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2021 GRC Trends Affecting the Intelligent Enterprise

To streamline processes and operations while reducing IT teams’ burden, many members of the SAPinsider Community have started migrating to SAP S/4HANA as their core ERP and to cloud-native applications to run their businesses. However, these strategic moves have had implications on access governance, risk management, and regulatory compliance (GRC). A May 2020 SAPinsider research report found that 34% of respondents worked at organizations that were already running at least one instance of SAP S/4HANA, while 78% of the SAPinsider community used at least one of SAP’s cloud-based business solutions – and those numbers have increased.

SAPinsider spoke with Dudley Alan Cartwright, CEO of Soterion, to hear how organizations can apply a holistic view to GRC and how they can navigate Governance, Risk and Compliance (GRC) and Identity and Access Management (IAM) as they navigate the current business landscape and move toward the Intelligent Enterprise.


Addressing Key Business Objectives with Your GRC and IAM solutions.

Organizations implement Governance, Risk and Compliance (GRC) and Identity Access Management (IAM) solutions to address specific business objectives. However, according to Cartwright, the challenge that many organizations face is that they mistakenly believe that their GRC and/or IAM solution is the silver bullet to solve all their SAP security challenges. This often leads to the solution being under-utilized due to inefficient processes surrounding the solution.

He advises that organizations take a more holistic approach when implementing a GRC and/or IAM solution. Companies must weigh the importance of each business objective for their organization. He explains that the typical GRC business objectives include:

  • Ensuring a secure SAP solution
  • Improving efficiencies
  • Complying with regulations (in particular the data privacy regulations)
  • Enhancing business accountability of access risk

Cartwright advises that enhancing business accountability of access risk is often the most challenging of the business objectives to get right. “Due to the technical nature of SAP authorizations, managing access risk has remained an IT function. The lack of business buy-in is often a result of complex solutions and processes. Coupled with this, the lack of senior management support for GRC projects also negatively impacts the ability to shift responsibility to the business,” he says. Organizations need to convert the technical GRC language into a language the business users can understand. This can be done by using the ‘Effective GRC Pyramid’. The ‘Effective GRC Pyramid’ breaks the various GRC activities into individual components. Each component needs to address the organization’s specific business objectives. It is important to appreciate the inter-dependencies between the various components of the Effective GRC Pyramid. Deficiencies in any layer can result in the organization not achieving their desired business objectives,” he explains.


Fig. 1: Soterion’s pyramid emphasizing the interrelationships needed for organizations to take ownership of GRC

 

 

 

Companies that have addressed the SAP role design, and their SAP access risk rule set, generally experience a better business buy-in and accountability. “The SAP role design forms the foundation of all things GRC and IAM. If there are deficiencies in the SAP role design, it does not matter how good the organization’s access risk rule set and GRC solution are,” Cartwright explains.

He reports that organizations who have customized the standard ‘out-the-box’ rule set generally have better business buy-in and accountability. “The rule set customization project not only ensures that the organization monitors risks that are relevant to them, but it also serves as a great education process to educate the business users on the risks applicable to their area of responsibility. Business users who understand the access risks make more informed decisions.” Cartwright says.

 

Security Considerations When Moving to SAP S/4HANA

Since many companies are in the planning phases of their move to SAP S/4HANA, this presents a great opportunity for organizations to re-visit and/or address any SAP security deficiencies they may have, reports Cartwright. “Without proper planning, organizations run the risk of implementing a sub-optimal SAP security solution. This is likely to prove very costly to the organization, as once the SAP authorization solution is live in SAP S/4HANA, it becomes very difficult to fix any deficiencies without considerable effort, cost and business disruption. Look at performing many of the security activities prior to moving to SAP S/4HANA so as not to compete with other project resources, else the security element can be overlooked,” he says.

Cartwright notes that security becomes significantly more complex with the move to SAP S/4HANA due to the Fiori layer. Users will be assigned backend access via the PFCG roles, in addition to Fiori apps and services. Fault finding and general SAP authorization support will become much more challenging. It will be vital that organizations chose the correct SAP S/4HANA and Fiori role methodologies, he says.

As SAP S/4HANA will be very new to everyone, Cartwright says it is likely that SAP functional consultants will dictate user access with no consideration for access risk or on-going SAP security support. The recommendation of using the pre-defined Business Roles may be problematic for many organizations as they may provide very wide or inappropriate access.

Cartwright advises organizations deal with SAP security experts, and to make sure they explain their proposed design and methodology prior to the role build. “Be careful not to place too much importance on end-user experience at the expense of on-going Business as Usual (BAU) SAP security support and maintenance,” he adds.

He advises organizations to use the SAP S/4HANA project as an opportunity to cater for any data privacy regulations that may be applicable in your region. Many of the data privacy regulations require ‘Privacy by Design’. “Know what personal data your organization may hold and of that what is deemed sensitive. Ensure that the SAP S/4HANA role design project caters for this, Cartwright concludes.”

What Does This Mean for SAPinsiders?

In today’s remote settings and cloud environments, organizations can strengthen security and compliance by:

  • Implementing a holistic view of access management and compliance: Instead of depending on a solution to resolve all GRC and/or IAM issues, you need business-wide investment and awareness into GRC, as well as education and training of all members of the team on SoD and access risks, to fully understand the issues and make appropriate decisions for your organization.
  • Leverage access privilege to suit your needs: To ensure that the right people have the right access, you should involve multiple perspectives and should know in advance what roles should be customized to suit your business needs, confirming and agreeing on risks and rulesets that will meet your organization’s needs.
  • View role design through a security lens: A security/GRC professional should help your decisionmakers understand the impacts of decisions based on risks identified through audits. To promote the dialogue, you should have IT and business teams examine regulations and their impacts and discuss role design on a regular basis.

Be proactive in adhering to regulations: Seek technological support in adhering to constantly evolving data privacy laws, and confirm that your cloud vendor hosts data and reports on data correctly. As new users are added to the system, organizations should constantly reassess privileges to confirm that the right people are being given the right amount of access.

ABOUT SOTERION

Soterion is a leading provider of SAP governance, risk and compliance solutions. Soterion’s GRC solutions provide SAP customers with in-depth access risk reporting to allow organizations to effectively managed their access risk exposure. Soterion is focused on simplifying  governance, risk and compliance processes, with a focus on translating complexity into a business-friendly language to enhance better decision making and business accountability.

 

 

 

 

 



Tax Trends SAP Customers Need to Understand

An Interview with a panel of Vertex tax experts

 

By Rizal Ahmed, Chief Research Officer, SAPinsider

Tax laws and regulations are in constant flux. Preparing for and ensuring compliance has become a greater challenge and requires constant collaboration between IT and Finance. SAPinsider sat down with Vertex Tax Experts, Michael Bernard, Chief Tax Officer; Peter Boerhof, VAT Director; and Brian Wilchusky, Director of Global SAP partnerships to discuss the latest tax trends and what customers need to do to stay compliant.

Keeping Up with Change

If one thing is a constant in tax it is change, reports our panel. The constant state of flux in tax laws and regulations is only becoming more rapid and complex. Many of the driving forces behind emerging tax trends relate to increasing globalization, the move towards digital as well as the rapid growth of compliance obligations.

Our panel discussed three tax trends that customers need to have on their radar.

Growth of country-specific tax regulations. This trend is taking hold specifically in regions like Europe, Asia, and Latin America where there are more distinct tax jurisdictions. If you also consider major events such as Brexit and the rapid growth of e-commerce, it becomes even more difficult to stay on top of key issues and their impact on tax reporting and compliance.

“One of the big overarching themes we’re seeing is unilateralism in tax. A lot of countries are creating their own rules that go beyond traditional use and sales tax. This increases complexity when it comes to compliance,” describes Bernard.

The digitization of tax reporting and audit: According to our experts there’s increased pressure on finance and tax teams to provide tax information a lot faster and more often. Tax authorities are moving closer to the ball rapidly and are also driving needs for business to have real-time digital audit trails for tax calculation and payments. These new requirements are forcing companies to rethink their current tax processes and supporting technology.

Increased complexity of IT and business applications: With the advent of cloud solutions, organizations support a wider variety of financial business applications than they ever have, and this trend has implications for tax. “Most companies are running many different financial business systems in addition to their core ERP, such as expense management solutions, procurement systems, and ecommerce applications. All these applications and systems contain some logic for taxation that needs to be build and maintained and feed into central ERP. This provides more complexity when it comes to tax, not less,” summarizes Boerhof.

What’s the Impact and How Should You Prepare

Many of the trends and changes described above are forcing companies to modernize their tax related business processes and associated applications continuously. SAP for many enterprise organizations sits at the center of it all because it’s the main system of record and manages many of companies’ most critical financial and business transactions.

Most organizations have leveraged SAP to support tax management in different ways, reports our panel. Organizations have worked with major (Big 4) consultants to implement componentized software solutions that are fed by their core ERP. These individualized toolsets have been built to support specific regulations, often in the field of tax reporting. Companies have also built their own custom programs and condition records within SAP.

The consequence of having a patchwork of solutions and systems is that such a landscape is very difficult and time-consuming to maintain for indirect tax and must be frequently updated to support new regulations. Most ERP systems do not have the robust and detailed tax calculation and determination capabilities that companies need to comply with the changing tax legislation. “As laws become more complex, it becomes harder to it becomes harder for companies to manage the changes. This can create downstream impacts for compliance and reporting,” says Boerhof.

That’s where specialty tax technology providers like Vertex come in. They create centralized tax engines that plug into your organizations key business and ERP applications. In this way the tax vendor takes on the management of tax content (ex. determination rates and taxability rules).  The tax vendor delivers updated content and enables your organization to be compliant with the frequently changing rules and regulations, eliminating the need for customization and simplifying indirect tax change management within core financial systems.

“SAP and most ERP vendors are not in the business of providing regular updates to tax content. That’s where Vertex’s tax technology can provide value by helping customers be responsive to changing rules in their tax determination and reporting processes. No one wants to maintain a large internal team to follow tax changes and localize their SAP solution to support tax laws in hundreds of jurisdictions across different countries, regions, and territories,” comments Wilchusky.

Where Are You on the Tax Maturity Curve?

While there are no hard and fast measures to assess tax maturity, the panel suggested a few different ways to look at it depending on your available resources and requirements.  By necessity, companies that do a lot of business in regions where there are highly complex and individualized tax regulations have had to build up their processes and solutions to support them. Those that do business in more homogeneous and centralized tax jurisdictions or in one geographical region, therefore less complex, have had less of a need.

Does this make one better than the other? Not necessarily, say our experts. One of the simplest measures of true maturity, suggests Boerhof is setting tax KPI’s and testing for error rates. How often do you test and are you seeing mistakes in tax processes, calculations and reports? Are you being audited regularly and do you have excessive fines? These will tell you if you need to take significant steps forward in tax compliance.

Another measure of tax maturity is the level of automation in your indirect tax processes. Many countries, especially during this pandemic, are accelerating their moves toward the digitization of tax processing and reporting. This approach is not just meant to limit errors, and fraud, but to enable tax auditors to inspect your indirect tax systems and processes remotely and be able to collect relevant data in a more streamlined and consistent way. Among the many countries that are pushing or have already pushed legislation forward are Italy, Poland, India and Argentina. The consequence of this for business is that there is less room for manual controls and corrections.

What Does This Mean for SAPinsiders?

No matter where you are on the tax maturity curve, you need to remain vigilant stay informed of both emerging tax trends and regulations as you plan for 2021. Here are a few insights to help guide you.

  • Actively inform your business and IT teams who support tax processes. In this wake of constant change, you must establish internal disciple and standard processes for educating your organization on emerging tax laws and regulations that impact you. And that’s only part of the battle. You must involve IT and those that support your tax processes and reporting. Knowledge sharing and tight collaboration will help ensure that you are evolving both systems and processes to support compliance.
  • Balance internal and external guidance: Once you establish your own internal knowledge and expertise, you should seek to supplement that perspective with outside experts. Whether they come from your audit teams or solution and content experts, like Vertex, those sources can serve as both a sounding board and external confirmation that you are on the right path and considering all the relevant impacts. But don’t just leave it to a third party for the complete story.
  • Establish a roadmap that reduces reliance on customization and manual tax processes. Many organizations face a litany of legacy and custom tax processes and operations. Emerging regulations and the constant pace of change within tax, make maintaining this environment highly expensive and potentially risky. If you have not already done, so, start investigating technology, solutions and strategies that can provide more automation and intelligence.
  • Understand the potential impact of technology and solution changes on tax. Projects such as the move to SAP S/4HANA and cloud business applications do hold implications for how you manage tax. You need to understand how these solutions impact your processes and how tax compliance might be impacted. “Don’t leave this responsibility for your consultants. The story they know may not be complete as it relates to your company,” warns . It’s important too choose the right solution and approach that can support your company throughout its business and technological evolution.

ABOUT Vertex

Vertex is a global provider of tax solutions and technology. Vertex serves over 4,000 customers across 130 different countries. Vertex has been in business for over 40 years and counts 56% of the Fortune 500 as its client base. For more information on Vertex and its thought leadership in tax go to www.vertexinc.com

 

 

 

 

 

 



Expert Perspective on SAPinsider State of the Market Survey

By Rizal Ahmed, Chief Content Officer – SAPinsider

SAPinsider’s 2021 State of the Market Report provides insight into where companies are investing in 2021, and how members of the community are turning business disruption into opportunity. SAPinsider recently sat down with Bas Kamphius, Chief Growth Officer from Magnitude, to get his perspective on the trends and priorities of SAP customers for this year. Check out the video and learn:

  • Why Cloud, Analytics, Automation, and Intelligence are among the key technology investments that SAP customers are making;
  • How and why IT and business leaders are focusing innovation efforts on core supply chain, finance, ecommerce, and sales;
  • Why the number of SAP users and support teams are holding steady or increasing in 90% of the organizations SAPinsider surveyed;
  • What skills companies are looking to add to their teams and how they are balancing the need for traditional SAP roles with new hires.

In order to learn more about the research and its findings click here to download the report.



Executive Q&A: Inside Deutsche Börse’s Phased Innovation Strategy

By Rizal Ahmed, Chief Content Officer – SAPinsider

A common mistake made by many CIOs and other executives when trying to drive their transformation projects is that they try to implement too much too soon without getting enough support from their teams and line of business stakeholders. Change is hard, and if you only try to force it from the top, you will not be able to build sustainable results. This video Q&A shares important insights from the transformation of one of Germany’s most prominent financial organizations and their multi-year project. Understand how Deutsche Börse is prioritizing innovation within its core processes starting with basic functions such as billing and travel and expense before moving to customer facing and more complex initiatives. Learn the mix of SAP and other cloud -based solutions Deutsche Börse is relying on and how it is planning a complete renovation of its existing infrastructure. The key is turning your innovation initiatives from push to pull, and that’s exactly what Lars was able to achieve at Deutsche Börse. Watch the video and:

  • Learn how Deutsche Börse is gaining support for innovation by starting with smaller process based transformation with quicker ROI.
  • Discover how the company is transforming its user journeys and changing the experiences of its customers and employees
  • See how Deutsche Börse factors in risk and compliance when selecting innovation projects
  • Understand how the company evaluates cloud solutions and what value cloud drives to process standardization, cost reduction, and time to innovation.

To hear more from Lars on his transformation project, attend our special Executive Forum virtual event, “The CIO’s 2021 Agenda for SAP and Innovation,” that will be held March 19th. We’ll be sharing more details in the coming days.



An Executive View on SAP’s RISE Announcement

SAP Unveils New Transformation-as-a-Service Offering — Reaction and Insights from the CIO Community

By Rizal Ahmed, Chief Content Officer, SAPinsider

Navigating the Digital Transformation Dilemma

In an unprecedented approach to a major announcement, SAP CEO Christian Klein led a virtual event to unveil a new integrated offering called “RISE with SAP” aimed at facilitating companies’ digital transformation initiatives. The event featured comments from other key tech leaders such as Satya Nadella, CEO of Microsoft, and Roland Busch, Deputy CEO of Siemens AG.

The event opened with a video and commentary from Klein painting the backdrop of a challenging, constantly changing business climate that has elevated the priority around digital transformation. “Digital transformation is at the top of the list because disruptions are increasing in frequency and magnitude,” says Klein.

Klein acknowledged the challenges of getting true transformation projects off the ground. Top among the hurdles he described is creating and communicating tangible benefits as well as developing concrete steps to move forward. One of the objectives of RISE is to help provide results-based motivation and a roadmap for SAP projects. “The key challenge for many enterprises is how to holistically transform when they are still successful in the market,” describes Klein. Those are the specific problems that RISE with SAP is intended to solve.

Key Elements of the RISE Offering

Klein describes RISE with SAP as Business Transformation-as-a-Service. Plainly put, it is a single integrated, analysis solution and service offering under one contract that will support SAP customers’ end-to-end transformation project. RISE with SAP is organized into three key elements.

Redesigning business processes: This component draws on SAP’s vast experience and business process data across most major industries. Business processes and transactions represent the backbone of SAP’s history and strength. SAP will leverage this data and insight to help companies build best practices and leading-edge processes. SAP also announced the intent to acquire process mining vendor Signavio to help support process analysis in the process redesign stage of the project.

Enabling technical migration: This stage involves the migration to the digital core; essentially SAP S/4HANA, and limiting customer reliance on custom code. This was a major theme during today’s discussion as excessive customization has been seen as a hindrance to business agility. Simplifying integration and interfaces are also core objectives. SAP will help organizations migrate to a single semantic data layer and start to standardize around SAP Fiori as the de facto user interface. Not surprisingly, the cloud is seen as the ultimate destination for housing the digital core, and SAP will provide more automated migration tools to help customers get to the cloud more efficiently.

Building an intelligent enterprise: SAP has been talking about this concept for years. At the foundation of this element is SAP Business Technology Platform (SAP BTP), which resembles (for those of you who have been in the industry for years) the old SAP NetWeaver platform. SAP BTP is more modern, but many of the perceived benefits are the same — such as tighter integration through centralized access to more than 2,200 application programming interfaces (APIs) as well as common data models to facilitate data sharing and management. Klein specified that customers could expect up to a 20% reduction in total cost of ownership from making these changes.

Klein also talked about more embedded artificial intelligence, robotic process automation, and advanced analytics. Access to thousands of business partners through SAP Ariba and other business network solutions is also a major part of this offering.

CIO Reaction: Love the Vision, but Want to Explore Practical Impact

To further understand the customer perspective on the RISE with SAP announcement, SAPinsider interviewed four executives from its SAP executive forum community. Those individuals included Nik Giannakakis, Group CIO of Hellas Motor Oil; Robin Mager, Vice President, SAP S/4HANA, of Schaeffler; Nuno Miller CIO and CTO of Sonae Fashion; and Christian Niederhagemann, CIO of GEA Group.

All the executives are at various stages of their own transformation projects, so it was interesting to see their reactions and questions based on where they were with their initiatives. Those further along with their projects did not see as much of a need for RISE with SAP as those who were just getting started. ­“We started our  transformation project a few years ago and are already down a path similar to what Christian described,” says Niederhagemann. “We run all these initiatives on Microsoft Azure, we run all our process management on Signavio, and we are working with one of SAP’s major partners Accenture. It’s a great offering, but a similar approach to what we did, so we will continue down our path until 2025. There may be an opportunity to apply RISE with SAP to some other processes, but we have our roadmap set and done.”

Overall, the executive panel was very enthused about certain elements of the RISE with SAP announcement including the drive toward simplicity and integration. “From a high-level view, it’s the dream of a CIO,” says Giannakakis. “You work with a single partner that offers end-to end services. It is a one-stop shop for leveraging the strong elements of data layer, the intelligent enterprise. For me, it’s the answer to all of my questions, but also I have to really understand how this will work.”

The executive group also welcomes the more tangible benefits-oriented approach that RISE with SAP seems to embrace. “When you talk to the SAP and partner consultants, there seems to be a disconnect describing the business process capabilities from SAP — where they have struggled to answer the questions of quantifiable value,” says Mager. “If RISE with SAP truly addresses this challenge, I am happy to learn more.”

However, like all discerning decision makers, they are trying to balance their enthusiasm with the practical reality of instituting significant change for tangible gain. “I would describe the announcement as interesting, powerful, and challenging,” summarizes Nunez. “The idea is very powerful. It matches a lot of what Sonae Fashion has been doing over the last three years regarding transformation and the move to an intelligent enterprise. It’s powerful because it is very aligned to business needs for industries across the globe. And it’s challenging because it’s difficult to institute massive change across people, processes, and technology and rethink how your business operates.”

As they would with any new offering, our executives questioned the true readiness of the solution to support all types of customers. Mager says, “It sounds interesting, but is it usable for customers with a highly integrated and customized landscape, and does it address customers who are using SAP applications across the value chain? Klein talked about one business model. We see gaps in some of the core solutions. We are working closely with SAP to close those gaps, but we need to understand this impact fully.”

What Does This Mean for Decision Makers in the SAPinsider community?

Whether you are optimistic or skeptical about the business transformation-as-a-service, here are some simple actions you can take to further consider this announcement and what it means to you:

  • Get informed on RISE with SAP. Whatever your initial reaction, RISE with SAP is a significant offering that needs to be carefully considered. There is no risk in informing yourself. Talk to your SAP representative and seek out more articles and information from SAP, SAPinsider, your key partners, and other important resources. Get your questions answered and demo capabilities. We’ll be covering this solution closely and will continue to share resources and other information that can help you make an informed decision.
  • Consider the solutions you have already invested in: Many of the benefits described during the announcement seemed to be integrated into existing SAP solutions whether they are part of SAP BTP, SAP S/4HANA, or SAP’s software-as-a-service portfolio. Also, with the impending acquisition of Signavio, it’s unclear whether you can plug in other process mining solutions. That’s why it’s important look at your existing solution portfolio and technology stack and ask your SAP reps how these solutions might be incorporated into RISE with SAP.
  • Seek out what your peers are thinking and doing: When we asked our executive interviewees how they will consider RISE with SAP, they talked about their intention to not only engage SAP and SAP partners but also their peers to learn from their perspective and questions. SAPinsider will be conducting its first Executive Forum on Innovation in March, which RISE with SAP will be a key topic. Make sure you attend this and other key events that can help broaden your knowledge.
  • Beware that RISE with SAP won’t solve your organizational challenges: One of our insightful CIOs pointed out that an integrated offering won’t solve your digital transformation troubles if your business and IT organizations aren’t properly aligned to evaluate RISE with SAP and then apply it to the project. Having strong communication between the groups, as well as a strategy and mindset that supports innovation and a deep understanding of how technology enables transformation, is key to making any solution work.

 

 

 



Is Cash King Again When it Comes to Automation?

An Interview with Christoph Dubies, Chief Strategy & Transformation Officer, Serrala

By Rizal Ahmed, Chief Content Officer, SAPinsider

When it comes to automation, organizations are balancing a list of priorities. Where does cash fit in the overall automation landscape, and what does that mean for finance teams?

Cash in the Automation Landscape

According to findings from SAPinsider research on financial automation due to be published in December 2020, finance and accounting teams are embracing automation in waves with most of the early activity focusing on invoicing procurement, and accounts receivable. End-to-end Cash focused automation, however, is starting to climb the list of priorities, with 39% of respondents from our survey saying that they are in the process of evaluating cash-focused automation technology.

In order to further understand this trend and where cash fits in the hierarchy of automation projects SAPinsider sat down with Christoph Dubies, Chief Strategy & Transformation Officer at Serrala.

Why Focus on Cash Now?

The recent economic disruption has elevated the focus on cash automation, efficiency, and visibility, reports Dubies. Many organizations have seen declines in revenues and need to preserve capital to pivot strategy and continue operations. “We are seeing the return of this notion of cash is king. The past years have been more focused on innovation or cost savings. Now working capital is the priority, and finance leaders want to get control over DSO and DPO. Cash will become a huge priority over the next two years to fund growth,” predicts Dubies.

One of the keys to getting started with any cash automation project, advises Dubies, is taking a more holistic view of cash related processes and the goals that you want to achieve. “The priority is to peel back the onion and understand your objectives and desired outcomes and consider the best levers to get you where you want to go. You have to measure tangibly where is AR, where is AP and DSO, and what are your goals,” he says.

Order-to-Cash and Procure-to-Pay represent two important end-to-end process anchors of cash management. Before thinking about automation. It is important to define your strategy and ensure you understand the fundamental structure around these processes and how you want them to change before undertaking your automation journey “It’s not just going after one part of the process and starting to automate. You must think hard about questions like how do you plan to go after open items? How do you want to structure collections? How will you modify and prioritize supplier payments?” he advises.  The pandemic has also raised awareness around risks to cash flow. That is why more attention is now focusing on credit management as well as credit and customer risk analysis as part of your overall cash related processes.

Building the Business Case for Cash Automation

Building a case for cash automation has similarities to other IT and business projects, says Dubies. He outlines three key dimensions to serve as a potential roadmap.

ROI: By automating, are you able to generate cost savings or reallocate resources and focus to higher-impact activities? Our current SAPinsider research shows that the number one driver for automation in finance is the company’s desire to redeploy finance and accounting resources to more strategic initiatives. Overall cost savings was the next most pressing objective and reason they were investing in automation.

Process Control: “Do your current processes meet your business needs? Are you able to handle all the incoming invoices? Are you able to get all these invoices out? Can your teams execute and manage these processes remotely? The latter question has become more critical in this pandemic,” observers Dubies. New digital technology can make it much easier to process customer, supplier or treasury payments, control processes across a distributed team and generate accurate forecasts. Going touchless and eliminating paper will make these processes faster and more accurate.

Working Capital: This is where the rubber meets the proverbial road in funding both business operations and future growth. Taking a hard look at KPIs such as DSO and DPG, will give you an idea on what kind of pressures are currently being exerted on working capital and what your organization needs to do to improve.

Keys to Success

Serrala has overseen hundreds of automation projects and Dubies discussed several lessons that you should consider. Management buy in and support are important to start the journey especially given that process automation represents a significant change management journey. “Without the support of top management, when results do not appear as quickly as planned, there needs to be organizational discipline to stay the course,” says Dubies,

A solid understanding of KPIs for the project and expected results are also key. Without these measures, it becomes difficult to judge success and impact. Serrala looks to typical measures such as Days Sales Outstanding (DSO), Days Payable Outstanding (DPO), or percentage of inbound payments that have been automatically applied. “We have seen customers achieve greater than 95% on day 1 and that has an enormous impact on employee morale and confidence in this project. Even if you do not get there on day 1, having a concept of what success looks like and where you are against this picture is critical,” states Dubies.

Every automation project carries with it inherent complexity that should not be underestimated, warns Dubies. Most organizations face a hodge-podge of applications, interfaces, and dirty data. You need to take careful inventory or your landscape, potential impacts, and have a long-term strategy for centralizing and cleaning your data. Having clarity and documentation around your existing processes is also important so you know where automation can be applied for optimal gain.

What Does This Mean for SAPinsiders?

Whether you have already taken the plunge on your cash automation journey or are just getting started, here are some important takeaways to consider:

  • Organize your goals and create transparency for your entire project and business team. There are many potential outcomes from applying automation to your cash processes. It is important that you create and communicate goals that reflect both the pains and priorities of your organization. That way your team can identify with project objectives and contribute to the shaping of the project and next step. This collaboration will enable finance and treasury to gain a larger voice in advocating and influencing change not just for one project but for the longer term.
  • Start small to win quickly: Automation is a journey. Momentum and credibility are as important for success as having the right technical architecture and project plan, That is why it is important to have clear, realistic, and measurable goals when it comes to your first few projects. “You cannot automate everything under the sun on your first project. Start with something that creates immediate ROI, celebrate, and communicate. This will help you secure buy in from both management and staff,” says Dubies.
  • Match your partners and skillsets to your long-term strategy. Depending on whether you are focused on one process or have a long-term plan to automate quickly across end-to-end processes, you need to make sure that your partners and internal skillsets are a good fit. This is harder to put into practice though as over half the early respondents in our finance automation study say they are dissatisfied with their solutions and level of automation. “Part of why companies aren’t further in their automation journey is that they have to find a new vendor for every step. Our knowledge and experience across the end-to-end processes are what sets us apart,” asserts Dubies.
  • Set up ownership from beginning to end and post go-live. Process automation projects are never over. Securing executive sponsorship and establishing a strong project manager who can navigate the internal complexity of the organization and appropriately prioritize requirements, says Dubies. It is also important to document your current state and provide transparency for the potential impact and results as the project progresses. Even after go-live there may be issues and learnings that will inspire further automation and improvements.

Additional Resources

If you want to delve deeper into this topic, here are some other resources to explore:

ABOUT Serrala

For more than thirty years Serrala has created enterprise solutions to help companies have more efficient and secure payment processes and capabilities while providing central visibility into cash flow. Serrala serves over 2,800 global customers representing 25% of the global 100.

 

 

 



Preparing for Central Finance

An Interview with Magnitude Software

By Rizal Ahmed, Chief Content Officer, SAPinsider

Customers are looking to simplify, integrate, and consolidate financial processes, and Central Finance is becoming a popular strategy for achieving that goal. But are you prepared for the integration implications?

SAPinsiders Consider Central Finance over the Short and Long Term

SAP Central Finance presents organizations with an opportunity to consolidate processes and data through a single instance of SAP S/4HANA. According the latest SAPinsider research, many companies are looking at this approach to address many of their current finance pain points, but also as a longer-term strategy.

44% of respondents in our recent Central Finance and Improving the Financial Close benchmark report, published in November 2020, indicated that they currently plan to leverage this approach help consolidate, centralize, and manage information. One third (33%) see Central Finance as a long-term solution.

Many see benefits in being able ease into their transition to SAP S/4HANA, but Central Finance is also a foundation for centralizing and simplifying finance for the years to come. To further understand these trends and how customers must prepare for this transition, SAPInsider sat down with Magnitude’s data integration experts –  Doug Corpuel [Senior Director, SourceConnect], Parikshit Kumar [Director of Product Management], and John Hume [Solution Consulting Leader].

Even though SAP Central Finance is a way for organizations to pull data from multiple SAP and non-SAP ERP systems into a single place, interest in the solution is not just accelerating for very large enterprises with multiple instances. For them, the value of central finance is straightforward – centralize first with one instance before rolling out or having to convert all systems. But according to Magnitude the benefits also are appealing to smaller organizations as well. “We’re seeing more customers in the $10 Billion or below in revenue as well as the $5 billion and below start to embrace central finance. We are also seeing net new implementations coming from non-SAP landscapes,” reports Corpuel.

Why SAP Central Finance

Like their larger counterparts, smaller companies are dealing with similar complexities of larger organizations. “Smaller companies are also looking for better visibility across the enterprise. They have redundancies, and they need to consolidate and save money just like the big organizations and, particularly during this time, all companies want to consume innovation and new projects in bite size chunks” adds Corpuel.

Data Is at the Heart of Central Finance Integration

To reap the benefits of Central Finance, customers must first prepare for and address some of the key challenges that arise from linking multiple heterogenous finance applications and data sources to a central system. First and foremost is integration. Magnitude has a unique perspective on this challenge having designed and built SourceConnect, a solution aimed at solving the integration issues inherent with Central Finance projects. SourceConnect was recently added to SAP’s list of solution extensions.

According to Magnitude, companies thinking about the move to Central Finance must consider various layers of integration and data. “It all starts with master data. Understanding how various systems have defined elements such as cost centers, customers,etc. and having to map back where those definitions came from,” describes Hume.

As data moves from their source systems into Central Finance it must be harmonized. Organizations can do this manually applying their rules and processes, or they can leverage more automated and intelligent solutions such as SourceConnect. Many service organizations have also built their own tools to support this process.

The next layer organizations need to understand according to Magnitude is the transactional data. Integration is particularly challenging when it comes to integrating transactional data from non-SAP data sources. “For SAP-to-SAP level integration, SAP has this down and not much work is needed. However, when it comes to integrating non-SAP data that is where the complexities arise. There has to be a whole series of transformations, validations and error checking to move data into the Universal Journal,” describes Hume.

Tracking and Sychronizing Change

There are many nuances that extend beyond just the movement and preparation of data to come into a Central System, report our experts. In any Central Finance implementation the source systems remain operational, so there must be constant communication between applications. One of the pain points that Magnitude sees and seeks to solve is being able to not just see the data but drill down into the source-level detail “It’s not just about replicating ledgers and subledgers but being able to drill down into source AR and AP data,” says Hume.

The other key challenge is managing changes. As changes are made in either the central or source systems, companies need to make sure those changes are replicated and synchronized across the financial landscape. Bidirectional synchronization between Central Finance and source systems is something to prioritize as you consider or build your own integration solutions, report our experts.

“For example, if you are managing open items and you clear an unpaid item in one system, you need to make sure that it is also cleared in the central system so when you go and look at your report, you have an accurate picture in real time. That’s a feature that has been unique to our solution”: says Hume.

What Does This Mean for SAPinsiders?

Whether you have already started your Central Finance journey or are actively evaluating this option as part of your SAP S/4HANA journey here are some takeaways to guide your exploration:

  • Fully explore Central Finance as an option. For many Central Finance can be a first step or a long-term strategy for solving system and process complexity and easing into their SAP S/4HANA journey. Fully understand this option and whether it is a fit for your organization. Talk to SAP, experts, and partners about their experience. Consume research, case studies, and other content from SAPinsider and others so that you can actively inform your decision makers and teams.
  • Understand and assess the data implications of your project: There will be data and integration implications of any Central Finance project. The complexity of your integration challenge will depend on your landscape, source systems, data, and reporting priorities among other factors. Understand what it will take not just to move data back and forth, but to track changes and provide visibility into financial processes throughout your project and post go live.
  • Actively evaluate tools to help automate and speed your Central Finance Project Without automation, the manual work to move data and establish the rules and integration necessary to support Central Finance can add months and potentially years to your project. Make sure you explore how tools and automation can be applied to solve your unique integration challenges and help get your project up and running quickly.

ABOUT Magnitude

Magnitude provides enterprise solutions to help organizations transform data into insight and connect data and applications across diverse and distributed landscapes. Founded in 2014, Magnitude serves more than 1,300 global customers and has over 600 employees.

 

 



The Role of Artificial Intelligence in Automation

An Interview with Aurélien Coq, Product Manager, Esker

By Rizal Ahmed, Chief Content Officer, SAPinsider

Everyone is talking about Artificial Intelligence and Machine Learning, but how specifically can these technologies add value to your automation projects?

Applying AI and ML for Automation: Where Are You on the Spectrum?

Stories and content on Artificial Intelligence are regularly splashed across most business and technology trade publications, but when does hype become reality when It comes to applying AI and ML to generate real results?

It already has for many organizations, finds a recent SAPinsider study. Just under half (44%) of the respondents in our recent “Integrating Process Automation and SAP S/4HANA” report (June 2020) have already started down the path of using Machine Learning and AI to improve business processes. However, 56% are doing nothing or just using basic Robotic Process Automation.

In order to understand this wide disparity and further explore the benefits and use cases of applying artificial Intelligence and machine learning to process automation, SAPInsider sat down with Aurélien Coq, Product Manager, Esker.

Demystifying AI, ML, and RPA and Their Role in Automation

Coq describes AI as simply as a way for the machine to mimic the human mind. “Machine Learning is a subset of AI, and Deep Learning is a subset of machine learning. Machine learning is a machine that can learn by itself without being explicitly programmed,” Coq says.

When it comes to automation AI and ML are typically applied in two distinct ways when it comes to order-to-cash automation. First for document capture and helping to automate the standardization of documents and data. The second use centers more on using intelligence to identify anomalies or areas of improvement. “In this scenario, one example might be setting alerts that can be initiated if certain conditions or thresholds are achieved. For instance., if a quantity entered is unusually high or low. That might be a basic one. A more advanced one could be using a predictive algorithm that senses when a customer’s credit or ability to pay comes into question and then you can flag the order or escalate to a personal communication,” Coq describes.

So what about Robotic Process Automation (RPA)? Is that AI? According to Coq, RPA is more of a steppingstone. RPA originated from software engineering circles where it was developed to automate testing. Because it focuses on simple manual tasks, there are limitations to its application in the business “RPA is good for small simple parts of an end-to-end process but not the entire process. The reason is that RPA does not work well when it comes to visual recognition, leveraging intelligence, or facilitating decision making,” Coq reports.

Reaping the Benefits: 80% Efficiency Improvements Are Possible

Esker has been working with many clients on applying AI to improve business processes. Efficiency and productivity are among the key measures where they are seeing results particularly on the order processing side. “We have been working with a pharmaceutical company that has been able to improve processing time by 80%. They took 3 minutes typically to process an order before and now they are doing it in 33 seconds. They are saving over 190 hours a month for the customer service team and now they can spend time on more strategic initiatives to improve their business,” reports Coq

So how does one get started, and how easy is it to start generating the results that are described above? Well it depends on the path you take. The longer road involves going it on your own. Unless you already have the AI skillsets, data and algorithms in place, many organizations are turning to vendors such as Esker to help them move forward.

Esker has been applying AI solutions to automation for more than a decade, and in that time has been able to build out a significant set of data and trained algorithms that their customers can leverage. According to Coq, data is one of the most important elements of any AI-based project. Without properly cleansed, tested, and labeled data, it doesn’t matter the quality of the algorithm.

Esker like most AI focused vendors has also benefited from being able to tap into many public algorithms that have been developed by technology stalwarts such as Facebook and Google. “We were able to adapt some of Facebook’s facial recognition technology into our document scanning engine,” reports Coq. In that spirit, the AI community has been able to share knowledge to help accelerate innovation.

Speed is the name of the game when it comes to getting these projects up and running quickly Most of Esker’s clients are completing their AI projects within months, not years, says Coq. Esker’s Cloud-based solutions have been an important piece of the puzzle. Customers can just plug their applications into Esker’s solution,

There’s more to it of course, Coq stresses. Most of their AI focused automation projects are completed over the course of two key phases. First, integrating key applications and processes into Esker’s AI engine, which typically takes 2-3 months. The second stage involves another 2-3 months of tuning the engine to the customers data so that the algorithm produces accurate results. The more customers that use the algorithm, the faster this becomes for follow on customers, “The models are getting better with their use. The more we see adoption the later the ramp up time decreases for new customers,” reports Coq.

Esker is not trying to boil the ocean with their AI approach but rather remain focused in what they feel they do best; Order-to-Cash and Procure-to-Pay. “We’re not trying to automate the entire world and be another EDI type technology. We want to help organizations combine human and artificial intelligence to deliver greater value within their customer/supplier relationships,” explains Coq.

What Does This Mean for SAPinsiders?

Whether you’ve already started down the Artificial Intelligence Path or are taking your first steps. Here are some takeaways to guide your exploration of AI and ML in process automation.

  • Build institutional knowledge on AI and RPA in data, skillsets, partners and algorithms. No matter who you are or what role you play, getting smarter on AI is only going to help you and your organization. Expand your knowledge of AI concepts and how they can be applied within your organization. In addition to SAPInsider, Organizations like Esker have plenty of knowledge, case studies, whitepapers, etc. on AI and Machine Learning. Be voracious in feeding your AI appetite.
  • Identify your biggest process problems and potential fit for RPA or ML/AI: Perform a fundamental assessment of your end-to-end processes. Benchmark them against industry standards to see how you measure up. Understand the sources of inefficiency within your business processes and where RPA, AI, or machine learning can add value. Talk to peers at industry conferences or reference customers from your partners to learn how they have applied these technologies for business benefits.
  • Question your current and future partner on their AI and ML capabilities and experiences Vendors have varying level of experiences with applying AI and Machine Learning to specific business instances and industries. Make sure you have the right fit. Newer AI companies may not have had the opportunity to tune their data models and algorithms or work with enough companies to truly test the accuracy and results of what they are doing. Ask for reference customers who have applied their technology to the specific processes you are focused on and who also fit in your industry and company profile to make sure that they can deliver against their promises.
  • Clean up your data and interfaces. AI algorithms are only as good as the data that it uses. You must be able to have clean, labelled data that can be easily passed and integrated with Cloud-based models and algorithms like the ones that Esker relies on. If you need to work on the data, that will impact the length and complexity of your project no matter what vendor you choose or even if you do the project on your own.

ABOUT Esker

Esker is a global provider of automation solutions that support the full procure-to-pay and order-to-cash business processes. Founded in 1985, Esker serves over 6,000 global SaaS customers across more than 50 countries. Esker has more than 700 employees and 14 offices worldwide.

 

 

 



Pairing Analytics and Automation

How do SAPinsiders take the insights they acquired through analytics tools and quickly act to address those insights? SAPinsider recently sat down with Simon West, CMO of Magnitude, and Darren Pierce, CTO, to exchange ideas on the future of analytics and automation for ERP systems.

By Pierce Owen, VP of Research, SAPinsider

Translating Data into Insights

As part of their “digital transformation,” 75% of respondents in a recent SAPinsider survey say their organizations use or plan to use self-service analytics for operational performance. Self-service analytics help democratize analytics, allowing the average business user to visualize raw data, identify outliers or errors, and set up alerts for when an issue arises. Self-service analytics empower operations professionals to track KPIs and find bottlenecks, both in current operations and in simulations or forecasts for the future. They can also help identify data quality issues and make sure that master data meets business rules.

Often, master data contains outdated information. For example, material masters include the number of days needed to provision supplies from suppliers. In reality, that provisioning might take more or less time on average. Analytics solutions can show material master values versus actual values and averages.

To get the most out of their enterprise data, organizations need data connectivity between their analytics solutions and the diverse, distributed data sets across multiple ERPs and other systems. The average member of the SAPinsider Community runs six instances of ERP, and 38% run at least one non-SAP ERP system. These members need analytics solutions that can integrate with data not only from all their SAP systems but also their non-SAP systems to get the full picture of enterprise operations.

Unfortunately, even when they have access to enterprise-wide insights, when it comes to taking action to address issues discovered through analytics, business users often have no easy way to achieve that.

From Insights to Action

Many business users can quickly find issues in their data thanks to analytics tools, but it can then take an inordinate amount of time for them to clean or redefine master data or clean up polluted sales or purchase orders.

By integrating operational analytics with process automation, organizations can quickly react to insights unsurfaced by analytics and address issues.

In the material master example, if a business user discovers a discrepancy between the days needed to receive supplies in the master data versus reality, this user could update the master data with the click of a button if the organization has integrated automated data management with its self-service analytics.

As another example, a major beer producer in Europe had inaccurate and outdated sales and purchase orders in its ERP systems. This messed up MRP runs because the MRP process allocated inventory for the polluting orders. The beer producer now uses Magnitude Every Angle operational analytics to identify the polluted orders and can clean them up with minimal effort with Magnitude Innowera Process Runner. The means the ERP systems run MRP processes much more predictably and accurately, and it has cleaned up inventory with less dead stock.

What Does This Mean for SAPinsiders?

When considering trends in self-service operational analytics and automated data management, SAPinsiders should:

  • Implement self-service analytics tools. As part of any digital transformation, organizations need to democratize analytics and adopt software solutions with which business users can generate value without heavy day-to-day IT involvement.
  • Consider analytics and automation solutions that integrate with multiple ERP systems. To get the full picture of enterprise operations, SAPinsiders need solutions that integrate with all of their enterprise systems, both SAP and non-SAP.
  • Evaluate the different applications and potential value of analytics and automation. This article outlines a couple potential areas of value in maintaining master data and cleaning up polluted sales and purchase orders for MRP runs. Organizations should evaluate the types of bottlenecks and insights they discover through analytics and how automation solutions might help them address these issues.
  • Integrate operational analytics with process automation. To quickly take action based on insights in a scalable way, organizations need some form of integrated automated data management or process automation.