Post on 30-Jun-2020
Finance automation and recent trends in fixed assetsDecember 2018
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Panel Introduction
Anuj Mathur is a Director in the Financial Management Advisory practice, specializing in Finance Process Transformation, Strategy implementation and Finance Governance Technologies, Shared Services Implementations and Automation Transformation Strategies. Anuj has served global clients by designing and executing finance transformation strategies and leading process improvement initiatives. With deep finance and procurement functional expertise he has worked extensively across the P2P, O2C and R2R cycles across multiple ERP platforms.
James Murphy is a leader of the Financial Management (FM) Advisory practice in Silicon Valley specializing in digital finance transformation, cloud/SaaS business implications and finance business processes and delivery models. James has substantial experience leading and delivering solutions focused on finance business strategy and operational efficiency. His focus is on continually improving operations and execution on strategic delivery models in digital finance areas while providing for an exceptional internal and external customer experience.
Diana Jajeh is the VP of Business Transformation at Juul Labs. Prior to Juul, she was the Business Lead for Equinix Long-Term Fixed Assets Remediation Program. Diana was also the controller at e.l.f. Beauty, Inc. leading a private to public journey and spent over 18 years at Visa Inc. leading several global controllership initiatives including SEC reporting, Technical and Operating Policy group, Controllership Optimization, Global Accounting Process Enhancements and M&A accounting integrations.
Shannon Meiner is the Record to Report Global Process Owner covering the close process, general ledger, fixed assets, intercompany, project accounting, lease accounting and all general accounting matters. She has a team in San Diego supporting process design with the execution occurring at an in-house center of excellence located in Hyderabad, India that has been in operation for over two years. Shannon has been with Qualcomm for 21 years and over that time has held a multitude of roles, including leading the Finance and Accounting teams supporting SG&A functions and leading business unit finance teams supporting consumer product offerings.
James Murphy, KPMG
Anuj Mathur, KPMG
Diana Jajeh, Juul
Shannon Meiner, Qualcomm
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The CFO agenda for disruption
Leading finance organizations have developed an agenda to deal with disruption
Leading strategy and capital allocationIncreasing role in innovation
— Trends and economics behind disruption— Approaching disruption at the organizational level— Maintaining an innovation portfolio— Disciplined portfolio process and structure
Risk management: Response to disruption impacts how risks and controls are managed in an organization and the need to continuously evolve.
Extreme automationIntegrating new technologies: — Cloud ERPs— Robotics— Artificial intelligence— Blockchain— Mobile
Insights and analysisNew insights through:— Automated descriptive
and diagnostic analytics— New predictive and
prescriptive analytics— Integrated business
planning— Local decision
support
Organizational simplificationChanging work:— Fewer people— Less hierarchy— Fewer offshore locations
Skills and talentChanging requirements:— Both strategy and finance
skills— Process and control
leaders— Relationship and
collaboration
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Extreme automation
Digital analytics and deliveryFinance will be delivered real-time, custom insights via new mobile interfaces thereby driving accelerated decision making capabilities, allowing finance to positively influence business outcomes.
Machine learningAdaptive technologies will radically change the work that finance does through the use of smart algorithms that can be leveraged to accomplish activities and tasks.
Data managementData management will no longer be an aggregation of performance data; finance will lead data strategy utilizing new data sources (internal and external) to drive deeper prescriptive insights.
BlockchainBlockchain is expected to accelerate transaction recognition and provide enhanced security, lesser storage requirements, and shorter delivery cycle times; integration with cognitive technologies will result in extreme automation.
RoboticsRobotic Process Automation (RPA) will drive “extreme automation” within rules-based finance processes resulting in greater capacity for value-added activities.
Natural language processingNLP will provide finance with unconstrained, real-time information accessibility, beyond just the numbers.
Cloud ERP and EPMCloud technologies will give finance the ability to select best-in-class application solutions, real-time data accessibility, and business partnering capabilities.
CognitiveCognitive technologies will advance automation past execution, through the ability to reason and infer trends and patterns from both structured and unstructured data.
The finance technology ecosystem will continue to evolve and be integrated.
Blockchain and Fixed Assets: Introduction
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Introduction to Blockchain H
ow it
wor
ks
Blockchain enables trust between parties,
without the need for an intermediary/guarantor
Bob
Alice
Digital-Trust
Alice wants to send money to Bob
Bob receives hismoney from Alice
Transaction is represented online in
a block
Block added to chain as transparent and
irreversible record of transactions
The block is broadcast to every
party on the network
Those in the network approve
transaction as valid through consensus
A Blockchain is a permanent record of transactions in a network. The system is protected by using a reference to the previous block ("hash"), which is encrypted. Breaking into the system, would be so evident than any illegitimate changes to the system can be detected and cancelled.It’s like there’s a notary present at each transaction. This way, everyone has access to a shared single source of truth. This is why we can trust the Blockchain.
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Finance impacts: Acquire-to-retire
Turn legal obligations into automated processes. Expected to provide a greater degree of security, reduce reliance on trusted intermediaries, and lower transaction costs.
Process issues/pain points today— Single source of truth for asset records and information are difficult to
implement— The finance function has little visibility into asset transfers, sales,
impairments, and retirements— Transactions between legal entities can be difficult to track
Asset ManagementAsset Creation
AssetRecord
Creation
FixedAssets
Month End& Reporting
Capital Planning
ProjectWorkOrder
Mgmt. & CostAccumulation
FinanceConsolidation
ProcessControls
AssetDepreciation/Retirement/Impairment
Acquire-to-Retire: Process Decomposition
Impacted by Blockchain Non-Impacted Process
Summary impact of digital ledger technologies
High
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Blockchain as a fixed asset solution
Client ChallengesSolution potential benefits
— Demystify Blockchain technology for S2P and A2R finance processes — Expected to generate successful Blockchain opportunities across various clients
(e.g. Equinix)
Fixed asset + S2P: Pain pointsManual / Complex Asset Management: Existing systems and processes around Fixed Assets are labor intensive, with high propensity for errors due to lack of automation.Decentralized System of Record: Data is often not comprehensive and decentralized across an enterprise –inhibiting proactive and timely responses to potential issues. Limited Financial Visibility: The finance function has little visibility into asset transfers, sales, impairments, and retirements.High-Cost Solutions: Current Enterprise Asset Management solutions are costly for businesses to implement and maintain.
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The Blockchain stores and tracks multiple asset and transaction attribute types.
Origin
Requester
VendorDate of Purchase
Vendor
Depreciation Schedule
Location History
Maintenance History
Maintenance Schedule
Invoice and Payment History
Shipment Date
Approver
Category
Blockchain for physical asset transactions
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Blockchain for physical asset transactions
Smart contracts are stored on the blockchain as part of the distributed ledger. Changes to the ledger require approval by participants according to an agreed upon endorsement policy. This goal is achieved through consensus.Smart contracts not only define the rules and penalties around an agreement in the same way that a traditional contract does, but also automatically enforces those obligations.
Seller BuyerSmart Contract
If all conditions are true, the transaction is verified
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SettlementConditions metEvent triggersPre-defined contract
Smart contracts
The contract dictates movement based on
conditions met.
The smart contract triggers the pay-out
event upon consensus
By initiating a transaction the code will execute the step triggered by those
parameters
Computer code that automatically
executes all or parts of an agreement and
is stored on a blockchain-based
platform
Turn legal obligations into automated processes. Expected to provide a greater degree of security, reduce reliance on trusted intermediaries, and lower transaction costs.
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FA + S2P – Centralized ledger vs. Blockchain
Centralized data Distributed Blockchain ledger
Receipt
Single Point of Failure
A centralized database essentially has a single point of failure while a distributed ledger gives control of all its information and transactions to the users and promotes transparency.
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FA + S2P Key attribute – Shared information
Smart Contracts
Shared information is often not fully trusted. Each record is time-stamped and appended to the event before it creating a permanent, auditable and shared record of every associated transaction.
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Blockchain: Fixed asset + S2P lifecycle processes
ReceivePurchase Asset Shipped Installation
Create PO Link Asset Tag to OrderApprove PO EnhanceReceive / Install Maintain
Service APIs to upload P.O to Blockchain
Service APIs to update P.O status on Blockchain
Service APIs to update Asset Tag status on Blockchain
Service APIs to update Receipt / DPIS status on Blockchain
Service APIs to update Asset status on Blockchain
— Web page to upload P.O into Blockchain
— Dashboard that shows P.O
— Web page to update P.O Status on Blockchain
— Dashboard that shows P.O Status
— Web page to update Receipt / DPIS Status on Blockchain
— Update FA Register
— Web page to update Asset Status on Blockchain
— Dashboard that shows Asset Status— Web page to update Asset UL (if needed)
Accounting
Report / Analyse
Update FA Management Module
— Real time view of Fixed Asset across lifecycle
— Web page to update P.O Status / Asset Tag Link data on Blockchain
— Dashboard that shows P.O Status
Proc
ess
Even
tsB
lock
chai
n In
terf
aces
Blo
ckch
ain
Flow
VendorMSFT
(Proc-Ops)
Enhancing the business process on the Blockchain
Reporting / Analytics
Approver Ops
Retire
Disposal / Replacement
Service APIs to publish Asset Disposal Date & DPIS for replacement asset
— Web page displays Asset Disposal Date & DPIS for replacement asset
P.O P.O
P.O + App
P.O
P.O + App +AT
P.O
P.O + App +AT
P.O + App +AT + Receive + DPIS
P.O
P.O + App +AT
P.O + App +AT + Receive + DPIS
P.O + App +AT + Receive + DPIS + Asset Update
P.O + App P.O + App P.O + App
Legend
Service Integration Points
< ReST API >
Web Capabilities
BlocksP.O
P.O + App +AT
P.O + App +AT + Receive + DPIS
P.O + App +AT + Receive + DPIS + Asset Update
P.O + App
P.O + App +AT + Receive + DPIS + Asset Update +
Disposal
OpsBuyer Ops FA
Blockchain: Finance Process deep-dive
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Fixed asset E2E lifecycle
Requisitioninitiation
PO creation and approval
Goodsreceived
System updates and G/L posting
Asset status change
Assetretirement
= S2P Processes= Fixed Asset Processes
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Initiate requisition
Validate PO withPO category
Purchase ordercreated
Goods received
Purchase Order details stored: Amount, Product details, Date, etc. Vendor details stored: Name, Address, Contact Information, etc. Order details stored: Shipping, Tracking, Goods receipt date, Invoice information, etc.
Approval process
Update AP module
S2P processes
PO Approval details stored: Approval and workflow/audit requirements for purchasing policyPayment details stored: Payment amount, Payment date, Check Number, etc.
Requisition details stored: Asset Number, Asset Specifications, PO Category, etc.PO validation details stored: Updated PO Category, if needed
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Fixed asset processes
Asset procurement
Asset enhancements /repairs
Asset creation inFA module
Asset write-off
Enhancement details stored: Useful life adjustment, etc. New asset details stored: Asset description, Location, DPIS, FA Category, Cost Center, Cost, Depreciation schedule, etc. Write off details stored: Write-off date, amount, etc.
Maintenance and repairs
G / L posting
Maintenance details stored: Date of repair, Part replaced / repaired, etc.G/L Account details stored: G/L Account number, respective FA category, etc.
Asset details stored: Asset description, Location, DPIS, FA Category, Cost Center, Cost, Depreciation schedule, etc. CIP details stored: CIP account information, Asset completion percentage,
156K+Transactions &
$1.3B Spend
Description,Location,DPIS, etc.
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