What is the real value of innovative, disruptive technology like HANA? I believe that more than anything, this technology is valuable because it is an enabler, and more specifically, a tool for helping people do their jobs much better than they were able to before.
My favourite quote to back this up is from the CFO of eBay (click on the image, video is only 2 minutes long…)
In case you can’t connect, here’s a quick version, mostly told by the CFO:
“Ebay is a place that brings buyers and sellers together… Every 6 seconds, a pair of shoes is sold. We are working with a massive dataset; it’s more than 50 petabytes. Finding a signal in that massive amount of data is hard… separating the signal from the noise… is very hard to do across hundreds or thousands of variables. Finding that signal after a month, not so useful. Finding that signal so that we can do something with that signal, act on that signal, a day, now that becomes very interesting… That is the value of speed. In the North American organisation, we have more than 300 analysts studying the data, day in, day out. What’s exciting to me about the speed of HANA – it’s that great people become exceptional at what they do…“
Speed is great, but only when it delivers real value…
Let’s look at Financial Fast Close for example. Let’s start with a quick description of what Financial Close means, and then take a look at different ways that speeding up the Financial Close process adds value to different organisations.
Accounting and Financial Close delivers the financial results of a group required for the presentation to external and internal stakeholders. Main steps are the valuation of business activities from an accounting perspective, closing the books for all individual reporting entities, corporate close for the group and its sub-groups, and then for external reporting combining quantitative data with comprehensive qualitative information for financial disclosure. Important characteristics of the financial close are the high number of involved systems and people requiring many handovers and reconciliations, today. The markets see a fast, high-quality financial close as a sign of financial excellence and often reward this with a lower cost of capital (ie. cheaper borrowing).
In a large telco we worked with last year, there were 50 people involved in this process. They will typically spend 5 days a month, and then an additional 10 days at year-end on these activities. So, all in all, (50 people*5 days/month*12 months) + (50 people *10 additional days for end of year) = 3,500 days a year on Financial Close. With Suite on HANA, we can usually reduce this by 40%, which means that we could effectively free up 1400 man-days a year (or the equivalent of approximately 6 FTEs) for other tasks… For some customers that will mean reducing the number of people, but for most it will mean that they are freed up to do higher value-add work, including running different scenarios.
We did some work at another client, a large manufacturer of complex machinery, who run their business as a collection of projects. This company closed their books for each project every month, involving over 2,000 financial controllers. Cutting 40% out of their workload is a significant amount of money, so using the same numbers as above (2,000 * 5 *12) + (2,000 * 10) = 140,000 man-days a year, or the equivalent of about 60 FTEs.
But what is really interesting is what happens when you move from monthly to weekly close, or even start approximating continuous close. You shift the value of the financial close process from being a restrospective monthly reporting activity to becoming an operational tool, run every week or even multiple times a week in order to keep projects on budget.
Speed isn’t everything either. More and more, users are prioritising intuitive and ease-of-use of user interface over performance. Bringing both of these together is a killer combination. The ability to pull together all of the information needed for a role into a single cockpit, with both a holistic overview such as the one below covering all major aspects of project management including timing, finance, scheduling etc. and the ability to drill down into the transactional level of detail to understand the root causes of problems, the downstream implications of different solution, makes the project manager much more effective, encouraging them to use their experience to make judgement decisions, based on solid facts and a 360 degree view of the situation.
This technology has the potential to generate huge gains in the productivity of the people that we hire, train and rely on to help us be competitive. One way that we can increase their productivity is obviously through training, and we need to continue to invest in people development. I came across this tweet recently, which I love:
CFO: What if we invest in our people, and they leave?
CEO: What if we don’t, and they stay?
With technology enablers like HANA, you are investing in a way that will enhance your employees’ productivity, but in a way that differentiates you from your competitors for their talent, and creates a barrier to exit. Who wants to go back to doing things the old way, with lots of manual tasks, once they are used to high productivity worktools? This innovation platform also allows you to attract key talent – in-memory, BigData, new visualisation tools – everyone wants these skillsets and experience.
Investing in an in-memory platform certainly delivers speed. What differentiates companies that only get the speed improvements to those who translate these speed improvements into tangible value that deliver competitive advantage will eventually separate the leaders from the rest of the pack.