Noteworthy
SAP, Microsoft To Release Joint Product
Microsoft Corp. and SAP AG -- the world's biggest independent software company and the world's largest provider of enterprise resource planning (ERP) systems, respectively -- announced that they will release a joint offering in the fourth quarter of 2005. The product, code named "Mendocino," will integrate Microsoft's popular Office suite with select data and functions within SAP's enterprise software. Users will be able to access corporate data via extended application menus and a "smart panel" within the Office work environment to perform tasks such as time management, budget monitoring, and T&E management.
Mark Smith, CEO and senior vice president of research with Ventana Research, says CFOs should note that the new product will offer only limited finance functionality. While the enhancements provided by Mendocino "can provide tighter integration of applications and technologies and easier access to information, they will not directly address financial processes for consolidation, budgeting and planning, reporting, compliance, and performance management," he reports.
More than 46,000 SAP installations worldwide run on Microsoft's Windows platform. While the two companies have a strategic relationship stretching back more than a decade, Mendocino will be their first jointly designed and developed application. Pricing for the new product had not been announced at press time.
Companies Turn Tight-Lipped on Earnings
Since The Coca-Cola Co. announced in December 2002 that it would no longer issue quarterly or annual earnings guidance, the roll call of companies that have done the same has grown substantially to include McDonald's, AT&T, Sun Microsystems, and Mattel. Though Coke made a one-time exception to its policy in September of last year, the trend away from offering earnings-per-share projections shows no signs of abating.
In the first quarter of this year, the National Investor Relations Institute (NIRI), a Vienna, Va.-based profession-al association of corporate officers and investor relations consultants, surveyed 527 of its corporate members to investigate their earnings guidance practices. Seventy-one percent of respondents said that their organization provides guidance, down from 77 percent in a comparable NIRI study in December 2003.
Among companies that do provide guidance, the study revealed a significant shift away from quarterly updates in favor of annual projections. The proportion of companies issuing only quarterly guidance fell from 53 percent in 2003 to 28 percent in this year's survey; the percentage of those providing only annual guidance rose to 28 percent from 16 percent in 2003. When asked if their company was considering discontinuing earnings guidance, 36 percent of respondents in 2005 answered yes, up from 19 percent in the earlier survey.
"In spite of a decline in the number of companies providing earnings guidance, a strong majority of companies still believe analysts and investors need some direction from the company to avoid increased stock price volatility," notes Louis M. Thompson, NIRI's president and CEO. "These results also say that a majority believe annualized guidance is increasingly important, whether or not they issue quarterly guidance."
Banks Moving to "Green" Lending
JPMorgan Chase & Co. announced in April that it has adopted a comprehensive environmental policy that includes the Equator Principles, an internationally recognized set of voluntary guidelines for financial institutions' project funding practices. The bank's private equity divisions will conduct an environmental review as part of their investment decision process for companies in environmentally sensitive industries. The move follows discussions with Rainforest Action Network and a group of JPMorgan shareholders that includes Christian Brothers Investment Services, Friends of the Earth and Trillium Asset Management.
Companies in a range of industries including mining, energy and forestry may find capital funding increasingly elusive in the next few years as more and more banks adopt "green" lending policies. Thirty banks worldwide have adopted the Equator Principles, including the Netherlands' ABN AMRO Bank N.V.; Britain's Barclays plc; and, in the United States, Citigroup and Bank of America. Toronto-based Scotiabank adopted the guidelines in January.
Software
Electronic Billing and Cash Flow Optimization
Under increasing pressure to do more with less, treasuries are turning to Internet tools to streamline processes and boost cash flow. Systems that offer electronic invoice presentment and payment (EIPP) functionality are a particularly hot sector of the treasury technology market right now; in a November 2004 Business Finance survey of finance and treasury professionals, 31 percent of respondents said that their organization currently uses an EIPP tool, and 28 percent reported that their company had plans to deploy such a system within the next 12 months. EIPP software can shave between five and 30 days off a company's order-to-cash cycle and cut the cost of processing payments by two-thirds, according to Michael Fossaceca, senior vice president, large corporate sales executive, with JPMorgan Chase Treasury Services.
Avolent Inc. has released version 6.0 of BizCast, its Web-based e-billing and cash flow optimization product. The update adds several new modules to BizCast's EIPP and dispute management functionality, including customer profiling analytics that enable users to review and compare customers' payment histories in order to understand, for example, how payment behavior changes due to seasonality or invoice amount. An accounts receivable dashboard provides an executive view of financial reports and cash flow in real time.
The new version also introduces a trade terms management module that enables users to centrally manage trade discounts and interest penalties. This component helps finance teams understand how customers are using trade terms. It enables users to fine-tune their collection policies and deploy discounts to achieve the optimum balance between margin and cash flow.
Avolent Inc., 444 De Haro Street, Suite 100, San Francisco, CA 94107-2347. (800) 553-5505. www.avolent.com [1]
Sarbanes-Oxley Compliance Assistance
Sales of Sarbanes-Oxley compliance assistance software were strong last year, and they look set to climb again in 2005. AMR Research predicts companies' total technology spending for Sarbanes-Oxley compliance will hit more than $1.7 billion this year.
"We will see an even stronger second wave of software adoption in 2005 by companies that elected to comply initially with in-house and auditor tools," predicts Paul Hamerman, vice president, enterprise applications, with Forrester Research Inc. in Cambridge, Mass. "Their objective in automating internal controls compliance will be to make the process repeatable and sustainable in future years. In addition, the more sophisticated solutions are designed to involve a wider variety of users beyond internal auditors, adding transparency and collaboration."
HandySoft Global Corp. is moving in that direction with its release of version 3.0 of SOXA Accelerator, its Web-based internal controls assessment tool. The new release offers an enhanced user interface and user assistance features aimed at eliminating the need for extensive training of the growing number of people who are becoming involved in corporate compliance efforts.
The product offers project and task management capabilities, including automatic routing of work to assigned individuals; tracking of key tasks; and alerts to ensure that assignments are completed in a timely fashion. Color-coded status bars help users monitor activities. SOXA Accelerator 3.0 provides Web-based electronic forms that users can complete online; managers can use these documents to enforce continuity in data gathering for financial functions, processes and risks. It also includes extensive document management capabilities and functionality for access authentication.
HandySoft, 1952 Gallows Road, Suite 200, Vienna, VA 22182. (800) 753-9343. www.handysoft.com
Due Diligence for Global Outsourcing Initiatives
Organizations that neglect to monitor the results of their globalization strategy on an ongoing basis run a high risk of failure. "Many offshore outsourcing programs fail to achieve expectations," notes neoIT CEO Atul Vashistha. He estimates that in 2005, as many as 40 percent of global sourcing projects will fail to achieve desired results.
"By establishing a framework for monitoring and evaluating offshore outsourcing engagements, companies can set realistic expectations and track performance over time," Vashistha points out. "Surprisingly, many companies fail to think through the ongoing due diligence required to keep outsourcing programs on track."
NeoIT offers Healthcheck, a service that helps organizations monitor their global outsourcing initiatives' performance, whether those projects involve a captive center, a third-party relationship or something in-between. The program helps companies understand the underlying issues that can prevent an outsourcing engagement from achieving its true potential. It can also help diagnose a troubled operation and return it to satisfactory performance.
Healthcheck analyzes an organization's ROI for its globalization strategy by measuring competitiveness (time to market), quality of human capital, product delivery improvements and technology efficiencies. Key activities include validating the choice of delivery model and assessing contract terms, evaluating workload distribution and workforce performance, reviewing process improvements, and evaluating disaster recovery and business continuity readiness.
neoIT, 2603 Camino Ramon, Suite 200, San Ramon, CA 94583. (925) 355-0557. www.neoIT.com