Overview
While businesses continue to try to adjust to changing economic and market conditions, interviews conducted by Upside Research with leading global 2000 executives continue to highlight the role that process-oriented and rule-driven IT solutions can play in both increasing business opportunities and reducing business costs. In fact, Upside Research has seen several new products in the past few months that reiterate our prediction that one of the top trends of 2006 will be the impact that business process management and related technologies (including business activity monitoring and business performance management) have on an organization’s ability to proactively address IT and business concerns. As organizations implement successful process-oriented IT or business solutions, they begin to realize the benefits that effective process automation and management can bring to any area of the organization.
For example, one area that stands to benefit significantly from process automation and management is corporate finance. How well an organization manages its finances can ultimately determine success or failure of the company. Areas like accounts receivable and cash flow may not garner as much attention as sales and R&D, but they can be critically important to the success of the company. In a time when business leaders are looking for every way possible to cut costs and improve effectiveness, shining the spotlight on corporate finance is one of the best places to achieve real, noticeable results quickly. Consider the fact that reducing the days it takes for its customers to pay their bills by just 10 days can free up millions of dollars annually for an organization. The return on investment for a solution that can help optimize the business processes surrounding accounts receivables is measurable and can be significant.
While many large organizations rely on their ERP applications to manage financial components of the business, many of these ERP solutions fail to provide enough specific tools geared toward cash flow management. Understanding this situation, and the fact that corporate finance managers are being tasked with finding ways to tighten payment cycles and maximize positive cash flow, one vendor is offering a solution that speaks to the business need for financial performance management. Emagia, an eight-year veteran of financial management applications, announced in January 2006 a specialized process- and business rules-driven solution for helping corporate finance managers make the most out of their working capital.
Putting Working Capital to Work
Emagia’s Cash Flow Performance Management Suite is designed to help organizations optimize their cash flow-related processes and manage their working capital performance. The solution builds on the expertise Emagia has developed in its existing product suite, including Cash Outflow Manager and Cash Inflow Manager that are designed to provide intelligent automation and collaboration for accounts receivable and accounts payable processes. The suite can gather financial data from multiple systems throughout the enterprise, and consolidate the views of the performance of various financial applications into a cash flow forecasting tool and management dashboard that highlights performance and enables simulation, forecasting, and close monitoring of working capital performance.
While most of Emagia’s existing customers have been using its solutions that focus on process automation and optimization, the new Cash Flow Performance Management Suite offers the next step toward cash flow optimization. Adding a management dashboard and tools for forecasts and simulation, Emagia is targeting corporate finance directors that are eager to find ways to maximize working capital. According to Emagia, most customers can be operational in twelve weeks using Emagia professional services, and the solution is geared to be hands-off for IT, enabling business managers to modify goals, and conduct simulation and forecasting exercises independently.
Upside Uptake
Throughout the next few years, Upside Research believes that we’ll see an increasing number of specialized enterprise solutions (such as Emagia’s Cash Flow Performance Management Suite) taking advantage of new process- and business rules-oriented technologies.
Using Emagia, corporate finance managers can more easily view consolidated data about cash flow performance and make more accurate forecasts and predictions. This is critical information that can make a significant difference in the day-to-day operations of a global enterprise. Emagia’s solution replaces Excel spreadsheets held by various departments and locations that are often inconsistent and error-prone. Several of Emagia’s customers have seen impressive results from using the company’s cash flow management tools. For example, a large enterprise reduced its Days Sales Outstanding by 15 days using Emagia, saving roughly $14 million annually. Another company used the solution to consolidate all of its accounts receivables into one system, automating country-specific accounts payable processes and enabling cash flow forecasting and decision support that was previously impossible with the old systems.
Upside Research believes that solutions such as Emagia highlight one of the next chapters in business process management and process-oriented applications. As BPM vendors still work diligently to claim real estate in enterprises with a broad solution that can solve many process-related issues across departments, we believe there will continue to be a growth of specialized software vendors that focus on specific vertical markets or vertical areas within the enterprise. Emagia has demonstrated its singular focus and expertise in the finance area of the enterprise. The resulting solution is intended for IT to install it once and then let it run relatively hands-free.
As a result, the buyers of this type of solution are predominantly finance managers, credit and collections executives, CFO’s, controllers and VPs of Finance. IT’s minimal involvement make it an easier sale directly to the business side of the organization, whereas traditional BPM platforms must successfully marry business and IT participation. Upside Research believes this may be a way for specific point applications to be more quickly adopted into the enterprise, and it makes sense from a sales strategy perspective for vendors such as Emagia. Look for other similar specialized applications to expand the edges of BPM and BAM technologies as organizations continue to look for ways to quickly and cost-effectively streamline manual processes and achieve business optimization.
