                                                          What to look for in a global finance system

                                                          Mon, 02/17/2014 - 14:50

                                                          In the increasingly volatile and regulation-filled business world, the ability to adapt is of utmost importance. But handling change and complexity is a challenge for companies, especially when they try to step out of the domestic environment and into the global zone.

                                                          During the transition, many find themselves trying to avoid incurring costs and disruptions by sticking with their existing accounting software. However, if businesses do not conduct comprehensive evaluations of their needs and software capabilities, they may well end up paying more than they could save. Why? Because the finance function spends hours checking for and correcting errors whilst they should be providing accurate and timely financial reports and analysis.

                                                          What should businesses look for in a global finance system then?
                                                          Handling currency complexity

                                                          Rapid globalisation means that businesses are likely to report in more than one currency. Thus, deploying multi-currency accounting software is tremendously helpful. However, it is worth noting that currency translation is not as simple as it looks. Complexity arises when different categories of exchange rates are required under certain circumstances. This is especially problematic when companies have to follow more than one set of accounting and business rules.

                                                          Handling multiple languages

                                                          Even though, globally, English is the default business language, everyone in an organisation will not necessarily grasp all English terminology and statutory reports, especially those that handle day-to-day operations. They are more likely to do the work in their own language. Moreover, different countries have different units of measurements and formats, which need to be reported as well. Hence, it is vital that the financial management software of a company seeking globalisation can handle all of these.

                                                          Handling multiple entities

                                                          A business with various branches in different countries or jurisdictions has extra workload that entails complexity. As a helping tool, a global finance system should be capable of consolidating results from discrete entities for statutory reporting and tax purposes. In other words, multi-company accounting software should help the mother company and its subsidiaries keep track of one another’s financials without interfering with their various legal structures.

                                                          ***

                                                          Stay tuned for the next blog post to find out other criteria for an effective global finance system. Can’t wait? Take a look at a market-leading global finance solution now!

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                                                          5 key factors to overcome manufacturing operational challenges and complexity(part 2)

                                                          Mon, 02/17/2014 - 14:20

                                                          In the last post, we discussed about the 2 key factors to overcome operational challenges from shared ideas of top manufacturing executives in GatePoint’s survey 2013, which focus on taking advantage of new revenue opportunities and improving production processes using ERP solution. In this post, we will continue to share top executives’ viewpoint on how to make the best use of not only ERP, but other general business applications, as well as how to flexibly combine organisational processes with information system to bring out the best results.

                                                            3.      Utilise ERP across the Enterprise

                                                              As ERP is designed to use across the enterprise, however, 59% interviewed executives said they get most benefits from the system in finance and accounting, and only one-third thinks that ERP is important in every aspect in organisation. Moreover, demand forecasting and inventory management are the most potential for improvement in the manufacturing process, with 49% and 44% executives agreed respectively.

                                                              According to Kinder, senior director of industry & solutions, Infor, the manufacturing world is rapidly changing and manufacturers need to have great flexibility to adapt and respond quickly to the environment, with the help of technology that supports in-depth functional manufacturing area such as supply chain management (SCM), product lifecycle management (PLM) and enterprise asset management (EAM). These applications should incorporate business intelligence and performance management process altogether strategically and flexibly to provide the best results.

                                                                4.      Finding harmony among diverse applications

                                                                  15% organisations in the survey has more than one ERP system in use. This often results from merge & acquisition activities, where a business is using an ERP system that is different from the company making the acquisition. Or it may also because of separate decisions to select a more modern ERP system than the being-used one.

                                                                  The story above is similar to one in Vietnam, where businesses are more likely to implement separate application for certain organisational function such as financial management, performance management, human resource management… which can cause problems when gathering relevant information to make strategic decisions.

                                                                  Commenting about this problem, Mr. Humphlett, Marketing Director at Infor, stated that the ability to connect all diverse application is “crucial” to provide the board with insights into the business to navigate the organisation.

                                                                    5.      Coming to grip with complexity

                                                                      There are 29% of polled respondents forecast an increase in the complexity of their operations, and 87% addressing conquering manufacturing complexity as a key challenge to overcome. Moreover, the greatest areas in where complexity grows most are the business processes, with 39% of respondents, followed by 32% by organisational complexity. Supply chain complexity, IT/market complexity, product complexity and operational complexity continues to complete the list in descending order, surprisingly.

                                                                      Complexity make the management process more difficult, thus bringing critical decisions may be delayed and cause great impact to the organisation. As a result, manufacturers need an ERP system that helps them to deal with change, while continue to adapt to the organisational changes when the company grows and help them manage the complex supply chain.

                                                                      Conclusion

                                                                      Apart from growing revenues, cutting costs, and keeping the information system up-to-date, it is extremely important for manufacturers to coming to grip with the changes in business and technology. Each step in the manufacturing process can have great impact to profitability. Top manufacturing executives understand how optimising production process is important to the organisation, therefore, gaining visibility and being efficiency is very crucial for them to achieve their business goals.

                                                                      You can see more detailed analysis of GatePoint’s survey of top manufacturing executives in our full report: “5 key factors in optimising complex manufacturing businesses”.

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                                                                      Infographics – A GRC Guide (Governance, Risk and Compliance) to Organizations

                                                                      Mon, 02/17/2014 - 09:40
                                                                      Infographics – A Governance, Risk and Compliance GRC Guide To Organizations – An infographic by the team at Corporate Governance Consultancy


                                                                       

                                                                      This infographic originally appeared on Care-web by Mohammed Nasser

                                                                      About the author:  Mohammed Nasser Barakat is the BRS Service Line Leader for the ME region. Nasser has an MBA in Professional Accounting and a BS Degree in Banking and Finance.He is a Certified Public Accountant in Colorado State, USA, a Certified Control Self Assessment Practitioner and a Certified Fraud Examiner.

                                                                       

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