This is the third blog in our series regarding Forecasting, Budgeting and Planning processes as we experience them at our customers and how these processes can be done in a different way.
As we concluded at the end of our previous blog Kaya has selected Board International as her preferred CPM/EPM tool or CFPA/CFC tool as Gartner would call it. In this blog we will elaborate on what a CPM tool is and how we conducted our research which led to the conclusion that Board International (hereafter called Board) is our preferred tool and why Kaya became implementation partner of this tool.
As mentioned in our previous blog Kaya selected a number of US and/or Europe based solutions to be analysed and compared. We selected following solutions :
• Adaptive Insights
• Board International
• CCH Tagetik
• Host Analytics
Adaptive insights, Anaplan, Host Analytics and Workiva are US based solutions, while the others have an European origin. All of these solutions are used “globally” and vendors have offices in various countries. Most of these vendors are already many years active in the EPM/CPM market.
What functionality to expect of a CPM solution
Typically, below functionality will be present in a CPM solution (first 4 bullets are specifically financial planning and analysis, the other ones are more related to financial close process)
• Financial budgeting and planning. The financial budgeting process sets short-term targets for revenue, expenditure and cash generation, usually with a one-year horizon. Most of the times it uses financial classifications found in the general ledger to classify financial goals and targets. Its normally acts as a fixed control mechanism and is performed by the CFO.
Traditional office-of-finance-oriented planning and forecasting processes consist of a financial modelling engine, with integrated profit-and-loss balance sheet and cash flow forecasting. These capabilities support the creation, review and approval of financially focussed plans and forecast, as well as their associated workflow. These capabilities should also maintain an audit trail of all associated activities.
• Integrated financial planning. This area joins the financial planning components of other business domains, such as workforce and sales, with those of corporate finance. More-innovative initiatives can also be used to meet organization-wide requirements in specific areas, thereby improving overall performance management needs.
• Financial forecasting and modelling. Capabilities in this area are enabled through corporate planning and modelling and “point” solutions that provide best-practice capabilities, especially for the more-flexible, end-user-driven corporate planning and modelling initiatives.
• Management and performance reporting. Performance reporting takes management reporting to a new level of inclusion and ease of use. Its collaboration capabilities transforms traditional management accounting reports into “performance playbooks” that take a more inclusive approach to explaining results. Performance reporting incorporates operational results, financial results and enhanced narratives (narrative reporting).
• Financial consolidation. Bring together financial information from multiple General Ledger sources, while providing eliminations of intercompany accounting and booking for joint-venture and non-General Ledger business units. It may include support for developing a financial consolidation instance, for the purpose of tax data provisioning, to help the tax organization prepare returns and plan. Even with a single General Ledger, an organization may still have complex financial consolidation needs, but small and midsize organizations with limited legal entities may not require complex financial consolidation capabilities.
• Financial reporting. This component provides financial-accounting-based reporting to meet the demands of regulators, investors and tax authorities, and to inform the organization’s operational and strategic financial management.
• Reconciliation management. This component manages the financial accounting reconciliations between feeder systems, bank accounts, subledgers and the General Ledger. It is not inclusive of vertically focused operational reconciliations (that is, financial services operational reconciliations).
• Close management. This component confers the ability to manage the financial close, including activities spanning accounting cycles. Capabilities include functions of close management, close “cockpits” that span ERP and post-ERP processes, and journal entry control.
• Intercompany transactions. This component confers abilities to approve at a voucher level and to handle accounting transactions across multiple General Ledgers and legal entities. This function works closely with intercompany reconciliation.
• Disclosure management. This component confers the ability to support multiple regulatory requirements for disclosure reporting, including eXtensible Business Reporting Language (XBRL) and in-line XBRL (iXBRL) tagging. It may also provide “board book” capability and form the foundation for performance reporting within financial planning and analysis.
When one looks at this list the idea can arise that there exist an overlap with some functionality of Dynamics AX/365 for F&S. To some extent this is true, but bear in mind that usually the functionality of a CPM solution is “deeper” than the functionality in these ERP tools. Besides from that the focus of an ERP tool is registration of (financial) transactions, where in a CPM tool the focus is on analysis of (financial) transactions and prediction of (financial) transactions.
Criteria used for selecting Kaya’s CPM partner
Given the task to compare the various solutions we needed some criteria to determine which of the solutions would best fit the needs of our customers and prospects. This led to following list (most important criteria are listed):
• To what extent is above functionality present in the solution
• To what extent adds the tool functionality for a user also using Dynamics AX/365 (functionality which is good in Dynamics AX/365 doesn’t have to be present or can be somewhat mediocre), for instance predictive analytical capabilities
• How user friendly is the solution (for example how easy is it to create a rolling forecast, ease of data input)
• To what extent is coding necessary to implement the solution (low coding/no coding)
• Can a power user/key user extent the solution if and when needed
• Link/interfacing with Microsoft products, like Microsoft Office (Excel)
• Can data easily imported in /exported from the solution
• How is maintenance organized
Outcome of our analysis
The result of our analysis is known. Kaya found Board the best tool to combine with Dynamics AX/365 compared to other solutions investigated. In our next blog we will go more into the details of our preference for Board and why we think this application is a good extension to implement next to Dynamics AX/365.
Look for other related blogs at https://kaya-consulting.com/category/board/
This is the second blog regarding Forecasting, Budgeting and Planning processes as we experience them at our customers and how these processes can be done in a different way.
As mentioned in our previous blog when making plans, budgets and forecasts there is a need for flexibility like Excel offers, but reports based on these should not give the opportunity of “multiple truths” like is experienced often in organizations relying on Excel for reporting as well.
So what kind of solutions are available to fill the need described above where the organization is using an ERP solution for (most of) its back-office processes? When challenged by this question we went on a quest to find these solutions
Solutions for forecasting, budgeting and planning (CPM/EPM)
As the processes we wanted to support had a primary financial focus we started looking for financial planning and analysis solutions. It appeared that solutions that were labelled as CPM/EPM (Corporate Performance Management/Enterprise Performance Management) solutions contained the functionality we, and our customers, were looking for. Nowadays these solutions are labelled as CFPA (Cloud Financial Planning and Analysis solution). It also appeared that (most of) these solutions also had functionality on board to be classified as CFC (Cloud Financial Close solution).
The solutions that are already longer on the market have offered their functionality in the past on premise, but the major vendors now offer all a cloud based solution. The underlying technology can be Microsoft based, but there are also solutions based on Oracle technology. As Kaya is an organization which implements and supports ERP systems from the Microsoft stack we focused on CPM tools based on Microsoft technology, This meant that solutions of Oracle and SAP were out of scope for us.
Major vendors of CPM software
During our analysis of the various vendors of CPM software we focussed on a number of major players (as identified by Gartner) with the exception as mentioned before. In order to limit the number of solutions further we only looked into solutions that were, preferably, both listed as CFPA and CFC solution. This made that solutions like Blackline were out of scope. We added this extra criterium, not only to limit the number of solutions to analyse, but also to ensure we should end up with a solution which can be used for multiple purposes in order to be able to support our customers in a more “ERP” like way.
Following US and/or Europe based solutions have been analysed by us (in alphabetical order):
• Adaptive Insights
• Board International
• CCH Tagetik
• Host Analytics
Which solution did Kaya select for a partnership
After comparing the various solutions mentioned above Kaya decided to apply for a partnership with Board International. After training of Kaya staff (both technical as functional), Kaya was awarded the status of implementation partner. In our next blog we will elaborate on the reasons why Kaya wanted to become a partner of Board International and why Kaya thinks that the combination of Dynamics AX or D365 for Finance & Supply Chain and Board international is a winning combination.
Look for other related blogs at https://kaya-consulting.com/category/board/
Kaya’s customers are using predominantly an ERP application of the Microsoft stack, being Dynamics AX or D365 for Finance (and Operations/Supply Chain); given the size and complexity of processes to be supported Business Central and its D365 successor are not common at our clients. As ERP stands for Enterprise Resource Planning one could, and should, expect that an ERP solution can be used to (easily) plan resources (financial, human, material) of a company/enterprise. In reality this appears to be not so easy and user friendly as one would hope and expect.
Functionality for forecasting, budgeting and planning in D365/Dynamics AX
In Dynamics AX and its successor D365 for Finance & Supply Chain there is functionality present to do forecasting and planning like MRP, production planning, project planning (Work Breakdown Structure), cash flow prognosis, forecasts on purchase and sales, project and ledger budgets. When using this functionality, it appears that configuration is not easy (initially) and requires quite an effort. After that, the forecast/budget/planning in many cases must be created with a periodic option.
For some of this functionality like MRP this is not a problem as input for such processes is based on inventory transactions which are registered in the solution and form a solid basis for the MRP run. This is however not applicable for all functionalities mentioned above. Especially where financial planning is involved D365 and its predecessors are lacking flexibility. Creating an additional scenario and calculate that is cumbersome and error prone and results in additional transactions in the system.
Common forecasting and budgeting process
So, what usually happens is that a financial forecast is calculated outside D365, mostly in Excel (Excel is still widely used at financial departments in conjunction with accounting software for the standard financial activities). Usually various scenarios are calculated, and one scenario is designated to be the (next) budget. After this has been done the result is uploaded into D365/AX.
Once the budget is uploaded transactions are posted and reporting is done on actuals versus budget (on multiple periods, comparing previous periods to present periods, year to date etc.) In some cases, this reporting is even done outside D365/AX by exporting transactional data to a Data warehouse or to Excel (there are lots of organizations who still rely on Excel for their reporting needs). Organizations that rely on Excel for their reporting needs often experience internal conflicts as staff/departments create their own reports which are supposed to report on the same issue, but the data reported on is open for multiple interpretation or uses a slightly different data set.
So, where does this come down to? There is a need for flexibility in planning and budgeting (like present in Excel) but the reporting should be more rigid (like the transactions stored in D365/AX). How to realize that? That will be the subject of the next part of this series of blogs.
Look for other related blogs at https://kaya-consulting.com/category/board/
I see a lot of MS Dynamics 365 implementations where the BPM in Lifecycle Services (LCS) is not used. They are running fine (at least that is what the clients are telling me). But in general, their implementation partner did not tell them all the benefits LCS has in store for them. Why should a partner bother to mention all the benefits Improvements on testing and user help experience does not result in more billable hours? So is your Business Process Modeler updated?
Using the BPM in combination with DevOps supports more streamlined and efficient implementation projects. By defining the processes in the BPM library; there is a generic structure for tracking the project requirements / user stories / tasks. The BPM hierarchy can be synchronized with DevOps – as a result the DevOps backlog and boards are populated with structured work items ready to be used by the project team.
In addition to tracking the progress of a project, the BPM and DevOps processes and work items can be used for automated testing (RSAT) and user documentation (online help recordings). Read more on these topics in our other blogs!
When defining the processes and work items it is important to understand how LCS and DevOps share the information. There are various approaches one can take regarding the level of detail to track in BPM vs DevOps.
Business Process Modeler
The BPM is a necessary evil – I must admit, it is a strange thing. Currently it is the only way to bring business processes, task recordings, automatic testing, and user documentation of Dynamics 365 together and re-use the information between the different areas. At the same time, it is not extremely user friendly when compared to for example DevOps.
- The model name must be short, the name is reused everywhere later-on in DevOps, I always call it simply BPM, so later the titles of my epics, features and tasks start with [BPM]
- The existing BPM models from MS are too big and complex, no key user will ever be able to put the task recording on the correct place.
- Create your own BPM
- 2 layers
- The 3 layer is in additional point for adding the task recording. A BPM could be like below picture, the customer has 2 tasks recording on how to create a customer
The BPM can then be synchronized with DevOps – the above hierarchy will generate DevOps work items with type “Epic” and/or “Feature” based on the synchronization parameters.
Once the epics and features have been synchronized, it is possible to add Requirements per process node via the button “Add requirement” – the work item type of a requirement in DevOps is also defined in the synchronization settings of LCS and depend on the DevOps project process template.
All links to DevOps are visible in LCM on the BPM nodes, including the test cases. The below considerations are important when making the decisions regarding what type of work items to track in which application.
BPM and DEVOPS
How does it integrate
- The synchronization between LCS and DevOps is one-directional from LCS BPM to DevOps, as a result:
- Any updates made in DevOps will not be reflected in the BPM library
- All work items that need to be available in the BPM need to be created via BPM and synchronized to DevOps
- Business processes (epics, features) need to be created in BPM, not in DevOps
- The mapping between BPM and DevOps is done in LCS and the options available depend on the project template type used for the DevOps project:
- when “Agile”, a BPM requirement type will generate a work item with type “User story” in DevOps
- when “Scrum”, a BPM requirement type will generate a work items with the type “Task” in DevOps
- If the DevOps template is “Custom” – including when it is derived from Agile – a BPM requirement type will generate a work items with the type “Task” in DevOps
- Test cases are linked to BPM process nodes (epic/feature in DevOps), not the requirements (user story/task in DevOps), maximum one test case can be linked to one process
- The one-directional synchronization rule applies also here
- If the test case should have a link to the requirement / user story / task, this can be added manually in DevOps
The DevOps process templates can be defined via DevOps Organization setup screen. The standard process templates are pre-created (Basic, Agile, Scrum, CMMI) and can be extended (KANBAN below).
The process template must be linked to the DevOps project via project settings screen:
The synchronization settings between LCS and DevOps are configured via LCS project settings tab “Visual Studio Team Services”. The options available in this screen depend on the process template used for the selected project.
In case of Agile process template, it is possible to select “User story” in the column “VSTS work item type” for LCS work item sub-type “Requirement”:
In case of Custom process template, it is not possible to select “User story” in the column “VSTS work item type” for LCS work item sub-type “Requirement”. The only available options are “Task” and “Bug”:
For additional details regarding the different DevOps process templates and how these are intended to be uses please refer to the Microsoft documentation
Considering the usability of LCS BPM and DevOps and the synchronization limitations our recommendation is to use BPM for 2-3 levels of processes and use DevOps for tracking the user stories / requirements / tasks. With this approach, the end users and key users can add new user stories / requirements via DevOps and link them to the proper BPM nodes (features / epics) inside DevOps.
When a new process is added, this must first be created via LCS BPM and synchronized to DevOps to make it available as a parent on new user stories / requirements.
Good luck on your improved user experience!
LCS is the place for getting all the information from Microsoft related to your Dynamics 365 for Operations projects. This Web portal also allows you to get your MS fixes to your environment and knows which Knowledge Base (KB) articles have been applied.
In the next image, for instance, we can see that there are 167 fixes applicable. So, let’s start cherry picking.
What kind of child do you have?
Your ERP system is a living, breathing thing and much like employees and your children: you only get the best out of them based on the effort you put in them, the attention you give them, the treatment you give them and what education you give them.
The innocent teen-girl artificial intelligence chat robot named Tay that Microsoft launched, turned into a Hitler-loving sex robot based on tweets received from the weirdos on Twitter in just 24 hours. (Source: Telegraph). If you still have an old on premise ERP system, locked away sound and safe, that only has the occasional chats with other business applications, you don’t have anything to worry about, or do you?
If you are running your business on the latest cloud based ERP system, having business intelligence and machine learning capabilities, mashing your trusted data with all kinds of information received from the internet (of things), you might have a lot to worry about, or don’t you?
Who is teaching?
To answer those questions, we have to answer two other questions first. The first question is “who is talking?”. In other words, do we trust the source of the information and where does that source gets his information from?
The second question is “what does your Intelligent ERP system do with the information received?”. If the information received is corrupt and your ERP system is taking actions based on that information, you have something bad going on. An example: your ERP systems prints an aging report of your customers that owe you money. Wouldn’t it be nice to mash your aging report with data telling if any of your regular, well trusted, customers are subject to a lawsuit or are even filed for bankruptcy?
Probably the answer is yes, but is this something that your ERP system should process automatically, or should a human being be the interpreter of the information received? Is it even possible for human beings to process all the information coming from private databases or the internet?
And on top of this all, your ERP system is also getting information from hundreds of employees entering data. Will they input all data correctly or are mistakes made? And will your ERP system behave irregular because of those mistakes?
The answer to all questions above and the reason why Tay got twisted can be explained in one word: “patterns”. If enough entities do or say the same thing, that thing becomes the truth. The one not acting accordingly is an anomaly.
The only point in monitoring all your data coming in into your (ERP) system is to detect the anomaly. Since it is undoable for most human beings to detect the anomaly in terabytes of (external) data or in any of the thousands of tables used by your ERP system, you need an anomaly monitoring system doing so.
Goodbye KPI, Hello Continuous Anomaly Monitoring
The old way of detecting anomalies is to define a KPI and everything exceeding the boundaries is an anomaly. For example, your revenue is between 1.5M and 2.5M each month. Everything outside these boundaries should be investigated. When the company grows the boundary values of each KPI should be adjusted accordingly. In our example to maybe 2M to 3.5M each month. With the company growing each year, this will become an iterative process.
This way of detecting anomalies is fine, but your BI is now mashing up data from your CRM system, your ERP system with machine learning capabilities and whatever it finds on the internet and you need hundreds of KPI’s to measure all that, or simply be happy with the few KPI’s that really define your business, ignoring the rest.
The alternative here is to use a continuous monitoring system that simply processes any data and find the anomaly for you. Such an anomaly detecting system can tell you that employee X for the first time in 12 year didn’t show up, it can tell you that revenue in the BFSI sector in the UK is down but goes up in The Netherlands and it adjusts the KPI boundaries for you based on the values interpreted.
Kaya Consulting tools
Kaya consulting has build a variety of tools helping you to make sense of your data. From anomaly monitoring systems to dashboards where you can define your own KPI’s. From continuous auditing systems to tools enforcing your data in a certain pattern. Our BI Analytics team is here to help you make sense of it all, give us a call to help you to unleash the potential of your data.