black box financial supply chain management - · pdf file6_black box "financial supply...

Black Box "Financial Supply Chain Management"

Which software solutions optimise financial management in companies’ CFO departments now and in the future – an international market appraisal

September 2013

2_Black Box "Financial Supply Chain Management"

Executive Summary

In all key functional areas of financial supply chain management self-developed solutions dominate the solution landscape – except for automatic cash allocation management

1 Area of responsibility of the Chief Financial Officer/finance director/business administration manager Source: goetzpartners

Management Summary

Future solution landscape

Present solution landscape

• The observed functional deficits lead companies to make plans for the use of external solutions as well as complete outsourcing in upcoming years – especially in the areas of automatic cash allocation management, treasury management and payment management

• Interviewed companies rated holistic single-source solution suites as advantageous – the main reasons for this are the reduction of interfaces and the resulting cost savings

• Among those extensive, holistic solution suites, release-secure solutions which are ready to be integrated in the respective ERP systems generate a higher willingness to pay with one in every two companies

Black Box "Financial Supply Chain Management"_3

• The key functional areas of software solutions in companies’ CFO departments1 are automatic cash allocation management, cash & liquidity management, treasury management, invoice management as well as payment management

• Standard ERP software solutions are dominant only for automatic cash allocation management, while in all other areas mainly self-developed and rarely customised solutions are commonly used

• Users of SAP systems work notably more frequently with standard software then non-SAP users (e.g. Oracle, Microsoft)

• Across all functional areas, there is only partial satisfaction with how the present solution landscapes conform with business requirements – an assessment of the ability to consolidate decision-relevant information in the management information system (MIS) also revealed room for improvement

11%

8%

9%

13%

23%

10%

12%

14% 22%

26% 27%

25%

Survey – Objectives and Approach

Across various countries and industries, goetzpartners interviewed 300 users of software solutions in all areas of financial supply chain management


Distribution of participants

• Objectives:

Evaluation of financial supply chain manage-ment software solutions

Identification of key trends and market dynamics

• Sample:

Interviews with 300 users (company experts who deal with software solutions for financial management) from middle management and above

Balanced spread of interviewees across countries, industries and company sizes

• Survey method:

Online questionnaire

• Survey period:

March-April 2013

Objectives & approach

Source: goetzpartners

Interviewed countries

Infor

Chemicals, pharma & healthcare

Govern- ment

Other

SAP

Sage

Other

29%

1%

1% 5%

ERP

systems

<€ 80 mn

Revenue classes

>€ 2,000 mn

Energy

Telecom.

& media

Insurance

Industries

Oracle

Micro-

soft 17%

47%

€ 80-400 mn

€ 400-

2,000 mn

Retail

Manufacturing & construction

Key Functional Areas of Financial Supply Chain Management

The survey examines the five key functional areas of software solutions that help to optimise the financial supply chains of companies


• Optimisation of accounting processes concerning incoming payments

• Securing of automatic processing, allocation and booking of incoming payments based on the electronic account statement

• Analysis and research functions to settle cases for clarification

• Daily overview of company-wide cash positions

• Planning/simulation of middle and long term liquidity trends

• Receipt and disposal of cash flows

• Corporation-wide closing of receivables and liabilities (netting out)

• Implementation of in-house banking

• Support and automation of corporation-wide payment processes

• Implementation of centrally controlled payment factories to bundle payments and save transaction costs

• Electronic authentication of payments

• Centralised communication with banks as well as integrated bank account management and signing authority

• Integration of electronic banking components

• Central mapping, assessment and booking of all financial transactions (interest, currencies, raw materials etc.)

• Connection to external trading systems

• Support of hedge accounting

• Analysis and reporting (e.g. value-at-risk)

• Optical recording/recognition of incoming non-electronic invoices

• Automation of invoice verification as well as workflow support in the approval process

• Automatic initial account assignment, booking and filing

1 2

3 5

4


Automatic Cash Allocation Management

To process automatic cash allocation management, companies particularly use the standard software of their ERP systems – non-SAP users tend to additionally use complementary solutions

• Comparing all interviewed companies, the ERP standard software most commonly dominates the processing of automatic cash allocation management – a differentiation between the ERP systems in place, however, shows that SAP users are much more likely to work without further complementary solutions to their SAP standard

• With their current solutions for automatic cash allocation management, only 13% of the companies reach an automatic reconciliation rate of incoming payments that is >95%, one in every two companies even fails to get above reconciliation rates of <85%

Key findings

Leading software solutions by ERP system1,2

20%

9%

12%

26%

32%

Not relevant

Outsourcing

External solution

Self-developed solution

ERP standard

10%

10%

7%

20%

53%

10%

23%

30%

30%

8% 26%

10%

11%

28%

26%

25%

8%

17%

25%

25%

1

Leading software solutions1

1 Rounding differences possible; 2 Interpretation: 53% of SAP users stay with their SAP standard, 20% use in-house developments etc. Source: goetzpartners


Total SAP Oracle Microsoft Others

Cash & Liquidity Management

Irrespective of company size, specialised software solutions for cash & liquidity management are rarely used – in-house developments based on Microsoft Excel dominate this functional area


• In the functional area of cash & liquidity management, the company software is most often supplemented by self-developed solutions for financial planning: while the raw data comes from the ERP system, the data aggregation, forecasting, simulation etc. are mostly carried out using Microsoft Excel – irrespective of the size of the company

• Actually, one in every two companies with revenues of < € 80 mn attributes no separate relevance to this area – therefore they are not paying any attention to specialised cash & liquidity planning software solutions either

Key findings

2

Leading software solutions by revenue class1

1 Rounding differences possible Source: goetzpartners


Not relevant 25%

Outsourcing 5%

External solution 17%


31%

ERP standard 23%

52%

3%

8%

29%

9%

19%

4%

19%

31%

26%

11%

4%

24%

32%

29% 23%

25%

8%

13%

31%

<€ 80 mn € 80-400 mn € 400- 2,000 mn >€ 2,000 mn Total

Treasury Management

In spite of the existing, highly efficient SAP offering, SAP users mainly work with self-developed solutions in the area of treasury management – even fewer non-SAP users rely on the ERP standard

3

Leading software solutions

• Functional requirements in the area of treasury management are in most cases met by the interviewed companies’ self-developed solutions – despite the highly efficient SAP offering, this holds true for SAP users and, to an even larger extent, non-SAP users

• Due to the fact that their financial transactions are often relatively easily manageable in terms of scope, small companies do not see an essential need for specialised treasury management software solutions

Key findings

Leading software solutions by ERP system1



Not relevant 33%

Outsourcing 5%



29%

ERP standard 22%

24%

3%

10%

32%

31%

19%

12%

16%

35%

19%

33%

7%

15%

25%

20%

50%

0%

8%

25%

17%

SAP Oracle Microsoft Others Total

Invoice Management

The dominance of self-developed solutions is extended to the functional area of invoice management – the ERP standard is only used frequently in industries with high invoice volumes

4


• For invoice management, self-developed solutions are more important than for any other functional area of financial supply chain management – from the optical recording/recognition of incoming, non-electronic invoices to workflow-supported invoice processing

• Again, SAP users work considerably more often with their standard software than users of other ERP systems – especially in industries with high invoice volumes

• E-invoicing is not yet used by almost half of the interviewed companies

Key findings

Leading software solutions in selected industries



Not relevant 19%

Outsourcing 5%



33%

ERP standard 28%

28%

8%

8%

36%

20%

26%

5%

13%

44%

13%

Telecom. & media Retail

3%

10%

13%

37%

37%

12%

4%

19%

28%

37%

Insurance Manufact. & construct.

24%

5%

13%

32%

27%

Others Total

Payment Management

The functional area of payment management clearly differentiates between the installed ERP systems: SAP users work considerably closer to their standard software than users of other ERP systems

5

Leading software solutions

• Almost half of the companies that use SAP work with their standard software

• However, cross-nationally self-developed solutions are used to a large extent for payment management – particularly companies in the energy, telecommunications & media as well as retail segments rely on such solutions to an above-average extent

Key findings

Leading software solutions by ERP system1



Not relevant 24%

Outsourcing 6%



31%

ERP standard 24%

21%

3%

14%

27%

35%

16%

12%

14%

42%

16%

SAP Oracle

25%

5%

18%

30%

22%

25%

8%

8%

33%

25%

Microsoft Others Total

Management Information System (MIS)

The consolidation of all company-relevant key financials in management cockpits is mainly relevant for medium to large corporations, yet reveals room for improvement

Evaluation of installed MIS solutions

• Management information systems are often part of highly efficient business intelligence solutions and therefore only interesting for companies with turnover of >€ 80 mn

• The implemented solutions basically comply with the business requirements, yet room for improvement was revealed at four out of five companies

• There is unanimous agreement when it comes to the acceptance of increasing information provision on mobile devices

Key findings

Evaluation of installed MIS solutions by revenue class1



No MIS in use 13%

Very bad 0%

Bad 3%

Adequate 21%

Good 43%

Very good 20%

29%

0%

2%

22%

26%

22%

12%

0%

4%

19%

49%

17%

<€ 80 mn € 80-400 mn

5%

0%

2%

23%

52%

17%

9%

1%

4%

19%

43%

23%

€ 400- 2,000 mn >€ 2,000 mn Total

Implemented Solutions' Compliance with Business Requirements

The partial satisfaction across all functions concerning compliance with business requirements leads to cross-industry willingness to invest in external solutions

Compliance with business requirements in the functional areas1

• Regardless of the functional area within financial supply chain management, there is only partial satisfaction concerning the solutions’ compliance with business requirements

• Comparing the different countries involved in the survey, it becomes clear that companies from the DACH region2 are more likely to be fully satisfied than companies from other EU countries and the US

Key findings



Strongly disagree

43%

2%

Strongly agree

3%

Agree 52%

Disagree

1%

6%

53%

40%

51%

41%

1%

6%

Automatic cash allocation management

Cash & liquidity management

Treasury management

51%

43%

5%

1%

43%

1%

7%

48%

Invoice management

Payment management

Planned Changes in the Solution Landscape in the Upcoming 3 Years

Due to performance gaps, the interviewed companies plan the implementation of external software solutions or outsourcing in the areas of automatic cash allocation, treasury and payment management

1 Interpretation: 41% of the companies currently using the ERP standard for automatic cash allocation management plan to implement an external software solution in the future Source: goetzpartners


• Especially in the areas of automatic cash allocation management, treasury management and payment management, present users of the ERP standard perceive functional deficits and are considering the implementation of external software solutions or even the outsourcing of the respective functional areas

• In the US, nearly half of companies are considering implementing an additional/alternative external solution for automatic cash allocation management in the upcoming years and one in three is thinking about it for cash & liquidity management

• In the DACH region, one in three companies is currently planning to implement a treasury management solution

Key findings

ERP standard

Self-developed

solution

41% 31% 43% 23% 36%

27% 29% 23% 23% 14%

Automatic cash allocation mgmt.

Presently leading solution

Treasury mgmt.

Cash & liquidity mgmt.

Payment mgmt.

Invoice mgmt.

33% 28% 38% 27% 34%

25% 28% 27% 16% 13%

Planned implementation of external software solutions1 Planned outsourcing of functional areas1

Automatic cash allocation mgmt.

Treasury mgmt.

Cash & liquidity mgmt.

Payment mgmt.

Invoice mgmt.

Value-Adds of Single-Source Solution Suites

A majority of the interviewed companies from medium to high revenue categories sees a considerable value-add in single-source solution suites for their company

• A majority of the interviewed companies sees advantages in single-source solutions for financial supply chain management – for SAP users the percentage was as high as nearly 70%

• Small companies with revenues of <€ 80 mn, on the other hand, see neither a general benefit nor the depicted value-adds for themselves

• The main additional benefits are seen in the reduction of interfaces, cost advantages and the reduction of isolated applications – a single point of contact is also relevant for the majority of companies

Value-adds of single-source solutions in detail Key findings

57% 43%

Reduction of interfaces

26%

Cost advantages

35%

Reduction of isolated applications

36%

Single contact person

45%

Consistent look and feel

50%

No double administration

53%

Scalability

58%

Essential value-adds1

1 Multiple answers possible Source: goetzpartners

Yes No


Willingness to Pay for Single-Source Solution Suites

At more than 50% of the interviewed companies, a general willingness to pay for a holistic solution suite as well as release-secure integration in their own systems has been identified

Willingness to pay for release-secure systems integration1,2

Willingness to pay for holistic solution suites1

• More than half of the interviewed companies expressed a willingness to pay for a holistic cross-functional solution suite for their entire financial supply chain management as well as release-secure integration in the existing ERP systems – there is an especially high willingness to pay in the insurance and energy industries

• Particularly users of SAP systems are willing to pay for a solution to be release-secure integrated into their ERP system; however, small companies with revenues of <€ 80 mn do not consider this a priority

Key findings

1 As a price premium compared to current licensing and service charges; 2 Rounding differences possible Source: goetzpartners


45%

3%

23%

29%

Others

13%

0%

61%

26%

Energy

No 20%

Yes, more than 30% more

7%

Yes, 10% to

30% more 33%

Yes, max. 10% more

40%

Insurance

42%

4%

22%

33%

Others

17%

4%

52%

26%

Energy

No 20%

Yes, more than 30% more

17%

Yes, 10% to

30% more 23%

Yes, max. 10% more

40%

Insurance

Selection Criteria for Financial Supply Chain Management Solutions

In financial supply chain management, reliability and quality of support are crucial selection criteria – differences become especially clear at industry level

Integrated product portfolio

23%

Integration competence

26%

Innovative product

Reference/image 27%

Lowest price 30%

27%

Availability/ flexibility

32%

Financial stability 34%

Personal contact 35%

Quality of customer support

41%

Reliability 45%

• The key selection criteria for financial management software are reliability as well as the quality of the customer support

• Differences become visible after differentiation by branch of industry: While there is high price sensi-tivity in the retail business, companies with a manu-facturing or construction background rate the relia-bility of the systems higher

• Comparing the countries, in the US, alongside relia-bility one in every two companies cites the impor-tance of the solution’s availability/flexibility

• For small companies with revenues of < € 80 mn, personal contact is of importance as well as a convenient price

Top 10 selection criteria1 Key findings

Energy

Retail

Manufacturing & construction

26%

39%

Financial stability 48%

Quality of customer support

Personal contact

36%

38%

Integration competence

46%

Availability/flexibility

Loweste price

41%

50%

Reliability 59%

Financial stability

Availability/flexibility

Total

Top 3 by selected industries1

1 Multiple answers possible Source: goetzpartners


17_Business Transformation

More Studies by goetzpartners

In 2013, goetzpartners is publishing a new study called “Finance organisation 2.0 – Contribution to a company’s success” concerning the changing role of the financial organisation within a company

“To make strategic decisions, it is essential to know what effect they will have on the financials of the company. This is the only way to lead a company successfully.”

The study will be published in the autumn of 2013 and contain a series of interviews with CFOs and other experts about the positioning of financial organisations within the company and their contribution to driving corporate success


Finance organisation 2.0


The growing complexity of companies also places the financial organisation before for new challenges. Advancing internationalisation, increasing complexity in the chain of production and the ad hoc supply of decision papers for top management are just some of the challenges a CFO has to face.

In this study, goetzpartners will show the requirements for today’s financial organisation and what position it should take within the firm. With the help of five optimisation levers, goetzpartners demonstrates how the financial organisation’s contribution to the company’s overall success can be increased:

1. Focus on core tasks

2. Standardise processes and tasks

3. Reduce complexity

4. Strong governance on data and processes

5. Performance metrics/KPIs

• Establish a comprehensive delivery model with clear accountability and respect to business units and geographical setup

• Provide decision support for (top) management • Set focus for corporate functions

• Identify value creating core processes that can be standardized • Use (offshore) shared service centres • Align IT infrastructure to automate standardized core processes effectively

• Right-size organizational layers and regional/geographical setup • Eliminate processes with little or no value • Enforce rigorous internal controls to reflect risks and impact of potential errors

• Establish central process governance • Use consistent data from defined sources throughout the company • Agree on data and information assets with business partners that these are in

line with corporate strategy

• Define key KPIs which support the corporate strategy • Use business metrics as track of execution for finance organization and

business partners • Introduce individual scorecard and drill down functions for top and middle

management

Focus on core tasks

Standardise processes and tasks

Reduce complexity

Strong governance on data and processes

Performance metrics/KPIs

1

2

3

4

5

18_Business Transformation

About goetzpartners

goetzpartners is a leading independent European consulting company that combines M&A (mergers & acquisitions) advisory and management consulting under one roof. With this unique service offering goetzpartners advises companies along their whole value chain, thus creating sustainable value for them. The Group is represented with offices in Munich, Düsseldorf, Frankfurt, London, Madrid, Moscow, Paris, Prague, Shanghai and Zurich, and maintains international cooperation ventures.

goetzpartners Management Consultants concentrates mainly on the fields of strategy, operational excellence, and business transformation. goetzpartners Corporate Finance focuses on M&A advisory services. goetzpartners is ''hidden champion'' in the consulting discipline corporate finance and management consulting (result of the ''Hidden Champions-Study'' conducted by Prof. Fink in cooperation with the business magazine ''Capital'').

Industry Line Financial Institutions

In the area of Financial Institutions, goetzpartners provides comprehensive first-class support in consulting mandates, M&A transactions and assistance to financial investors. With our integrated approach we support our clients in adapting to the challenging market environment, reassessing and, where necessary, redefining their business model.

Industry Line TIME

In the TIME sector (telecommunications, IT, media and e-business), goetzpartners supports numerous clients with their alignment and transformation according to the new market environment within the converging world of media. Through our innovative, strategic approach coupled with our strong implementation and value orientation, we work with our clients to improve their competitiveness and ensure sustainable success.

Service Line Business Information Strategy

To ensure sustainable success, companies are increasingly dependent on the effective and efficient use of information and technology. In close cooperation with the client, goetzpartners addresses the various issues in the field of business information strategy. Among other things, this includes the development and optimisation of IT strategy and governance, the optimisation of product and service portfolios, structures and processes of IT organisations and service providers, as well as the planning of high-technology usage for products or services.


Disclaimer

This publication is protected by copyright. The duplication as well as any other form of distribution or publication, also of extracts, requires the approval of goetzpartners. Our own

analyses and assumptions for this brochure have been prepared to the best of our knowledge and belief. goetzpartners does not assume any liability for the correctness and

completeness of the analyses and assumptions. Naturally this brochure does not consider the circumstances of any individual cases. Therefore it can neither substitute for

specialised consulting nor replace extensive research by a third party.


Contacts

Dr. Hans Gerd Prodoehl

Managing Director, Düsseldorf

[email protected]

Thomas Oppe

Manager, Munich

[email protected]

goetzpartners MANAGEMENT CONSULTANTS GmbH

Prinzregentenstraße 56 80538 Munich, Germany Tel. +49 (0)89 290725-0 Königsallee 60 b 40212 Düsseldorf, Germany Tel. +49 (0)211 60042-570 Bockenheimer Landstraße 24 60323 Frankfurt, Germany Tel. +49 (0)69 2475048-0 32 Brook Street London W1K 5DL, UK Tel. +44 (0)20 76477700 Calle Marqués de Urquijo n°30, piso 1° 28008 Madrid, Spain

Tel. +34 (0)91 7451313

Gagarinskiy per. 25 119034 Moscow, Russia Tel. +7 (0)495 9810791 19, Avenue George V 75008 Paris, France Tel. +33 (0)1 70725500 Melantrichova 17 110 00 Prague 1, Czech Republic Tel. +420 (0)221 632451 Unit 1610, No.336 Middle Xizang Road, 200001 Shanghai, P.R.China Schwerzistrasse 6 8807 Freienbach/Zurich, Switzerland Tel. +41 (0)55 4102294 www.goetzpartners.com

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