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hybrid cloud

There are more than 200,000 companies running on-premise ERP systems from Microsoft, Sage, SAP and Acumatica world-wide and many are not planning to move to the cloud yet. However, if you are one of them, this does not mean that your company can’t start taking advantage of modern cloud-based reporting solutions today to drive better and faster decisions for yourself and your management team!

Hasn’t Cloud-based reporting for on-premise ERPs been available for a long time?

Yes, vendors like Prophix, Solver, Vena, Adaptive Insights, and Planful (formerly Host Analytics) have offered both cloud-based financial reporting and budgeting for years. However, all of these vendors have typical corporate performance management (CPM) architectures that require data to be loaded from the on-premise ERP and into the cloud CPM tool before the user can run reports. 

The process requires a “refresh” of data from the ERP database into the CPM database which means that the data users see in reports is not real-time. This also mean that the drill-down on any number is only as detailed as the lowest level data that was loaded into the cloud CPM database. 

Your executives are often ok with this because they want to wait on their report analysis until the accounting team has closed the books. However, the accounting team that is posting transactions in the ERP system almost always prefers live ERP reporting because they want to immediately see the impact of journal entries in their reports. They don’t want to refresh data into a CPM reporting database first, and then wait one minute, ten minutes or significantly longer to run reports after the data has been transferred to the CPM tool.

How do I get true live reporting for my on-premise ERP GP data?  

The obvious answer is that you use the report writer that natively comes with your ERP system such as  Management Reporter, GP Report Writer, Smartlist or SQL Reporting Services (SSRS). However, at best, it would be safe to say that these tools have aged “gracefully,” and they are just not comparable to many modern cloud reporting tools.

Key weaknesses of on-premise report tools include:

  • Not particularly user-friendly for accounting staff to design reports.
  • Lack of easy and professional formatting.
  • Typically requires VPN or Terminal Server to connect to the ERP in order to run reports from outside the office network.
  • Maintaining multiple report writers for different data (e.g. for formatted financial statements versus sub-ledger transaction reports).

In order to overcome these weaknesses and help on-premise ERP customers maximize the value of their data a modern, cloud-based reporting platform, Solver has now launched what they refer to as “Hybrid Cloud Reporting.” You can see it live in this video. This is a unique integration technology that enables you to:

  • Use your web-browser to run beautifully formatted reports (looks like Excel formatting).
  • Benefit from true real-time reports on your ERP data without any data transfer to a separate reporting database.
  • Drill-down from any number in the report directly into your underlying GP transactional data. 
  • Easy internet and browser-based access with no need for VPN, or software like Terminal Server.
  • Enter budgets from user-friendly forms (looks like Excel) in the cloud and have the transactions stored directly into the GL budget table in the ERP database.
  • Be better prepared to move to a cloud ERP later because the reporting and budgeting solution is already in the cloud. 

In other words, now your accountants and reporting end-users get the best of two worlds by only needing a web browser to run live ERP reports and drill-down.

Below is a simple architecture diagram to explain how it works:

hybriddiagram

What about budgeting and forecasting?

Like many other cloud-based CPM solutions, Solver also offers budgeting and forecasting. With the new Hybrid Cloud technology and Solver’s cloud-based Planning Module, users can store budget data directly back from Solver’s budget forms in the cloud, into the General Ledger budget table in the ERP database. 

So, if you struggle with manual Excel-based spreadsheets for your budgets, you can save a lot of time by eliminating emailing files between users, linking between spreadsheets, and put better controls in place for the entire budget process with workflow and approvals. 

As an example, users can access budget forms like the example below with their browser and instantly, until you close the budget process, update their department’s budget in the ERP system. Since Solver’s Hybrid Cloud updates are real-time, reports can immediately be run to see the impact of these changes on the budget.

Enjoy Faster and Better Decisions in the 2020s

Companies like Solver, Prophix, Vena, Adaptive Insights, and Planful are driving the next generation cloud-based reporting and planning technology. However, with the lack of live reporting and live budget write-back to on-premise ERP systems, accountants and very active ERP users have been left with their legacy tools for their real-time reporting needs.  

With the release of Solver Hybrid Cloud, these users now get the best of both worlds and can start ushering in the 2020’s by enabling themselves and other users with faster and better decisions.  Learn more about the benefits of choosing Solver CPM solutions by contacting us today or requesting a demo. 

Supported ERP systems are: Microsoft Dynamics GP, SL, and NAV, Sage 100 (SQL)*, 300* and 500*, SAP Business One (SQL)*, and Acumatica*.

*) Direct budget writeback not offered for these ERPs.

 

It is easy to predict the future when it is business as usual. However, if your business environment is suddenly impacted by something like the coronavirus, a delayed product launch or an unplanned acquisition, your corporate budget may become obsolete very quickly.

How Do I Know it is Time To Replace the Budget with a Forecast?

Sometimes unexpected events happen and it is clear the company’s actual performance is moving so far above or below the annual budget that it no longer provides value in the following ways: 

  • A cost control tool
  • A target for employee compensation plans
  • A detailed financial break-down of corporate strategic goals
  • A financial plan for various corporate initiatives

There are many signs that you need to create a budget reforecast because it is becoming obsolete due to unexpected events, such as:

  • Management comments why a revenue or expense budget variance is occurring
  • Complaints from sales teams that their targets are too high due to XYZ event
  • Lack of budget ownership from department heads

In addition, you will start hearing from executives that the budget column in the financial statements is “useless” or that the budget target figure in a Key Performance Indicator (KPI) is no longer valuable. 

Some organizations have a predefined monthly, quarterly or semi-annual reforecasting process, and when the unexpected happens, they simply take this into account next time they reforecast. These companies often have budgeting and forecasting software such as Solver, Adaptive Insight or Planful to speed up and automate the time and effort it takes to create budgets and forecasts.

Other organizations’ forecasting techniques only include a single annual budget version as a baseline, and for these companies a “forced” reforecast due to unexpected events might involve a lot more arms and legs and interruptions to people’s work schedules.  

What to do When the Corporate Budget Becomes Obsolete?

Companies generally do one of the following when their budgets become obsolete: 

  1. Do nothing and live with the undocumented comments and questions until next year’s budget is launched
  2. Leave the budget as is and use report comments to explain big budget variances (see sample screenshot below).
  3. Reforecast the rest of the year and replace the now defunct budget with the new forecast

Most companies enter their corporate forecasts at a higher level than the annual budget, and often it is only done at the Profit & Loss account level and sometimes also for Balance Sheet and Cash Flow.

In most cases, smaller organizations with well organized, home-grown Excel models can forecast in their spreadsheet and then re-import the forecast into their ERP system or third-party reporting tool. In mid-sized and larger organizations even forecasts at the GL account level may require a lot of work due to requirements to do this by division or department. These companies either have more human resources available to perform the work or they use a budgeting tool to automate it.

Picture1

How to Reforecast Your Budget?

Whether your forecasting requirements are simple enough to be handled in Excel or your company is using a modern budgeting tool, there are ways to avoid the painfully slow bottom-up data entry process. The problem with the latter is that the new forecast may already be old by the time you are done. In these cases, the unexpected event that led to the reforecast could have changed again, leading you to start all over.

Budgeting and forecasting software automation typically means that your input model is highly formula driven. For example, your forecast model can rapidly calculate all the required entries automatically such as % Revenue Increase, Target Net Income, Reduction/Increase in Headcount, etc. This functionality has many names such as:

  • Top-down planning
  • Driver-based modelling
  • Break-back modelling (see sample screenshot below)
  • What-if analysis

Picture2

Regardless of what you call it and the type of planning tool you use, an automated reforecasting model can create an entire forecast in minutes or hours versus days or weeks with manual methods. 

 An automated model also allows you to create multiple scenarios. For example, armed with a “Best Case”, “Worst Case” or “Likely” forecast scenarios, you can be prepared for unexpected events without rushing to reforecast. Instead, you replace the “Likely” budget version with the already created “Best Case” or “Worst Case” scenario and you are done. 

If the situation calls for a brand new scenario, you adjust the drivers in the automated model and it will recalculate and store the underlying account-level forecast transactions.  

When your company has the right tools and plans ready for a budget reforecast they will be prepared for a virus outbreak, stock market crash or exciting acquisition of a competitor. Planning ahead will reduce stress and blood pressure for the organization’s finance team.

Workforce Planning

One of the most significant changes to businesses during COVID-19 has been  the large-scale work-from-home policies that almost all companies implemented. While some businesses may have partially or fully practiced this for a few years already, it has never in the history of the world been at this level. 

As many business owners are eager to get their staff back in the office, they may find that a majority of their team members have enjoyed their newfound freedom of working from home with zero commute time and no travel costs.

Some companies have already announced that they will be completely work-from-home going forward. Some employees may switch companies to find a more flexible employer if pressure to show up in the office five days a week is too high. 

Chances are that the remote work trend that was accelerated by COVID-19 will not fade away. There will be other trends that will continue to shape work-from-home habits such as:

  • Virtual reality technology
  • Video and collaboration technology (Teams, Slack, Zoom, etc.)
  • Longer commute times due to re-emerging traffic congestion
  • Hassle of all the new “cleanliness rules” when coming into the office
  • Real estate prices driving workers to live further away from work  
  • Commercial real estate prices and parking rates
  • Security concerns as home internet often is less secure than being in office 

If work-from-home is becoming the new normal for many organizations, a number of new questions arise including: 

  • How do companies assure that their team members are as- or more efficient as they were when working at the office? 
  • How do managers operate when they rarely ever meet their team members other than virtually on video calls?

Let’s take a closer look at both of these important items.

Efficient Workforce Planning Strategies and KPIs

Increasingly, executives are doubling down on two-way transparency. In other ways, the sharing of how you are doing as a company and how each team member is performing against agreed upon goals. In order for this to work, employ performance-based compensation plans and processes. 

Next, tools must be implemented to track metrics and provide reports. Imagine dashboards and scorecards with personal KPIs  and traffic lights. This is the recommended approach according to many management gurus.  Use top down sharing of strategies and goals that support the KPIs, broken down from company to department to individuals. Then, as results come in, bottom-up sharing of how team members as well as departments performed versus goals. 

Specifically, with likely strong growth in work-from-home trends, executives are already pondering how to ensure that employees are engaged, efficient and goal driven as they conduct their work from their bedroom or living room. With limited oversight and old-school micromanagement quickly fading, personal KPIs for work are rapidly growing in popularity. However, setting the best possible goals for employee KPIs can be a bit of science in itself.

Often attributed to the management guru, Peter Drucker, and first used by George T. Doran in 1981, the acronym, SMART, is used to guide goal setting.  Here is an overview of SMART goals: 

  • Specific – simple, sensible, significant
  • Measurable – meaningful, motivating
  • Achievable – agreed, attainable
  • Relevant – reasonable, realistic and resourced, results-based

In the years ahead, organizations both in public and private sector, will increasingly explore and try out individual KPIs, and those that are most successful with it are better equipped to build thriving organizations that are “future proof”. 

Key Elements of Remote Workforce Planning 

Managing and growing employees successfully has always been an area that can put a company ahead of its competitors. Companies spend money on benefits, training, education, and compensation plans to improve their staff. However, organizations promote from within, without experience, and do not train the new managers. This was a failing process and the future will require better managers with a higher percentage of employees working from home.

Define Job Descriptions 

The starting point is the most important. For each position, a manager needs a job description with the six to eight main responsibilities of the role along with the KPIs that will be set each year. Define what makes a successful candidate and a candidate that would fail in the role. Each employee receives this document from the manager and then the manager reviews it in a meeting to ensure both understand the expectations.

There are many ways of coming up with the main roles and responsibilities of the position. Interview people currently in the role, research online, talk to the HR department, and discuss with other managers. Keep the list of responsibilities concise, but include details. The more details around each role will enable the employee to understand the role and improve their chances of success.

Pinpoint the KPIs that will Define the Role.

The manager should explain how he/she will measure each KPI in the role and what is a success or a failure. Describe where the data comes from and how the KPI is calculated. Then sit with the employee and document what the goals for each KPI by a specific period will be. Ensure that the employee is onboard and agrees that they can achieve their goals. If numbers are set that they do not believe in, then you may lose the employee early on in the process.

Review and Finalize the KPIs 

Historically, managers would have an annual review that tried to encapsulate what happened over the year, but typically only highlighted the last few months as that is all that most remember. In a year like 2020, it becomes even more difficult with the rapid shift to remote work. 

Start now – meet with the employee monthly, show the KPI goal, the results to date, and a variance. Include a traffic light on each KPI to show whether the employee is succeeding (green), failing (red), or in the middle (yellow). For all yellow and red items document action items that the employee needs to do to improve upon those that are below the goal. 

Now, when you meet, the manager simply reviews the numbers and the prior action items. Many of the work from home efficiency concerns go away and it is all about productivity.  Below is an example of a simple scorecard for a manager to review with a consultant that includes actual data, the goal, variance with traffic lights, and goals for the next four quarters.

Screen Shot 2020-06-03 at 1.03.39 PM

By doing this across the board, the culture changes to become a highly productive workforce. Good employees want to work with other good employees. This culture helps build a profitable company with high growth. Terminate the employees that regularly do not meet their goals, but in a way that is clear from day one. 

 

Benefits of Automated Workforce Planning Software and KPI Management

Whether your KPIs and workforce planning requirements are simple enough to be handled in Excel or currently using a modern planning and budgeting tool, now may be a good time to think about ways to combine budgeting, workforce planning, reporting and KPI management into a single solution. 

So, whether caused by an unfortunate virus outbreak or technology trends affecting your industry, having effective workforce planning tools and plans to be ready for a reforecast is always going to reduce stress and blood pressure for the organization’s management team. 

This article explores the popular Dynamics 365 Business Central cloud ERP system and how you can achieve advanced reporting and budgeting.
After Microsoft’s highly anticipated release of Dynamics 365 Business Central (D365 BC) a few years ago companies evaluating the solution has, as expected, quickly zoomed in on reporting, budgeting and business intelligence (BI) capabilities.

But, let’s zoom out for a moment
after 25 years in the software industry, I have yet to see an ERP system with fantastic reporting, budgeting and BI capabilities built into the ERP. Alas, the world’s most used tool in this area remains the ever popular Microsoft Excel spreadsheet! There is actually a good reason for ERPs failing in this area with their native functionality, and that is that the demands for advanced calculations and formatting, currency conversion, consolidations, budget workflow, custom budget input forms, and charts simply are too much for the otherwise controlled and accounting-focused ERP applications. That is also a main reason why there is a flourishing corporate performance management (CPM) and BI industry out there that plugs these and other planning and decision-making related holes in ERP systems. It has become a symbiotic relationship in many ways with a sometimes elegant dance, especially when there are solid integrations that exist between ERPs, CPM solutions, and BI tools.

So, where does Dynamics 365 Business Central (D365 BC) land in terms of advanced reporting and budgeting? Well, as expected, it has native reporting and budgeting at the typical level where most modern ERPs have it. So
if ERP history is any indication, that means that 90-95% of all D365 BC customers will at least partially be using their beloved Excel spreadsheets for some of their reporting and a lot of their budgeting and forecasting. That is, unless they are ready to step up the CPM game and look at CPM tools like Solver for full blown cloud budgeting, reporting and consolidations that are pre-integrated and also running on Microsoft Azure as a multi-tenant solution.

But wait a minute, that was CPM, but what about BI? Actually, here Microsoft seems to have achieved a home-run in the past few years with Power BI. Not only did Power BI recently become the leader in the Gartner BI Quadrant, but Microsoft has done an excellent job integrating it to D365 BC and many other transaction systems.

So, if you work for an organization that plans to evaluate Dynamics 365 Business Central, between Power BI from Microsoft and advanced CPM solutions like Solver, you should be in good shape to turbo-charge your organization’s decision-making abilities in the years ahead.

Good luck and enjoy your ERP, BI, and CPM journey!

Solver enables world-class decisions with the Solver cloud based CPM suite made up of budgeting, reporting, dashboards, and data warehousing, delivered through a web portal. Solver is reinventing CPM with its next generation user-friendly solution. Solver empowers business users with modern features including innovative use of cloud-connected Excel in the report and budget form design process. If you’re interested in learning more, our team is excited to hear about your organizational needs and goals.