managing the evolving role of finance to empower enterprise growth

Managing the Evolving Role of Finance to Empower Enterprise Growth

Mike Forman

VP Finance & Corporate Controller, NetSuite

© 2014 Proformative

NetSuite: World’s #1 Cloud ERP

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Top 10 Cloud Companies to Watch

#1 Cloud ERP Suite Industry Recognition

Fastest Growing Top 10 FMS Vendor 3rd Year RunningBest Financial Management

Best Cloud Infrastructure

World’s most deployed cloud ERP

Used by 16,000+ organizations

Fastest growing top 10 ERP

Used across 100+ countries

1,000+ Software companies

Founded 1998

Publicly traded on NYSE: “N”

Offices in 10 countries

2,200+ employees

$400 M+ revenue FY13 (~33% Growth)

Background Performance


“It’s important for a company to determine which processes will

come under particular stress when it grows.

Unscalable processes are an area that companies often

overlook when they are growing.”

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McKinsey Quarterly: Preparing your organization for growth [May 2011]

Is Your Company Prepared for Growth?


The Controller Role Has Changed in the Past Three Years

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IMA: The Evolving Role of the Controller [January 2014]

How Controller Time Has Changed in the Past Three Years

Role is evolving to include:

• More higher value-added activities

• Support of more strategic outlook

• Driving productivity improvements


But Financial Accounting Responsibilities Still Remain

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• Implementing Controls and Compliance• Changing regulations and the convergence of accounting principles requires

more time and increases operational costs to perform technical accounting and financial reporting

• Creating accurate financial and management reports and disclosure documents• Data for financial reports and disclosure documents are in disparate systems,

making this process error-prone and time-consuming

• Timely close and consolidation• With multiple versions of the truth, the process is inefficient and takes too

long


Volume for Information Requests Is Also Increasing for Financial and Non-Financial Data

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IMA: The Evolving Role of the Controller [January 2014]

Change in Support Requested in the Past Three Years

But, increased access exposes new challenges:

• Limits on reporting capabilities

• Limits on ability to access data in real time

• Limits on information system capacity


“Things take longer to happen than you think it

will, and then they happen faster than you

thought they could.”

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Rudiger Dornbusch, Economist

The Difficulty in Managing Change with Scarce Resources

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Growth Introduces Change and Complexity for Global Businesses

• Inability to customize systems and processes as the company grows

• Error-prone, inefficient, time-consuming manual processes

• Lack of confidence in financial data

• Significant resources, effort and attention just to keep current system running

• “Siloed” data; no 360o view of corporate performance

• Lengthy cycle to roll up financial results from subsidiaries

• Lack of current visibility into subsidiaries’ financials

• Challenge of scaling processes across geographies

• Lack of IT resources in distributed locations

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“We were running on about five different systems, and that led to a real inability to

connect records between two systems. We had no 360o view of our customers and

activities, and I was constantly starved for

information.”

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Customer Example – Pain Points


A Typical Applications Journey….

• Started with on-premise ERP system (i.e. QuickBooks, MS Dynamics, etc.)

• Added Excel for analytics

• Added CRM system (i.e. Act!, GoldMine, Salesforce.com)

• Built a homegrown website

• Add more seats

Over time: more money, more resources, more integrations

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…Ends Up Being an Application Hairball: Opaque Visibility & Slow, Error-Prone Reporting


ECOMMERCE

PSA

ERP

CRMSINGLE DATA

SOURCE

ERP Company A GL

Subsidiary B

A Business Suite in the Cloud Helps Unlock Value

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Typical Way – Manual, Disconnected Mess After – Integrated, Dynamic Platform

• Disparate data

• Disparate processes

• Slow, reactive decision making

• One version of truth

• Streamlined, integrated processes

• Real time, proactive decision making


“We sell multi-period engagements and have to

manage complicated revenue recognition schedules. Our business was growing and

NetSuite was able to render the scalability needed

without incurring incremental spend for IT-related resources

or headcount.”

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Customer Example - Solution


Background of My Company

• More than 15 subsidiaries and about same number of functional currencies

• Maintain more than 35 currencies

• Revenue recognition• Amortize subscription, POC for Services

• Amortize revenue in accordance with EITF 08-1

• Global Finance Team

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Outcome of Using a Business Suite in the Cloud

• Monthly/Quarterly/Annual Financial Close• Same hard close each month

• Finalize financial results in 5 days

• Close/FP&A team spread between the US and Philippines

• Permits FP&A to share results in timely fashion with business partners

• Rolling monthly forecast based on timely updated actuals

• Order-to-Revenue Process• Lead → Estimate → Sales Order → Invoice → Revenue → Collect

• Respective steps between Sales and Finance can be performed anywhere with an internet connections

• Procure-to-Pay Process• Purchase Request → Purchase Order → Bill → Bill Payment

• Decentralized purchasing system coupled with a centralized disbursement group

• Quarterly Reviews and Annual Audit• Provide auditors with limited role to access system

• System notes provide an audit trail to support transaction history and the key controls that are tested as a part of SOX

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Dashboard Example

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Consolidated Financials Example

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A Suite in the Cloud Supports the Evolving Controller Function

• Manage the Entire Business in the Cloud• Lead → Estimate → Sales Order → Billing → Financial Reporting

• Single System, Single Database• No data warehouse

• Everyone Logs into the Same System / Global Finance Organization• Access to information from any location; control by role

• Real time Consolidated Data• Full drill-down from financial statements to individual transactions

• Multi-Dimensional Views• Worldwide, regional and country-based views

• Local Control, Global Roll-up• Localized UI and currency; regional and global visibility in context

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Lightspeed Technologies – Tualatin, Oregon

Carl Cox

EVP of Operations & CFO, Lightspeed


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Why Lightspeed Exists – To Make a Difference

• ANSI classroom standard should not exceed 35dB

• Voice 15dB above ambient noise

• The standard classroom is like teaching on a noisy street corner (60dB)

• 70% of children with mild hearing loss will fall behind in at least one subject

• Our systems can help children hear 15,000 words instead of 10,000 EVERY DAY!


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Changing Our View

• But to make a difference in the classroom…we had to make a difference ourselves

• Why NetSuite?

• Changing our work from What to Why?

• How did NetSuite help us make a difference for our customers?


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We Had a Big Challenge!

• Growing at 25% annually

• Peachtree & FileMaker & Excel & Outlook…&

• All systems were separate

• The “What” and “Will it hold up”


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Who Me? Worry…

Will these systems make it another

night?


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So We Looked at Everything


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Traditional ERP solution NetSuite

The Final Two: The On-premise Solution or NetSuite

ERP

SINGLE DATASOURCE

3PL SFA

CRM

SINGLE DATASOURCE


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Final Phase – The Customer References

• The early slight favorite was the on-premise solution

• Do your work and research –

• Ask and find customer references

• This is a must!

• Don’t trust the sales person – go directly to the customers


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The Answers Were Like Comparing…

The on-premise solution…

• Difficult implementation

• Used outside consulting firm

• Talked with IT

NetSuite…

• Changed our company

• Access anywhere - insight

• Talked with business owners


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So We Took the Leap!

• We were live in 3 months from signing the license agreement

• Eliminated double-entry

• Finally connected with the sales force

• Access anywhere in the world

• No more servers

• Access to the latest updates


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In the Past, IT and Accounting Were Bean Counters

• Keep the servers up

• Close the books

• Always looking in the past


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Highly Skilled Workforce

Innovative

High Collaboratio

n

Knowledgeable

Multi-Skilled

- PROBLEM SOLVING

- COMMUNICATION

- EDUCATION


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Today, They Have Become Business Consultants…Literally!

Head in the Cloud Development

• IT were DBA’s, Case Managers

• As the need to ‘maintain’ was removed…

• We changed their job to value-add

• And they made a huge difference

• Writing over 200 scripts

• Continuous Improvement


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Are We Managing Through the Windshield?


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Or Through the Review Mirror?


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From Accounting Manager to Small Company Controller

• Issue monthly financials via e-mail to bankers and auditors

• Accounting and IT departments are smaller; although we are 2 ½ times larger

• Integration of systems and processes reduced order entry from 3 days to 1 hour

• Accuracy improved – last financial audit – zero findings

• Adaptive Planning budgets have decreased planning significantly


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Serving Our Customers


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Hearing From Our Customers


Net Promoter Score

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The Net Promoter score for the first half of FY14. The results are as follows:

Promoters: 403Neutral: 44

Detractors: 16Total: 463

Percent Promoters: 87.04%Percent Detractors: 3.46%

Net Promoter Score: 83.59%

For reference, our NPS for FY13 Q4 was 82.67%


Customer Satisfaction (2013)

Google – 53%American Express – 41%Kaiser – 35%Verizon – 32%

NPS 30+

Costco - 78%Apple – Laptop 76%Nordstrom – 75%Amazon – 69%Southwest Airlines – 66%

NPS 60+

Lightspeed – 83.6%USAA – Insurance – 80%

NPS 80+

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Upcoming Sessions

• Educational Session:• Delivering Value with Financial Performance: Leading FP&A Practices of High-Growth

Companies• 2:35PM-3:25PM, Veronese Room 2501

• Speakers: Eileen Tobias, Director of FP&A, NetSuite and Eric Zimmerman, Manager of FP&A, Infusionsoft

• Technical Demonstrations:• NetSuite Financial Planning: Integrated Budgeting, Planning and Forecasting in the

Cloud• 11:30AM-12:20PM, Veronese Room 2505

• Speakers: Robert Israch, VP of Global Marketing Programs, NetSuite Philip Adams, Solutions Consultant, NetSuite

• NetSuite ERP/Financials: The System of Choice for Over 16,000 Organizations• 1:30PM-2:20PM, Veronese Room 2505

• Speakers: Robert Israch, VP of Global Marketing Programs, NetSuite Philip Adams, Solutions Consultant, NetSuite


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Q&A

Managing the Evolving Role of Finance to Empower Enterprise Growth

Thank You For Attending

managing the evolving role of finance to empower enterprise growth

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nonfinancial data change

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evolving role of finance