Upgrading Corporate Performance Management – Best Practices From Our OneStream Practice – Transcript

Sahil Patel:
Try not to lift and shift your existing process. Getting into a new CPM solution, it’s the opportunity to drive efficiency, bring costs down and bring timelines down. And ultimately, if you just rebuild what you have, you’re sacrificing a lot of that.

Announcer:
Welcome to The Hackett Group’s “Business Excelleration^™ Podcast.” Week after week, you’ll hear from top experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to Digital World Class^® performance.

Stephen Ferguson:
Hello everybody and welcome to today’s episode of The Hackett Group’s “Business Excelleration^™ Podcast.” Today we talk with Sahil Patel, a director at the OneStream practice. I’m Stephen Ferguson. I’m a director in our Advisory practice over here in Europe. So thanks for joining us today. Sahil, welcome. Good to speak to you today. Why don’t you introduce yourself and then we can begin?

Sahil Patel:
Yeah, thanks for having me, Stephen. So I’m a director within the OneStream practice, as you said, and that typically involves working with clients to improve back-office, finance and accounting processes that can involve anything from closing consolidation or any adjacent activities to FP&A and the big wide world of FP&A that that involves.

Typically, I work with enterprises ranging from the hundreds of millions of dollars to billions of dollars in revenue. We help companies modernize their business processes – whether it be taking them off disparate Excel systems from around the world or antiquated on-premise systems that were installed when computer screens were still black and green. Our goal is to introduce automation, security, integrity into the finance and accounting functions within any enterprise. And what we do, as the name implies, we work with OneStream as our tool of choice.

Stephen Ferguson:
Great. Great, Sahil, and I’m old enough to remember the black and green screens. I’m sure some of the audience are as well. So today we’d like to really get into the concept of re-platforming touch-on consolidation for instance. So I suppose one of the areas that I’d like to touch on first is when you’re re-platforming the corporate performance management or the enterprise performance management layer, how important is the ERP situation? So some companies may be in a situation where they’ve got a single instance of SAP – the fortunate ones. Some may have many boxes – many SAPs or many Oracle or other applications in play – and some might be on the project to upgrades, and they’re in the middle of that. So I guess first question to you, Sahil, is how does that impact on a project to re-platform the CPM layer?

Sahil Patel:
You have hit the nail on the head with that first question. Honestly, we get this almost every single day. It’s very common as all these enterprises are shifting right onto in your example SAP and making the shift onto S/4. The answer is not black and white. It’s a little bit more nuanced than just do one and then the other, which is kind of the old school or let’s say the traditional approach to systems implementation.

What it comes down to is time-to-value. So lots of clients that we speak to up and down the food chain are considering or are in the middle of transitioning to let’s say S/4HANA. It’s a huge effort, typically takes multiple years, multiple work streams, and you have lots and lots of people evolve from across the business. And there’s a big timeline before you’re going to really start to realize any value out of that effort.

CPM, as OneStream calls it, which traditionally has been known as EPM, it’s a bit more targeted, right? And you can deploy tactical solutions, which will be live years before your S/4HANA or your overall ERP implementation.

I recently read a study that says OneStream customers on average will see value out of their investment in OneStream a full two years before any value can be generated out of their S/4 upgrade. Now, that’s not what you would expect at first thought, right? It kind of goes against the traditional approach to CPM, but it goes to show the value of the OneStream platform and making investments in performance management early on, even whilst you may have ERP work ongoing, right, because you’re going to have that legacy system in place. That’s not going to go away until all of the bolts have been tightened and all of the screws are in place on that new system.

And what this doesn’t even begin to consider really is all of the different parallel processes that can be enabled with a tool like OneStream. OneStream likes to brand itself, and it truly is a platform more than it is a single application solution. It gives you the capability to do things like strategic, long-range planning, profitability and cost management, even simple things like account reconciliation where we see lots and lots of clients around the world who use BlackLine, in addition to whatever they’re using for their existing close of consolidation.

So getting a head start on your corporate performance management solution, OneStream gives you a head start on all these other parallel processes, and the ERP can follow that down the line. Now, there is a reality here, right? Once that bright and shiny new ERP is in place, there is going to be some rework to repoint your integrations and make updates to things like the chart of accounts certainly. You have a newer ERP and hopefully you have a modern chart of accounts, and there’s going to be some integration work that is going to come out on the back of that. That is the reality.

But the lift and the amount of work is much more digestible at that point versus starting from scratch. And what you’re not doing is precluding yourself from all the benefits of having a modern CPM system whilst you just wait around or I shouldn’t say wait around, but while you go through the effort of implementing that new ERP.

Stephen Ferguson:
That operational context is the reality for most companies. And if you wait for everything to be perfect at the ERP level, you’ll never do anything, right? So it sounds like that’s all very much baked into a project like this. You have to face that reality and therefore we shouldn’t be scared off by it. It’s good to hear.

I think one thing you mentioned there as well, the additional functionality that you don’t often get at the corporate performance management level. You mentioned things like account reconciliations and maybe workflow. That’s actually quite an unusual offering. Would you mind commenting a little bit on that and why OneStream is a bit different there?

Sahil Patel:
Yeah. So as I mentioned earlier, OneStream is a platform solution. It’s not a one-show pony. It really gives you the flexibility and the capability to put lots and lots of solutions onto a single platform. And there’s natural benefits you get from doing something like that. I mean there’s the one-stop shop for security, data integrity, all of your integrations – all of your data is flowing through one place, and it really enables that whole concept of one source of truth for your financial data.

Taking that example of account reconciliations, right, it’s typically you have one system – whether that be Excel or an old HFM system or even enterprise. And then you have another system that handles the account reconciliations down to the subledgers, and you have to work to integrate those two things. OneStream affords you the capability to bring that all onto a single platform with one set of licenses. Your users are all working in one system. There’s inherent benefits to that.

Everyone is reading from the same book, and you’re not having to log in and out of different applications, but all of your work is there. It’s presented ready for you, and it allows you to establish these natural workflows that we find end users all across the world get a lot of value out of because they’re not having three different applications – four different applications – open on separate screens, but it’s all just contained in this kind of one neatly packaged solution.

Stephen Ferguson:
That is attractive to have that as you say, the single source of truth in one layer. But I do wonder if organizations are ready for that. So when I speak to companies about the close and consolidation process, that’s a different group of people than the people that are looking at planning and forecasting. So I just wonder if the silo thinking can perhaps create a missed opportunity. So when we’re replacing technology at that layer – at that layer is there a danger of not simultaneously thinking about consolidation and account reconciliations and planning forecasting? And we have this new kid in the block – ESG reporting – is there a danger there that you miss a trick by not bringing all the parties together when you’re implementing something at OneStream?

Sahil Patel:
I think the answer is a bit of yes and no. There is kind of an inherent synergy in aligning actuals from the consolidation function to the forecast and budget data from the FP&A function.

The first thing to consider is the levels that your FP&A data will sit on top of your actuals data. What I mean by that is all too often we find clients who get lost in the sauce with planning. They get so granular that they’re almost trying to plan either at their natural account level or just one step up, and their end users are to some degree burdened with the amount of work that they have to do to provide that level of detail.

For something even like a strategic plan where you’re looking five years out into the future, it just doesn’t make sense. Or we can see lots of disparity in planning detail across an organization where you have different business units that for one reason or another are planning different parts of their income statement at different levels, and it’s really hard to do like-for-like analysis or have consistent variance analysis across your organization.

Now the reason for that – that can come from a number of things – your organization grew very quickly and maybe you had lots of acquisitions that were not obviously on a standardized process. And now as that organization starts to mature, that need starts to come to light because you realize, whoa, your finance spend per FTE is starting to balloon 10%, 20% year-over-year and your man-hours every quarter to close the books or every period are starting to get longer and longer, but you don’t realize why. Well, it’s because there is a lack of standardization.

This comes down to having a good IT financial strategy and combining those two things. And that’s where OneStream has made its mark as a key market differentiator. It’s introduced this concept of extensibility. And not to get too far into the weeds, but at a very high-level extensibility, let’s say, it allows organizations to create different data input layers up and down the chart of accounts.

So take that bright and shining new ERP that you spend five years building out and is going to be the future of the business for the foreseeable future. Well, you’re not going to want to plan or forecast your entire business down at that natural account level as prescribed in your ERP. And if you take a step back in time to the time of HFM or enterprise, there were lots of tricks that we use to enable that, right? You’d create things like dummy accounts or input entities – adjustment accounts that worked around the limitations of those technologies to allow you to plan or forecast at a higher level than your actuals.

OneStream solved that problem with extensibility. I could go on here for a long time, but this story has been told, right? And this has been OneStream’s selling point since the day it was really sent to the market. But not taking advantage of that extensibility, which you’d be surprised how often we still see even solutions that are created on the OneStream platform today, really don’t make use of that core functionality of extensibility.

And the thing is if you don’t set that foundation up, it really makes the implementations and solutions that get enabled down the line much more challenging because you have to get back and re-engineer.

You touched on ESG, and I do want to address that because the interesting thing about ESG data is that it’s its own world. It’s not financial data. It is its own world of environmental, social and governance data. And it has through the ways of the world has fallen into the finance function to make sure it’s auditable, traceable and really give the public and government agencies comfort that this data these organizations are going to be producing is valid.

And what we see is for organizations to get the most value out of their ESG implementations is when they can tie those two worlds together, which is that, then that’s the key part that OneStream has invested in and really built out a fantastic solution for is bringing that ESG data together with their actuals so they can evaluate how the investments in those three pillars – environmental, social, and governments – actually impact their bottom line. And it allows them to plan against that because they can say, “Hey, I invested X million dollars in this plant to decarbonize it or to reduce my carbon footprint or to increase my diversity levels on the factory floor.” And you can actually tie those investments back to the impact that they’re having on your revenue. And that’s ultimately what the goal is I think with ESG data, is to really draw that picture and make those connections and that’s how you’re going to make it valuable.

So that’s kind of the key thing that we encourage clients and what we see clients really getting value out of, is generating and reporting that ESG data and then actually tying it back to their actual financial data. And that’s challenging to say the least, because in and of itself, ESG data, it needs to be generated. I mean that’s a big endeavor. But then actually taking that, strategizing against it and then using technology to bring those two sides of it together, it’s not the easiest thing in the world. I mean far from it.

So it starts with developing a process and creating that integrity around the ESG data, and that’s where OneStream has kind of presented their solution to the market and we’re starting to see a lot of success with it. It answers both of those questions on a single platform. How do I handle my ESG data? How do I handle my financial data? And how do I bring those two things together?

So to answer your question in a bit of a roundabout way, there is opportunity for missed opportunity, but the way to answer that is get out ahead of it … get out of ahead of it. I speak a little bit biased from the OneStream standpoint, but it’s with any EPM or CPM tool.

Stephen Ferguson:
Yeah, no, thanks. Now this is helpful, and you’ve given me a new word for my lexicon – extensibility. I need to start using that term more and more.

Thanks for raising the point in ESG that it’s not just about the actuals and reporting what’s actually happened. By its very nature, ESG is about keeping your promises and therefore you have to be planning and influencing your investments by considering ESG criteria. So it’s quite interesting and an area that you feel OneStream has got particular capability to support that because I think that’s a really important dynamic.

So just moving on a little bit, thinking about a project, can you bring to life a little bit what kind of preparation is necessary on the client side before a project, and how a project typically plays out from your experience?

Sahil Patel:
You’ve hit the two questions we get the most – one and two. So I’ve thought about this quite a lot because it comes up in the lead up to any project – how can we hit the ground running? The reality is that every organization is going to have distinct challenges. There are general principles, but it’s going to take some introspection and some investigation into your own organization where the responsibilities lay, where the challenges lay and getting out ahead of them to address them once you start that implementation.

A couple things, I think, let’s say four or five things that we see pop up pretty often or pretty much all the time. Extraction of data is huge. So depending on the organization, the actual ownership, the stewardship of the financial data can vary, right? Sometimes it’s owned by IT but managed by finance or managed by IT but owned by finance. It varies, and it varies more often than you would think.

So starting those conversations early on – who owns this data, how can I get a sample of it, and how can I start to have the conversation of I need this data … I need my trial balances for these 50 entities generated monthly in this format? Getting those conversations going and starting to actually get into the detail of that early on, and as someone who’s working with this technology day in and day out, I find that the clients who get out ahead of that conversation are ultimately the ones who have some of the smoother projects.

Because the thing with the extraction of that data is you often have to involve so many different teams. You have to go back to the sources of that data, which can be business units halfway across the world. So to make sure that you’re getting it – getting it in a consistent manner – that’s a really surprisingly difficult thing to do and to do quickly, especially if you haven’t done the legwork to get to that point. Getting samples of those files, so having a folder with your 10, 20, 30 CSV files or whatever it is that you’re going to load into OneStream that’s going to go a long way to getting you ahead of the conversation.

Stephen Ferguson:
Yeah. I’m really glad you’ve given that insight, Sahil. It’s almost like there’s a project before the project, and the better prepared you are, the easier the project will be to deliver. Because once the project starts, you’re on the clock to a certain extent, and you don’t want to be scrabbling around for things that are important. So if you’ve got clarity on the client side before you start, it’s going to make the project a much better chance of success.

So just talking a little bit more on that, what are the typical pitfalls that you see clients run into when you’re working with them? Any words of advice around that?

Sahil Patel:
One thing I like to advise clients of early and often, reporting drives the requirements. So we can build out the best system in the world, but if it doesn’t actually hold, calculate, consolidate, and report the data that needs to go on those PDFs at the end of every month or at the end of every quarter, then there’s a gap full stop.

So keep your reporting in mind always, because if there’s a number on that page, there’s going to have to be a corresponding process in the system to get that number calculated and printed.

Other than that, I think pitfalls tend to come kind of in two flavors. You have people and process. So on the first point I would say don’t underestimate the number of voices that need to be in the room. Schedule a cadence with your stakeholders across the organization. Make sure that people are … make sure their voices are heard because all too often we find that the corporate organization does all the legwork, puts in tons and tons of man-hours, and then four to six months down the line – when the end users actually get their eyeballs on it – the first thing they ask is, “But what about this process that I do every month, or what about this report I need to generate?” And everyone just looks at each other because it’s, “Oh, we weren’t aware,” or, “oh, we didn’t account for that.”

So users will ultimately own the data that’s coming out of that tool. So they should have a say in requirements and certainly design, because I think you’ll find yourself in a very awkward position. It’s the easiest way to say it because you’re going to have people who are disgruntled and they say, “Well, now I still have to maintain this parallel process in Excel because the tool you’ve built doesn’t answer all of my questions.”

On the process side, which I’m going to expand to include technology as well, I think there’s a few things. Extensibility – that classic buzzword that OneStream has created – challenge the design and the architecture of the application. A good design and a good use of extensibility is going to be the foundation for scaling on the OneStream platform. All these different parallel solutions you can come up with – strategic planning, profitability, ESG – all of that will be benefited by having a well-established foundation and that foundation comes out of the proper use of extensibility.

Another thing would be try not to lift and shift your existing process. So if your yearly budget is done by a bunch of people filling out Excel forms, can OneStream recreate that using forms on the platform? Sure. But take a breath and ask, maybe I can create some trend calculations or some drivers that will not only improve the timeline, but it’ll also take a lot of burden off of my end users because this batch of accounts doesn’t actually impact more than 2% of my overall numbers. So why am I asking my end users to go and sit and think about how much they’re going to spend every month?

But the point is getting into a new CPM solution, it’s the opportunity to drive efficiency, bring costs down and bring timelines down. And ultimately, if you just rebuild what you have, you’re kind of sacrificing a lot of that.

Don’t underestimate the effort it takes, and maybe this is a bit of self-preservation here because I face this so much, but don’t underestimate the effort it takes to build out a pretty solution. So if aesthetics are important to your organization and it’s a completely valid request, get out ahead of that. The demos that we all see, they don’t become a reality overnight. And making sure that if that’s valuable and if that’s important to your organization, then voice that because it’s going to be something you have to consider pretty early on to make sure you have the time to actually build it out.

And that kind of goes hand-in-hand with articulating your vision of the solution. It doesn’t help to get all the functionality right if the solution doesn’t work the way you want it to. Maybe it does the calculations, but you can’t report on them in the way that your users are expecting or that they’re comfortable with. And at the end of the day, that’s what you really need to get right. Even if the correct numbers in the system are somewhere buried in the dimensionality or the cube but you can’t report on it in the way that your users are able to really digest it and actually analyze those numbers, then what’s it for?

And I personally think Excel mockups or building out a POC during the design phase, that goes a really long way in driving adoption. Managing expectations and bringing the overall risk profile down, that’s huge because like I just mentioned earlier, you don’t want to get up to the UAT phase and find yourself with a bunch of unhappy users and no budget and no time to make changes.

I’m sure there’s more, but I think those are the ones that come up top of mind.

Stephen Ferguson:
No, this is great. I’m really, really enjoying your insights here, Sahil. And maybe ask one final question of you if that’s OK, but really grateful for your time today. Given all we’ve talked about, what would your final piece of advice be to companies that are weighing up selecting a new solution at the corporate performance management level, and what would your final piece of advice to them if they’re not at the stage where they’ve chosen the technology and they’re thinking about the best way to go about it?

Sahil Patel:
I’ll give you two answers. The first one – don’t wait. Going back to that study I referenced earlier, our clients realize value in their OneStream investment, on average, of course, on average, a full two years before they see value in their ERP investments. That is time that could have been spent making your business more efficient, building a happier user base and building a foundation for a modern CPM solution.

As far as projects themselves go, I think the best advice I would give is get involved. Don’t let it be a black box. Don’t let your consultants or your implementation partner just run wild and then they just show you the output. But ask them what they’re doing and ask them how they’re enabling and have knowledge transfer sessions and just be involved throughout the build process because ultimately clients are going to have to own these solutions in the long run, right?

I mean there’s always going to be consultants who are there to come and help out, but you don’t want to have to go knocking up someone else’s door every other week because you have a question on how process A or process B is functioning. You’re going to … or you being the client … you’re ultimately going to take ownership of this – not only the solution and the data, but the end-to-end process. And that transition is always easier if you know what’s under the hood before you’re asked to turn the keys in the ignition.

Stephen Ferguson:
OK. Well, listen Sahil, thank you – thanks for taking the time to talk with us today. We really enjoyed the conversation. Just to the listeners, if you’re interested in learning more about our OneStream practice, you can visit the OneStream partner page on our website. And thank you all for joining us today, and I wish you a nice rest of your day.

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