Noteworthy
Grading BPM Tools
The market for business performance management (BPM) software is hotter than ever before, but BPM vendors' customer satisfaction ratings are nothing to shout about, according to research by Stamford, Conn.-based BPM Partners. The consulting firm's 2005 BPM Pulse Survey gauged perceptions of this technology market segment among more than 200 companies in a wide variety of industries.
Nearly three-quarters of respondents said that they had already completed a BPM implementation, were in the process of doing so or were planning such an initiative. Among large organizations (those with more than 5,000 employees), the proportion was even higher -- 84 percent, up from 75 percent in a comparable BPM Partners survey published in 2004.
At the same time, vendor satisfaction ratings were disappointing, according to Craig Schiff, BPM Partners' founder and CEO. "A majority of the 20 vendors included in the market perceptions rating received only average marks," he says. "BPM Partners' independent assessment is that vendors continue to overstate their case, users have incomplete or unrealistic requirements, and the implementation process often takes longer and costs more than anticipated."
BPM Partners' white paper "Beyond the Hype 2005" lists seven "core vendors" that most companies eyeing a BPM software purchase should consider: Cartesis, Cognos, Geac, Hyperion, Longview, OutlookSoft and SRC. The report also gives end-user satisfaction ratings for the five vendors in this group that were mentioned in at least eight specific responses in the most recent survey: Cognos, Geac, Hyperion, Longview and OutlookSoft.
Equity Group To Buy SunGard for $11.3 Billion
A consortium of equity investment companies, including Silver Lake Partners, Bain Capital, The Blackstone Group and Goldman Sachs Capital Partners, has announced that it will acquire financial services software giant SunGard Data Systems in a transaction valued at $36 per share, or approximately $11.3 billion.
SunGard serves more than 20,000 customers in more than 50 countries; its many business units include SunGard Treasury Systems, provider of the treasury and risk management suite AvantGard. The acquisition is expected to be completed in the third quarter of 2005.
"This transaction offers great value to our stockholders and represents an endorsement of our business model, industry leadership and financial strength," says Cristobal Conde, SunGard Data Systems' president and CEO. "Our customers and employees should know that it is business as usual, now and following the completion of the transaction." The company plans to keep its current senior management team, and its corporate headquarters will remain in Wayne, Pa., according to Conde.
SEC Flexible on Option Expensing Methods
New SEC guidance on methods for valuing stock options recognizes that a one-size-fits-all approach won't work. The commission's Staff Accounting Bulletin 107, issued March 29, grants companies some leeway in measuring the value of employees' stock option grants when the FASB's new expensing rules start to go into effect later this year. The bulletin informs companies that, to a reasonable extent, they may choose valuation methods that differ from those used by other businesses in similar situations.
A fact sheet released with the bulletin notes that "the SEC staff believes companies can choose from a number of models to estimate the fair value of stock options. The staff will not object to reasonable fair-value estimates made in good faith ... even if subsequent events indicate other estimates would have been more accurate."
Opponents of the expensing rule cautiously welcomed the SEC's move. "While we continue to believe that FASB's mandatory expensing standard is fundamentally flawed, it appears at first blush that the SEC is trying to address some of the problems with the standard," says Rick White, president of the International Employee Stock Options Coalition, which represents organizations and individuals opposed to the new rule. "We are hopeful that the SEC has made progress toward developing a workable valuation approach and providing pro-tection from meritless litigation for well-intentioned preparers of financial statements."
Delphi Admits Improper Accounting
Auto-parts giant Delphi Corp. announced March 22 that it has substantially completed an investigation into multiple accounting irregularities dating back to 1999. The audit committee of its board of directors found that the company had improperly accounted for $237 million in cash payments made in 2000 to its former parent, General Motors Corp., as part of a settlement agreement. Delphi accounted for most of the funds as an adjustment to its retiree health-care obligations -- which it could expense over time -- rather than as a settlement of warranty claims, which it would have had to expense immediately.
Also in March, Delphi announced that it would no longer provide health-care benefits for 4,000 retired salaried workers once they qualify for Medicare. The company expects the move to save at least $500 million over several years.
Software
Virtual Auditor
John Hagerty, vice president of research with AMR Research, has no doubts about the value of software that helps companies streamline their Sarbanes-Oxley compliance efforts. "Increase investment in technologies that automate testing of your internal controls," he advises. "Key technologies can reduce the cost of compliance upwards of 25 percent, as compliance has been a mostly manual, people-intensive process."
Financial forensics technology, a relatively new category of software, is generating considerable interest among CFOs and finance managers charged with compliance responsibilities. Innovative best-of-breed products in this category automatically scan finance systems to detect irregular transactions.
Oversight Systems Inc. offers Oversight, software that continuously monitors transactions in real time to evaluate their compliance status and prevent losses from errors and fraud. A new release, Oversight 3.0, includes functionality that monitors order-to-cash and financial accounting and reporting processes.
The product identifies a wide variety of suspicious transactions and control exceptions, including unauthorized discounts and credits; duplicate shipments and shipments without invoices; unauthorized write-offs for receivables; and misclassified general ledger adjustments. It applies specific audit tests that encapsulate the best practices of auditors and fraud examiners to every transaction.
Oversight Systems Inc., 75 5th Street, N.W., 2nd Floor, Atlanta, GA 30308. (404) 920-2030. www.oversightsystems.com
Integrated Collections and Dispute Management
Few finance executives would rank the credit and collections department among their organization's most strategic resources. In part because of the deficiencies inherent in traditional enterprise resource planning (ERP) applications' billing systems, many collections departments remain paper-based and tied to manual processes. But a new crop of credit and collections tools is garnering attention from CFOs looking to improve cash flow management, gain greater visibility into the order-to-cash cycle, and reduce invoice processing and reconciliation expenses.
I-many Inc. has debuted I-many Collections Manager, an integrated collections and dispute management tool that helps organizations reduce days sales outstanding (DSO) by focusing on the accounts that need the most attention. Users can analyze their collection strategies and monitor and benchmark collector effectiveness. The system calculates key metrics, such as best-possible DSO and days beyond terms, on a daily basis.
I-many Collections Manager helps users negotiate, track and monitor customers' payment arrangements. Users can easily flag disputes with an appropriate reason code and direct them to the proper channels for quick resolution. In addition, the product automatically delivers up-to-date credit profiles, including information about customers' credit status, open disputes and industry payment patterns.
I-many Inc., 399 Thornall Street, 12th Floor, Edison, NJ 08837. (800) 832-0228. www.imany.com
Enterprise Risk Management Dashboard
Finance executives face an increasing need to manage risk and monitor its impact enterprisewide. Most companies have developed mechanisms to manage critical exposures -- credit risk, market risk, operational risk and business risk, for example -- but these processes often remain enclosed in silos. An optimal risk portfolio can be achieved only by managing risk aggregations and interdependencies holistically, so proactive CFOs are increasingly turning to more comprehensive approaches such as enterprise risk management (ERM).
CXO Systems has introduced ERM Dashboard, browser-based software that helps businesses enhance risk transparency and maximize risk-adjusted return across the enterprise through an integrated view of critical exposures and key risk indicators. The dashboard aggregates data from internal sources such as enterprise resource planning tools, customer relationship management applications and supply chain systems and integrates it with information from external real-time feeds. The product's risk communication and reporting capabilities offer decision-makers continuous risk monitoring as well as real-time alerts.
CXO Systems, 1601 Trapelo Road, Suite 249, Waltham, MA 02451. (781) 697-3100. www.cxosystems.com