Juliette Welch: Today's call is about enterprise performance management: Leveraging a Reporting and Analytics Tool to Fully Realize the Potential of Your ERP.
Shawn Windle is one of our speakers today. Shawn is the Founder and Managing Principal of ERP Advisors Group based here in Denver, Colorado. ERP Advisors Group is one of the country's top independent enterprise software advisory firms.
Shawn advises mid to large sized businesses on selecting and implementing business applications from enterprise resource planning, customer relationship management, human capital management, business intelligence, and other enterprise applications which equate to millions of dollars in software deals each year across many industries.
Prior to ERP Advisors Group, Shawn helped establish a successful technology practice with the top 50 accounting firms in Denver.
There are only a few people in the world with the practical experience that Shawn has gained with helping hundreds of clients across many industries with selecting and implementing a wide variety of enterprise solutions.
Karl Nicholls is also a speaker on today's call, and Karl is a senior consultant with ERP Advisors Group.
Karl has participated and lead the design in several major multinational ERP implementations as well as selected and implemented financial planning and reporting tools.
In addition to his ERP experience, Karl is a seasoned senior financial executive and applies his 20 plus years of experience to ensuring his clients financial systems are optimized to meet their long-term needs in the areas of accounts payable, accounts receivable, cost accounting, inventory accounting, intercompany accounting, multi-currency operations, and financial planning and analysis in multi-entity settings.
On today's call, Karl and Shawn will speak to you about using your ERP to its fullest potential as it relates to enterprise performance management. They will share with you some practical insights about getting the most from your ERP reporting and analytics tools.
Shawn, can I introduce you?
Shawn Windle: Please. Thank you, Juliette.
Yeah, I appreciate the introduction and definitely is — we're talking about ERP concepts in this ERP Advisor call.
The purpose of it is to share, as Juliette said, some very practical tips and tricks on things that we’re picking up from the field.
And today's call is a little bit different in that we're going to focus on a segment of software that sits on top of an enterprise resource planning package — those applications are called enterprise performance management, also corporate performance management, as well as financial planning and analysis and budgeting tools, so we'll get into that.
I'll talk a little bit about the background of these tools and how they fit in and the types of problems that they solve and even give you some examples.
But then, as Juliette mentioned, Karl from our team has some very pragmatic experience in implementing — selecting and implementing — these solutions, too.
So, we've got some questions for him that we're going to cover here in about ten minutes, so let's jump into it.
So, when we talk about going — take it even a little half step back — we talk about ERP and why companies select a new financial package or enterprise relationship planning package, there's reasons why they want to do it, and typically they want better reporting. That's like 95% of our deals that we help clients with.
One of the reasons why they want to switch — one of their success criteria on an implementation — is they want better visibility of their business, which makes total sense. But what isn't realized sometimes is that just implementing an ERP doesn't necessarily give you the reporting that you're looking for, but what it does is it sets the stage.
It's almost like a pyramid of needs where you have to have your transactions cleaned up first, and in implementing a new ERP, that's usually what happens. You normalize your data that you’re cleaning up your chart of accounts, getting your items more defined and more practical for what your business looks like today.
Then you get your transactions really cleaned up. You get rid of old vendors and you combine customer accounts from — you got Acme Inc. and Acme Co. and that’s really one customer — you bring all that together when you implement an ERP. That's what you do.
Then you also do the business logic in automation. You make sure that that's correct.
So, in a manufacturing firm, available-to-promise, we got to figure out what date we're telling customers orders are going to be ready. That's what ATP is.
So, we go through that logic, make sure that it's correct. Then as you're going along and working on the ERP system you also see that there are drivers in your business, and you have more visibility to seeing that as well as matrix, for instance in a professional services firm, how many hours are we billing on a weekly basis? That's something that you need to see if you do not have those transactions in place.
If you don't have the basic level of reporting, you’re hosed. So, implementing an ERP system does give you that basic bottom level of the pyramid if you will of needs where your transactions are put in place.
Then you have that second level of automation that comes in, too, so that you can notify a project manager when they're close to hitting their budget.
When the actuals are starting to go over that budget and again in professional services scenarios so that middle level of the pyramid if you will is around automation, and so you can get some of that basic automation in.
But very often that top part of the pyramid which is around reporting and analytics is not well defined in an ERP — it's not well developed or delivered in an ERP.
The ERP gets the middle in the bottom part but the tools that come out of an ERP system or financials application typically don't cut it. They don't give you the analytics and even some of the automation around budgeting process and even planning.
ERPs aren’t really made to do that. It's a transactional processing system.
But once you have that base financial system in place — transactions in — as well as some base reporting, basic P&L, a balance sheet, that type of thing, that's where we see customers say — you know, typically CFO's office, the CFO controllers — say, we really want to optimize our annual budgeting process, or even make it a rolling budgeting process or definitely from planning tools and processes — forecasts —that are put together with hey, we want to optimize those processes, too.
And then a budgeting side what we're talking about. There are about four things we want to focus on departmental operating expenses.
So, we're looking at what is the personnel budget for the sales division? And then we want to increase that 10% going into next year so we set a budget for that.
The second thing is a lot of times those budgets are Excel-based and when you start using Excel, there's a lot of manual work that's required to bring everything together. So, there's some challenges that kick in there.
As well as with that, too, you have the third point, which is you have different versions of the budget that can float around.
So, then finally, leading into — let's say we want to modify that budget across all the departments. It's difficult to do when you have multiple spreadsheets that are running around with different departmental heads.
So again, the budgeting process — you don't necessarily get that defined for free in an ERP system. Would it be great if there was a tool that could help you with budgeting — and of course there are.
Then we look at planning, which is more forecasting going forward into the future and we hear a lot of clients and say, look we don't want to forecast just once or twice a year, we want to do it annually — monthly, pardon me — we have assumptions that change the business increases, decreases whatever it is. So, we want to be able to have a rolling forecast. And Excel can't do that very well.
But you also want to look around forecasting on different revenue drivers, so for a wholesale distributor that the revenue drivers may be seasonal based off some of the clients we've worked with that sell home and garden products for instance.
And it's been a great year for rain and snow in Denver. So, there's going to be a big demand around Memorial Day. We want to be able to change our forecast to show that.
So, those are some things on the revenue side that they want for planning as well as maybe even looking at just general functionality. What happens so you know — what if scenario planning around reducing cost of goods sold or increasing people, decreasing rent?
So, planning-wise, again, we see a lot of our clients, a lot of CFO's — they're saying, okay, got the ERP in place, but man, I want to take this data and I want to see what my future looks like so that I can add more value to the board or to my colleagues at the C-Suite to tell him this is where the business is going.
So, we really see those kinds of needs, budgeting, and planning pop up next once the ERP is in place.
Now the truth of the matter is, it's all possible in Excel, but the reality is, Excel has its limitations and it only takes having a spreadsheet blow up on you once.
And once that happens, you know that Excel is probably not the right tool to do this kind of advanced budgeting and planning on. Although sometimes it feels like you have to, but it just takes that one crash to realize, oh my gosh, we've got to put this into a system that's more stable.
And that's where these enterprise performance management tools come in.
Now there's lots of names you'll see in the marketplace of the category of software. EPM is one of the, corporate performance management is another, financial planning budgeting and analysis is another.
They all do a little bit different things, but some examples of these tools are like Adaptive Insights, Anaplan, Host Analytics, lots of other different kinds of solutions out there, but they're very focused on financial planning and reporting and not like ad hoc reporting or operational reporting.
There are other tools like DOMO or CLICK or Tableau that are built for BI and analytics. These financial planning and analysis tools, EPM, CPM are really based around a financial statement, but a financial view of your organization that's driven around your chart of accounts and more based on your financials.
So, with that we also, as I mentioned earlier as is Juliette introduced Karl, Karl's on the line and curls with ERP Advisors — with our team. And if he recently implemented a new EPM tool and I'd like to ask you a few questions, Karl, so maybe you can share for some of the participants here on what your experiences.
Or if that's okay, maybe Karl, you could just do a quick hello and a quick intro on top of what Juliette said.
Karl Nicholls: Sure, hi. Thank you very much, Shawn.
My name is Karl Nicholls and Juliette gave a pretty detailed in-depth introduction for myself.
But yes, recently I implemented — it was actually host analytics at a biotech company in Boulder. It was a small growth stage organization with some pretty quick revenue growth.
Shawn: Perfect so maybe we can start with this first question then, Karl.
What problems were you looking to solve with the new EPM tool?
Karl: Sure, well as you say, get rid of Excel I think was one of the overarching things that we wanted to do.
We were a fast-growing organization, and we had some diverse departments with many people contributing to the budget and those were all managed on Excel spreadsheets that I had to send out to the department heads, consolidate when they came back to me after chasing up the management heads to actually submit their budgets, I had to put those into the spreadsheet.
So, you're copying and pasting information and people would insert your rows into worksheets that messed up the copy and pasting.
So really, a lot of issues around just making sure the integrity of the Excel file stayed the same. And really, just being able to run reports quickly, look at different versions of those reports, perhaps compare them to a previous one that we've done.
And really to remove some of the human effort involved — sending out a spreadsheet to the users they had to type in their budget. Well, why not just have them type it directly into the planning tool itself?
And there was also a lot of personnel data in these files — so people, names, salaries, benefits, those types of things that you wouldn't want to get into the wrong hands as it were.
So, looking for ways in which we can give people access to this sensitive data.
Shawn: Perfect, that makes a lot of sense.
And then if you figured out, okay, this is what we want to solve, how did you decide which application to go with?
Karl: Right, I mean that's a — it’s an interesting question.
Like what do I do?
So, like, all good modern folks, I just went to Google first of all and I just put in there, hey, planning tools for FP&A tools and just see really what the landscape looked like.
As you can imagine to begin with, Google is a pretty powerful tool and I got a lot of responses back and so then it was really about how do I start to narrow down the options that are out there?
There are various types of independent reports that you can look at — the Gartner quadrants for example.
I took a look at those and read their reviews on some of the vendors — Capterra Online you can search FP&A tools on there and it gives you some oversight as to the various tools available and gives you some user reviews. So, that gives you some good background there.
And I started to sign up for some of the more promising vendors to do online demonstrations, or perhaps get a white paper.
One word of caution I would give you guys for that — as soon as you start doing that, be prepared to start receiving lots of emails and phone calls from the vendors.
And that gave me some good background information as to what was out there.
And as I started to look at these online demonstrations, I was able to start to see the look and feel of the various tools and get a sense for what is going to work for me and my organization.
So that was important, too, is understanding what are the needs of the organization? How do you budget and forecast? And how do those solutions that you're looking at online fit with that?
Then by merging those two things together, was to create an even shorter list of particular vendors and then brought a couple on-site to do some pretty detailed demonstrations not just to myself but also to other people in the finance department and other interested parties in the company that would be using the software.
Shawn: And of course, too, as you're going through that process, maybe you could talk a little bit about where ERP Advisors could help in that selection.
Karl: Certainly one of the strengths of ERP Advisors is coming into an organization and very quickly getting up to speed and understanding what the organization's needs are, to be able to document those for you, and to be able to really put together a script of all of the features and functionality that a tool would provide that organization.
And then be able to help the company go through a selection process and engage with these vendors at making sure that they're able to demonstrate to you the real needs that you need.
Shawn: That makes a lot of sense, and at the end of the day, it — you know your phone doesn't ring as much when you have your ERP Advisors around, because vendors will call them.
But that's good. Yep, that makes sense.
Well, tell us about the implementation — like what kind of challenges do you run into? What are some things that maybe some folks on the call could learn from what you — from the pain point that you — pains — that you went through?
Karl: Well, one of the main criteria that we looked at when we were going to implement the tool was we really wanted it to be cloud-based.
It was a small organization that was very technical in nature and had a lab with lots of IT resources and being a small company, there wasn't much IT resources available for us poor finance and accounting people, so we really had to take the lead ourselves.
That actually gave us a lot of advantages with the implementation. It was up and running really quickly.
As soon as you sign the contract, your instance of that particular tool is immediately available online. It's very intuitive to set up. In fact, with a very small amount of help from the vendor themselves, I was able to set up the infrastructure of the tool, learn how to import data, look at the history, write reports, and validate that against the existing reports that we had for the history. So, it's very user friendly.
And again, that's one of the things about the cloud-based tools today is that they're really set up to enable the users themselves to be able to do a lot of their own setup and reporting. Not a lot of reliance on IT, or necessarily even the vendor themselves.
So, then one of the things I then did in terms of implementation was how do you get the users engaged?
So really, putting together a nice training package for them, really showing how it's going to help the user do their job better and easier and faster, and being able to make sure that I reached out to all of the users and sat down with them one-on-one to take them through everything that it was that they needed to do to get the budget and the forecast in. But then also show them the reports and the analytics that were available to them that gave them information about their own department when they needed it and they didn't have to come and ask finance for it.
One of the things I really liked about the tools, and what the users really liked about the tools, was having access to the actual transactions themselves.
So not only, for example, did they know they spent $20,000 on engineering consultants, they were able to drill into that number and see who the vendors were and how much they spent for that vendor. And that transactional information can go back as far as you want to input the data into the system. So, there's a lot of user satisfaction in being able to do that.
Shawn: Perfect, okay, thank you.
Karl: And just making yourself available for those users if they have questions.
Shawn: That's a really good point. Let's actually drill down on that last point here. And then we'll probably wrap up on the questions.
But how much time of yours did it take to implement the tool? Was it a significant amount of time, or was it pretty reasonable to do this on top of your 40 to 50 to 60 hour dayjob?
Karl: A great question. I think from signing the contract to actually completing budgeting and forecast cycle — so, that's actually setting the software up, having the reports created and set up, and then actually going through the cycle — it was eight weeks.
Shawn: Fantastic. So, pretty quick then. And then like you said after that eight weeks you're up and running and you're giving drill through ability to your customers basically as the office of the CFO. So kind of a lot of value in a short amount of time.
What else would you add? Maybe any final thoughts to folks that are listening or thinking about a EPM tool or — what would you tell them?
Karl: I would say make sure you do the research. Understanding what the needs of your organization are and making sure the tool that you implement really addresses those needs.
User empowerment engagement is also really critical. One of the reasons for implementing such a tool like this is to actually disseminate the effort of entry to those users and without their engagement, the success of the implementation will be less than it could be. So, really win over your users.
Look to the future, too. Don't just implement the system today that satisfies what you need today and for yesterday, but really look towards the future and be prepared for this to be an iterative process.
Implement the system today for what you have. And then look to the future again and improve processes over time and — the system will only be as good as the base data that you're using.
So, making sure that your ERP system itself is set up correctly with the right departments, accounts, and transaction types is critical because that's what goes into your EPM tool.
Shawn: Now that's really good, Karl, and I really appreciate the practical insights, too.
Again, as we're working with lots of folks on their systems, the tools that you just described, the benefits that you just described, I think are almost wrongly assumed to be delivered in ERP and that's why we wanted to do this call today is to say, look, there's these additional tools that you layer on top of — just like Karl said, if the transactions are correct. The actuals there's so much capability that you can get out of an EPM tool that’s relatively easy to implement price-wise.
We've seen different pricing from different vendors, but very effective pricing, very quick return on investment periods.
If you look at even automating the budgeting process, there's some — it's an easy business case to write up to see the benefits, so we want to make sure that you all are aware of these tools and that they're out there.
And of course, there's just like Karl said, go to the internet, do the research, see what's out there, or give us a call, too. We're working with lots of vendors and have just recently did a selection helping with an implementation at a nonprofit in the Denver area with a project that's going well with particular tools.
So, lots of practical experience there, too. Give us a call if there's anything else that we can provide.
Karl, any last thoughts here at the end of our call that you would provide in terms of EPM to the listeners, or anything else you'd like to add?
Karl: I just think that they really do well. I found them to provide really good value for money, really facilitated a lot of improvement in analytics and user empowerment for really reasonable prices — easy to set up and quick to get going.
Shawn: Perfect. One last thought to that that I wanted to make sure to point out, too, based on what Karl just said, there is when you look at an EPM tool, you really need to understand the integrations that they have available back to your ERP and accounting system as well.
That's super important because that can add a lot of cost. But most of these EPM tools, financial planning analysis and budgeting tools have pre-built integrations back to some of the more prevalent financial systems, ERP systems, so you should be — you should know about that. Make sure to talk to salespeople, go through the demonstration process, see what that looks like.
So that's perfect. That's it for my side Juliette, we'll pass the conversation back to you.
Juliette: Okay, thank you Shawn. Thank you, Karl. Thank you everyone for joining us for today's call.
Please be sure to reach out to us if we can answer any questions you have. And if you'd like a summary of today's talk, go ahead and email us and we can send that out to you.
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