financialforce steps out of shadow 02 · financialforce steps out of the salesforce shadow ......
TRANSCRIPT
June2017
FinancialForceSTEPSOUTOFTHESALESFORCESHADOW
WITHRENEWEDFOCUSANDENERGYONERPFORSERVICES
FinancialForcewasfoundedin2009whenitbrokeawayfromUnit4andpartneredwithSalesforcetobecomeoneofaveryfewcompanies(atthetime)borninthecloud.Sincethenithasleverageditsrelationshipwiththesoftwareasaservice(SaaS)pioneer,alongwiththestrengthoftheSalesforcedevelopmentplatform.Ithasrecentlysurpassed$100millioninrevenuerunrate,supportingover1350customersin34countries.ButithasalsogrownintheshadowofSalesforce,asomewhatlimitingfactorintermsofmarketawareness.Itsnamemayalsohavebeenalimitingfactor.
FinancialForceimpliessoftwareforthefinanceteam.Butitsproductextendsbeyondaccounting.Itoffersafull-fledgedenterpriseresourceplanning(ERP)solutionfortheserviceindustry.Itleavesthedomainofmanufacturinganddistributiontoothers,butthatdoesn’tmeanithaslimitedgrowthpotential.Indeed,newmanagementatFinancialForceisbettingbigonwhatisrapidlybecomingaservices-basedeconomy.
AtthesecondannualFinancialForceCommunityLiveevent(previouslyheldaspartofDreamForce),newCEOTodNielsenharkenedbacktoMarcAndreessen’sfamousexplanationintheWallStreetJournalin2011of“WhySoftwareisEatingtheWorld.”TodayMr.Nielsengoesonestepfurther,declaring,“Servicesaredevouringthegalaxy.”InordertotakefulladvantageofthevastopportunitythiscreatesforFinancialForce,itmustnowstepoutoftheshadowofSalesforce,establishitsownidentityandfocusintentlyonsatisfyingthespecificneedsoftheserviceeconomy,where“speedisthenewcurrency.”
NEWREQUIREMENTSFORERPFORSERVICES
Mr.Andreessen’s2011articlewasactuallyaharbingerofwhatmanytodayviewasthedigitaleconomy,whichisfosteringasubscriptionenonomy.Onequoteprettymuchsumsupwhatthishascometomean:potentialdisruption.
“Moreandmoremajorbusinessesandindustriesarebeingrunonsoftwareanddeliveredasonlineservices—frommoviestoagriculturetonationaldefense.ManyofthewinnersareSiliconValley-styleentrepreneurialtechnologycompaniesthatareinvadingandoverturningestablishedindustrystructures.Overthenext10years,I
Who is FinancialForce?
FinancialForceisaleadingcloudERPvendorwithapplicationsforthenewserviceseconomy,builtnativelyontheSalesforcePlatform.Foundedin2009andheadquarteredinSanFrancisco,FinancialForceisbackedbySalesforceVentures,TechnologyCrossoverVentures,AdventInternationalandUnit4.Thecompanyrecentlysurpassed$100millioninrevenuerunrate,experiencing40%growthyearoveryear.Itsupports1350+customersin34countries.
Typesofservicesbusinessestargetedinclude:ü Consultingü ITServicesü Engineeringservicesü Information
Services/FinTechü SoftwareandSaaSü EducationServices
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expectmanymoreindustriestobedisruptedbysoftware,withnewworld-beatingSiliconValleycompaniesdoingthedisruptioninmorecasesthannot.”
Wedoindeedliveindisruptivetimes.Weaskedsurveyparticipantsinour2016MintJutrasEnterpriseSolutionStudytoestimatethelevelofrisktheyfaceintheirindustry(andthereforetheirbusiness)beingdisrupted(Figure1).
Figure1:Howmuchriskdoyoufaceinyourindustrybeingdisrupted?
Source: Mint Jutras 2016 Enterprise Solution Study
Wefound88%ofcompaniesbelievetheyfacesomelevelofriskintheirbusinessesand/orindustriesbeingdisruptedbynewinnovativeproducts,newwaysofsellingorpricingexistingproductsorservices,entirelynewbusinessmodels,orsomecombinationofalloftheabove.Whileonly10%feltthatriskwashighand/orimminent,mostdounderstandtheriskisreal.Whileaboutoneinthree(34%)feeltheriskislow,wehavetoask:HowdoyouthinkthetaxiindustrymighthaveansweredthisquestionontheeveofthelaunchofUber?DoyouthinkthehotelindustryanticipatedAirbnb?DidBlockBusterforeseethedevastatingimpactNetflixwouldhaveonitsbusiness?Alloftheseexamplesreplacedassetswithservices.Whatkindofdisruptionislurkingoutthereforyou?
TheInternetandthedigitaleconomymadeallofthesedisruptionspossibleandnoneweredecadesinthemaking.Comparedtoslow,evolutionarychangesofthepast,theyliterallyhappenedalmostovernight.TheInternethasleveledtheplayingfield,allowinganycompany,evensmallones,toestablishaglobalpresence.Newwindowsofopportunityopeneveryday,buttheycanalsocloseasfastastheyopen.
Changeisinevitable,bringingaboutnewrequirements.Asyourbusinesschanges,alongwiththeworldaroundyou,thespeedwithwhichyoucanrespondwillclearlyimpactyourgrowthandperformance.
FinancialForcehasrespondedtothesechangingrequirementsbycreatingthreethemesthatwillcutacrossitsentireproductportfolio:
ü Businessmodelagilityü Timeandtalentoptimization
Data Source Inthisreport,MintJutrasreferencesdatacollectedfromits2016EnterpriseSolutionStudy,aswellasearlydatacollectedfromthe2017study.Bothinvestigatedgoals,challengesandstatusandalsobenchmarkedperformanceofsoftwareusedtorunabusiness.
Over525responseswerecollectedin2016andalmost600in2017fromorganizationsspanningabroadrangeofindustries,including81fromservicesrelatedbusinesses.Bothsetsincludeorganizationsofallsizes,rangingfromverysmalltoverylarge.
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ü PredictiveInsights
BUSINESSMODELAGILITYMintJutraswouldagreethatbusinessmodelagilityisimportant,butwouldfurtherstressthatalltypesofagilityarecritical.Asafollow-uptothequestionweposedaboutriskofdisruption,weaskedsurveyparticipantstoselectthesinglemostlikelycauseofpotentialdisruption(Figure2).
Figure2:Whatismostlikelytocausethisdisruption?
Source: Mint Jutras 2016 Enterprise Solution Study
Thethreatfromnew,innovativeproductsmayhavethelesserdisruptiveimpactonbusinessprocessesandbusinessmodels,butitdoesrequirecompaniestoplacemoreemphasisoninnovation.Windowsofopportunitycanopenandcloseveryquickly.OfcourseanagileERPsolutionisn’tallyouneedtoacceleratenewproductintroductions,butyoualsodon’twantittobethereasonyoucan’trespondtonewmarketdemandsortakeadvantageofnewandunprecedentedopportunities.
Newwaysofselling/pricingexistingproductsmightincludesubscriptionstoservicesoroutcomesthatreplaceoutrightsaleofproducts,makingvirtuallyanyandallcompanies“service”companies.Ratherthansellingamachine,youmightinvoiceforuptimeorhoursofproduction.Youmightshipaphysicalproductforfreeandchargeforusageand/orconsumables.ThismakesservicesubsidiariesoflargemanufacturersaviabletargetforFinancialForce.Softwarecompaniesthatusedtoofferperpetuallicensesmightnowalso(orinstead)offersubscriptionstosoftwareasaservice(SaaS).Thesetypesofchangescanhaveamajorimpactonhowyouinvoice,recognizerevenueandmanagecash.AndthesechangesmustbereflectedinyourERPsolution.
Theimpactofentirelynewbusinessmodelsisevenhardertopredictbecauseoftheinherent“newness.”Youdon’twantyourERPsolutiontobethereasonyoucan’tcapitalizeonthatbrilliantnewideathatcancreateanewrevenuestream.YourERPmustadaptasyourbusinessevolves.
MintJutraswouldagreethatbusinessmodelagilityisimportant,butwouldfurtherstressthatalltypesofagilityarecritical.
Newwaysofselling/pricingexistingproductsmightincludesubscriptionstoservicesoroutcomesthatreplaceoutrightsaleofproducts,makingvirtuallyanyandallcompanies“service”companies.
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Andifyouarelikeoneinthree(33%)ofoursurveyparticipants,youexpectchangetocomefromacombinationofthesedisruptivefactors,whichisevenhardertopredict.Youmustcontinuetosupportyourcurrentrevenuestreamsinconjunctionwiththesenewopportunities.
Forallofthesescenarios,thisiswherethepowerofanopenplatformlikeSalesforceissoimportant,alongwiththeecosystemthatsurroundsit.Customersgainmorefromthevastecosystemofpartnersthananyoneofthemcanprovideonitsown.AndasvastastheSalesforceecosystemis,FinancialForcehasdevelopedanecosystemofitsown,withoneveryimportantpartnershipannouncedattheFinancialForceCommunityLiveevent.Moreonthatlater.
Ofcoursenotalldevelopmentplatformsarecreatedequal,butSalesforceisliterallya“force”intheindustry.Salesforceestimatestheplatformspeedsdevelopmentbyafactoroffive,andcutsthecostofdevelopmentinhalf.Asaresult,bothsolutionprovidersandcustomersbenefit.ForapartnerlikeFinancialForce,itmeansfewerwheelsto(re)invent,bytakingadvantageofapplicationservicesalreadybuiltintotheplatform,including:
• Supportforamulti-tenantSaaSenvironment,whichisakeyenablerindeliveringmoreinnovation,faster
• Aworkflowengine,accessandidentitymanagement• OtherrapiddeveloperservicesincludeSalesforcestandarduser
interfacetemplates,(business)objectorientationandbuilt-inmobilesupport
• Theabilitytotie“social”onlinechats(throughSalesforceChatter)directlybacktobusinessobjects.FinancialForcelikestosayyouareeveronlyoneclickawayfromfollowingaconversation.
• EmbeddedanalyticswithSalesforceWave,acloud-baseddataplatformaswellasadata-analysisfrontenddesignedtoanalyzenotjustERPdata,butalsoanythird-partyapp,desktoporpublicdatayoubringin.AndWaveisevolvingtobecomeSalesforceEinstein,whichaddstheelementofguideddiscovery.Thiswillbeatremendousassetinnotonlyprovidingvisibilitybutalsoinhelpingdecisionmakersasktherightquestions–eveniftheymightnotbeobviousorintuitive.
Forthecustomer,itmeansmoreflexibilityandmoreinnovation,faster.ERPforservicesmustbemoreflexible,configurableand(perhapsmostimportantly)moreextensible.InarecentMintJutrasreportIs“AgileERP”anOxymoron?wetalkedabouttheimportanceofcomponents-basedarchitecturesandtheabilitytoextendthefoundationalsolutionthatrunsyourbusiness.Wealsotalkedabouttheimportanceoftheunderlyingdevelopmentplatform.ThespeedofinnovationandtheeaseofconsumingitarelargelydependentontheplatformonwhichyourERPsolutionisbuilt.FinancialForce
Multi-tenant versus Single-tenant SaaS
Multi-tenantSaaS:Multiplecompaniesusethesameinstanceofhostedsoftware;configurationsettings,companyandrole-basedaccesspersonalizebusinessprocessesandprotectdatasecurity.
Single-tenant(orMulti-instance)SaaS:Eachcompanyisgivenitsowninstanceofthesoftware,butmaysharecommonservices,suchasanintegrationplatform,andsecurity.
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willcontinuetoleveragetheSalesforceplatformevenasitstrivestobetterestablishitsownidentityandbrand.
TIMEANDTALENTOPTIMIZATIONFinancialForce’sfocusonservice-centricbusinessesnaturallyplacesmoreemphasisonpeople.Ofcoursesomeservicescanbeautomated.Software(andSaaS)providesaclassicexample.ButatmanyFinancialForcecustomers,thecustomers’employeesdelivertheservices,makingtimeandtalentcriticalsuccessfactors.WhileHumanCapitalManagement(HCM)hasbeenpartoftheFinancialForceproductportfolio,arecentannouncementsignalsasubtleshiftincorporatestrategy.
OnJune20,2017FinancialForceannouncedapartnershipwithADP,aleadingglobalproviderofHCMsolutions,includingpayrollandHCMcapabilities.ThisstrategicpartnershipwillprovidecomprehensiveHCMtocustomers–manyofwhomarealreadyusingADPfortheirpayrollservices.ADPisclearlyaleaderinthisspace,especiallyinpayroll.
Thejointbilateral(referral)agreementincludesintegrationplansandamigrationpathforthosecustomerscurrentlyrunningFinancialForce’sHCMsolution.Whilenocustomerwillbeforcedtomove,FinancialForcewillnotbeenhancingitsexistingproduct,excepttoaddressanyregulatorycompliancerequirements.ButitwillcontinuetosupporttheproductuntilMarch2020.Inthemeantime,thosewhowouldliketomove,willbeabletomigrateto“like”modulesatnoadditionalcharge.Thetwocompaniescurrentlyhave170jointcustomers,mostlyinNorthAmerica.SothefirstprioritywillbepayrollinNorthAmerica.Futureplansformigrationinothercountrieshasyettobeprioritized.
ThefunctionalitythatADPwillprovideisgeneral-purposeinnature,thekindsoffeaturesandfunctionsthatarequiteconsistentacrossanytypeofbusiness.ThiswillfreeupFInancialForceresourcestoworkontimeandtalentfeaturesspecifictoservices-centricbusinesses.FinancialForcewillstartwiththoserequiredbyprofessionalservicesorganizationsandwillthereforebepartofitsPSAapplication.
Thisroadmapisreflectiveofthemotivationbehindthisdecision:toprovidemoreservice-specificfocus.Fortheshortterm,muchofthedevelopmentfocusforFinancialForcewillbedirectedatmeetingcompliancerequirementstocomplywiththenewrevenuerecognitionrulesofASC606.Theseregulatorychangesresultfromthemergingofaccountingstandards(ASCandIFRS)andgointoeffectDecember15,2017forpubliccompaniesandayearlaterforprivatecompanies.ThechangesrequiredhavethepotentialofbeingdisruptiveandplaceadditionalfunctionalrequirementsonERPforaccountingthatarenotinsignificant.Dependingonyourbusiness,thesenewruleshavethepotentialofcreatingthemostsignificantchangesaccountantshavefaced
ASC 606 and IFRS 15 InMay2014,FASBissuedAccountingStandardsUpdate(ASU)2014-9,RevenuefromContractswithCustomers(Topic606).AtthesametimetheInternationalAccountingStandardsBoard(IASB)alsoissuedInternationalFinancialReportingStandards(IFRS)15,RevenuefromContractswithCustomers.Indoingso,thesetwogoverningbodieslargelyachievedconvergence.Theseconvergedstandardsforrevenuerecognitiongointoeffectthebeginningof2018forpublicentities,bringingverysignificantchangestofinancialstatementsandreportingforanycompanydoingbusinessundercustomercontracts.
OnJune20,2017FinancialForceannouncedapartnershipwithADP,aleadingglobalproviderofHCMsolutions,includingpayrollandHCMcapabilities.
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inmany,manyyears.With“servicesdevouringthegalaxy,”therearefewerandfewercompaniesthatareimmune.
ThestrategytopartnerwithADPratherthandevelopingHCM(includingvariouspayrollsystemsaroundtheworld)wouldappeartobeasounddecision,withjustoneminor“gotcha.”ADP’ssolutionsarenotdevelopedontheSalesforceplatformandsomeofFinancialForce’scustomersclearlyhaveastrongbiastowardsthisplatform.However,thefactthatitisanexclusivelycloud-basedsolutionmakesiteasierforFinancialForcecustomerstoembraceasolutionbuiltonadifferenttechnologybase.TheycanleavethecareandfeedingofADPtoADPandshouldnotberequiredtoinvestinskillstosupportanddevelop.
PREDICTIVEINSIGHTSWhilepubliclyFinancialForcewillbesteppingoutfromtheSalesforceshadow,theabilitytodeliverpredictiveinsightsisclearlyabenefitderivedfromtheclosepartnership.TodayWaveAnalyticsfromSalesforceisthevehiclebywhichthesewillbedelivered.FinancialForcehasalreadydevelopeddashboardsanddatasets;analysisiscompletedinWave,withmoreadvancedvisualizationstocome,alongwiththepotentialtoaccommodateexternaldatafeeds.
EinsteinisthenextevolutionofWaveAnalyticsandwillprovideguideddiscovery,helpingsmallerorganizationstomakebettersenseofthedatatheyhave.Of14differentdigital(andpotentiallydisruptive)technologiespresented,the2017MintJutrasEnterpriseSolutionStudyfoundthemostinterestinandfamiliaritywithpredictiveanalytics.Accordingtosourcesintheknow,Einsteinstillneedsalotofwork,butSalesforcewilldotheheavyliftingtobuildthatstack.Thereisnodoubtthatpressurewillcomefromitsownlargeenterprisecustomers.AndFinancialForcecustomerswillbenefit.
LookfornextstepsbeyondWaveAnalyticstoincludemachinelearningandartificialintelligence(AI)tohelpanswerrisk-relatedquestionssuchas:
ü Aremyprojectsatrisk?ü DoIhaveriskoftalentattrition?ü Whichcustomersareatriskintermsofretention?
“Customer”isahugefocusforFinancialForceandthegoalisforitsowncustomerstoinheritthisfocus.Theobjective:EveryonewhointeractswiththesystemshoulddoitthroughthelensofAIandanalytics
KEYTAKEAWAYSANDRECOMMENDATIONS
Areservicesreallydevouringthegalaxy?Whethertheyareornot,thetrendiscertainlymovingawayfromasset-basedtransactions,eitherreplacedbyorsupplementedbyservices.Whetheryouviewitasservices-based,
Digital Technologies The2017MintJutrasEnterpriseSolutionStudy,investigatedtheleveloffamiliaritywiththefollowingdigitaltechnologies:
ü PredictiveAnalyticsüMachineLearningüArtificalIntelligenceü Blockchainü SmartRobotsüVirtualcustomerassistants
üVirtualpersonalassistantsforemployees
ü InternetofThingsüAugmentedRealityü BeaconsüDronesüDigitalTwinsüNaturalLanguageUserInterface
ü 3DPrinting
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subscriptionsorsimplythedigitaleconomy,theworldischanging.Andthespeedofchangecontinuestoaccelerateevenbeyondourwildestimaginationsjustafewshortyearsago.
Thevastmajority(88%)ofcompaniestodayunderstandtheyfacesomeriskofbeingdisrupted.Andyetmanyofthesolutionsinstalledtodayremainrigidandunresponsivetochangingneedsingeneralandthespecificneedsintroducedbythenewserviceseconomy.FinancialForcecustomersareatadistinctadvantage.Notonlyaretheyrunningonadynamicandadaptiveplatform,butalsotheirsolutionproviderunderstandsthisserviceeconomyandtheneedforspeedandfocus.
Forthosethatarerunningothersolutions:Ifyouareinapurelyservices-basedbusinessnow,orheadinginthatdirection,areyoufullypreparedtotakeadvantageofthevastopportunitythiscreates?Foryou,wehavesomerecommendations.
RECOMMENDATION:Don’tletchangebeyourenemy.Makeyourabilitytomanagechangeacompetitivedifferentiator.Considerthefollowing:
• Ifyourfocusisnotonbusinessmodelagility…itneedstobe.• Ifyoucannotoptimizetimeandtalent…youneedto.• Ifyourcurrentsolutionsimplyreportsthefactsinhindsightand
doesn’tprovidepredictiveinsights,youneedtobetterprepareforthefuture.
• Ifyourcurrentsolutionisrigidandmonolithic,movingforwardatasnail’space…youneedanewone.
• Ifyourcurrentsolutionisnotsupportedbyaplatformorarchitecturethatallowsyoutoeasilyconnectnewservicesorcomponents…youneedanewone.
• Ifyourcurrentsolutiondoesnotallowyoutoadapttobusinesschange,includingmeetingchangingregulatoryrequirements(likenewrevenuerecognitionrules),orrespondtonewbusinessornewbusinessmodels…youneedanewone.
Ifyoufindyourselfinanyofthesecircumstances,FinancialForceiscertainlyworthalook.WeapplaudFinancialForceindefiningitsownidentityandfocustobettermeetthespecificneedsoftheserviceeconomy,wherespeedisindeedthenewcurrency.
Abouttheauthor:CindyJutrasisawidelyrecognizedexpertinanalyzingtheimpactofenterpriseapplicationsonbusinessperformance.Utilizingover40yearsofcorporateexperienceandspecificexpertiseinmanufacturing,supplychain,customerserviceandbusinessperformancemanagement,Cindyhasspentthepast11+yearsbenchmarkingtheperformanceofsoftwaresolutionsinthecontextofthebusinessbenefitsoftechnology.In2011CindyfoundedMintJutrasLLC(www.mintjutras.com),specializinginanalyzingandcommunicatingthebusinessvalueenterpriseapplicationsbringtotheenterprise.