GRC

BPO’s: Why You Should Partner with Apparancy, Powered by Corefino

The business of business process outsourcing continues to evolve, presenting new challenges, but also new opportunities. Companies have long been comfortable with the concept of outsourcing certain back office functions like payroll. Outsourcing providers can handle the ever-changing tax and regulatory requirements faster, less expensively and more reliably than their clients can internally.  Today more and more business processes are impacted by a combination of new regulatory, legal and even internal board-driven compliance requirements.  This new dynamic, the potential for automation and the increased use of cloud technologies and software as a service (SaaS) options that allow processes to be managed and delivered from virtually anywhere in the world, create a perfect storm to make the outsourcing of back office processes very compelling.

As a business process outsource (BPO) service provider you face some of the same challenges that drove your clients to you. How do you master the art and science of providing compliant-ready solutions, leverage leading edge technologies to create new opportunities and scale your business? The answer might be more “apparent” than you think. There’s a new kid on the block named Apparancy that can help. But that new kid is no rookie because Apparancy is powered by Corefino, a cloud pioneer with a ten-year history of defining and refining business process excellence in meeting financial compliance.

Who are Apparancy and Corefino?

Apparancy and Corefino are sister companies. Corefino is the big sister, founded in 2004 by Karen Watts, who is herself a former Chief Financial Officer (CFO). Five years later Corefino officially launched the “Future of 21st Century AccountingTM,” a three part solution for the strategy-minded CFO. At the time I called it a “triple play;” Corefino called it people, place and platform:

  • People: Corefino is a BPO, completely taking over all routine accounting functions of a company, eliminating the need for an in-house accounting staff and freeing up the CFO to focus on revenue and profit strategies.
  • Place: This is the cloud part. Operating as a value added reseller (VAR) of software as a service (SaaS) accounting solutions, Corefino established strategic partnerships with enterprise application solution providers such as Coda, Intacct, Intuit, NetSuite and SAP for accounting applications, ADP for payroll, Xactly for incentive compensation and Adaptive Planning for financial planning and budgeting.
  • Platform: A framework of best practices and workflows, introducing yet another “triple” play, trademarking its Triple-C PlatformTM to connect, correct, and comply. “Connect” refers to 24 x 7 connectivity to financial data and processes. More than 500 best practices for accounting business processes, including workflows and quality assurance checks assure “correct” and auditable financials that “comply” with requirements such as GAAP, Sarbanes Oxley, and IFRS.

While I found the price and value offered remarkable at the time, and Corefino did attract some early strategic thinking pioneers, it proved to be a bit ahead of its time. In 2009 most CFO’s were simply not ready to trust their financials to the cloud, and perhaps not even willing to let go of the day-to-day control of accounting, even if it meant less headaches and lower cost. So while Corefino still retains and supports those early adopters, it didn’t grow very aggressively. That gave founder and CEO Karen Watts the opportunity to rethink the concept to extend it beyond the CFO. She took the best part of business process management, workflow, cloud and compliancy, added social and mobile components, and built new repeatable purpose-built business processes into a compliance-centric, audit-worthy framework. And Apparancy was born.

There are lots of tools on the market to build workflows. This isn’t one of them. It is actually much, much more. It started with those 500+ best practices and went beyond financial requirements to address compliance needs of new and additional stakeholders, combining technology with rich content in the form of intellectual property: best practices.

The result: a purpose-built, compliance-centric workflow solution for transparent business management. But while Corefino remains in the service business, offering a turn-key CFO-centric solution, Apparancy is all about platform and content for a purpose-built solution. But it doesn’t deliver the people performing the service. It leaves that enormous opportunity to its BPO service partners. That’s just one of the reasons BPOs that provide back office services might want to strongly consider partnering with Apparancy. Are you a BPO service provider looking to expand your business? Or make it more efficient and productive? If so, read on to discover why a partnership with Apparancy could very well be a win-win.

Expertise: Compliance-Centric Best Practices

While you (the BPO) are an expert in your business, Apparancy is expert in applying technology to compliance-centric processes. Born out of the need for financial compliance and strong enough to satisfy the toughest critics (the CFOs), Corefino’s offering was built on the foundation of over 500 best practices. While the initial value proposition of Corefino was to free up the CFO from day-to-day operations in order to add more strategic value, its early customers also reported 30-50% cost savings. This speaks volumes in terms of Corefino’s expertise and the effectiveness and efficiencies of operation.

 

While the initial value proposition of Corefino was to free up the CFO from day-to-day operations in order to add more strategic value, its early customers also reported 30-50% cost savings. This speaks volumes in terms of Corefino’s (hence Apparancy’s) expertise and the effectiveness and efficiencies of operation.

 

Not only has Apparancy inherited these processes, along with the business process expertise, it has expanded beyond the needs of the CFO and has also added a strong technology platform to deliver these processes. Apparancy has the advantage of being both new and cutting edge, yet has the maturity of ten years in business at the same time. It adds a new approach and new ideas, on top of solid experience and a strong track record of delivery.

Scale Your Business: Work Smarter, Not Harder

If you are a BPO, you are essentially running a service-based business. Unlike a manufacturer or a software vendor that can design and develop a product once and put it on the shelf to deliver, you constantly design processes and execute them.  While you might not be billing by the hour, you still don’t have the natural scale of a product-based business.

Reusable, Repeatable Processes

As in any service-based business, the key to profitability is efficiency and productivity. The key to efficiency and productivity is making the process reusable and repeatable. While each of your customers might be unique, most portions of their processes are not. If you can deliver a custom-configured process without having to design it from scratch, you save time and money. If you base that common process on industry best practices you not only stand to improve it, but also you start producing your own revenue faster. And that revenue is “sticky.”

Apparancy delivers a framework and best practices designed for specific processes and even for specific industries. Think of the platform delivered as the technology and the best practices as “content” for the tool. “Content” is king. While there are plenty of tools on the market, adding intellectual property (IP) to build in best practice process models, workflows, exception handling, activity monitoring, audit trails and more allows you to scale your business well beyond the limits of a traditional service billing.

The Critical Link: Process to Systems

While the process (defined as a best practice) is essential, it brings no value unless it can be executed. And where processes are required for compliance with tax, regulatory, legal or internal regulations, they must also be auditable. This means linking the process, not only to the people but also to the enterprise systems, the applications that provide a system of record of the business. Linking the process to the systems insures the process is repeatable with no variation: the very definition of quality. BPO providers that are long on processes and short on systems may have difficulty in insuring that processes are executed efficiently and accurately.

If as a BPO provider you occasionally (or regularly) resort to throwing people at a problem, you know this can potentially result in not only making matters worse, but also having a significant and negative impact on the profitability of your own business. The premise behind Apparancy’s marriage of platform and process is to keep systems, people and processes aligned so that your capacity can increase without unnecessarily adding people or complexity.

Purpose-Built Content

Because this content (IP) is so critical, Apparancy will deliver purpose-built solutions for different industries and different organizational roles. Healthcare is the first of these target industries, chosen for two very good reasons: it is a highly regulated industry where compliance can mean life or death and it is also an industry undergoing very significant change and facing enormous challenges.  The human resources management function is also a target across all mid-sized U.S. businesses and organizations in the private/public sector needing to comply with the new Affordable Care Act requirements.

The market for healthcare-related BPO services needs no stimulus and BPO providers can benefit enormously from pre-defined best practices and a framework of compliance. Through a partnership with Apparancy, a BPO can combine tools with expertise and intellectual property and deliver a turnkey solution with far less design and development up front.

Added Opportunity

Social, cloud, mobile and big data are the big hot trends in the industry today. Yet many BPO customers have yet to avail themselves of these new technologies. Whether they are stuck on legacy solutions, or simply have their heads stuck in the sand, these companies are prime targets for modernization yet may not have the budget or the stomach for ripping and replacing existing systems. By layering Apparancy on top of existing solutions, you, the BPO provider can bring these modern trends to your customers.

Of course if you have progressive thinking customers, they might be leading you down this path already. Stay a step (or two) ahead of them by building a center of excellence with proven pre-built processes, designed for specific compliance requirements  and packaged with ROI-based testimonials. Or take the next step and attach your own custom-built or personalized extensions to create upsell and cross sell opportunity.

Summary and Key Take-aways

Never has the BPO industry seen more opportunity or more challenges. As compliance requirements continue to grow and change, more and more companies are turning to the experts: you, the BPO service provider.  Where do you turn to accelerate your go-to-market strategy for offering compliance-built business process management solutions? If you want to:

  • Leverage leading edge technologies
  • Create new opportunities
  • Scale your business

… you may also want to consider a true cloud-based, compliance-proven veteran like Apparancy to get a jump start on building or extending your portfolio offerings.

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SAP GRC Solutions Leverage HANA for Fraud Management

According to the 2012 Report to the Nations on Occupational Fraud and Abuse, published by the Association of Certified Fraud Examiners (ACFE), $3.5 trillion worth of fraud occurs every year. Industries such as insurance, public sector, banking, healthcare and utilities bear more than their share of this risk and often spend millions in their attempt to detect, investigate, analyze and prevent it, with varying degrees of success. Investigators are forced to wade through massive amounts of data, which potential perpetrators count on to shield them from detection and prosecution. To help companies face this challenge, last month SAP announced SAP Fraud Management, leveraging the power of its HANA platform. The goals:

  • reduce the cost and effort of investigation, by providing tools to better detect new and changing fraud behavioral patterns
  • redirect efforts away from false alarms in order to deter and possibly even prevent a fraudulent transaction from being completed
  • and of course… earlier detection by processing high volumes in quasi real-time

What Is It?

SAP Fraud Management is part of SAP’s Governance, Risk and Compliance (GRC) product portfolio, along with Process Control, Access Control, Risk Management and Global Trade Management. It is part tool (for the IT department) and part analytic application (for fraud investigators).

The potential for the solution was demonstrated at the SAP Insider GRC 2013 conference in Las Vegas using an example from the insurance industry, see the page for full analysis of the conference. Michael Lortz, Sr. Director, Solution Marketing for the GRC portfolio of products played the role of an investigator tracking down a potentially fraudulent automobile insurance claim. A young policyholder had submitted a claim after an accident that had occurred between 1:00 and 5:00 AM. The detection engine flagged it as suspicious due to the combination of the age of the operator and the time of day the accident had occurred.

The first step Michael, as the investigator, took was to do a “network analysis” to look for the same set of circumstances in any other claims. Come to find out this young claimant, and two others involved in the accident were also participants in four other claims. What are the chances this kid had five different legitimate accidents involving the same people? Slim to none? Obviously the perpetrators of the fraud were counting on the sheer volume of claims processed to mask this. In fact, they were successful the second, third and fourth time. The fifth time around, with the help of some enabling technology, somebody noticed.

As a result, the transaction could be flagged as fraudulent before any payout on the claim was made. But more importantly, the engine that triggered this as a suspicious claim could be recalibrated to change the thresholds that trigger audits that would prevent, if not the second claim, at least the third and fourth. And through recalibration of the rules, the likelihood of any transaction flagged as suspicious turning out to be fraud is increased substantially. Tracking down “false alarms” is costly and unproductive. So the ability to reduce those “false positives” can represent a huge savings.

Part Application, Part Platform

So, is SAP Fraud Management an application or is it a set of tools from which a clever customer or an SAP partner can build an application? The answer is, “Yes.” It is part application and part tool and it relies on the HANA platform for some of its functionality. Of course, this example provides a compelling business case for the insurance industry. While this was automobile insurance, surely it could be tweaked for homeowners and other kinds of liability insurance. The net result is a complete, working application for this industry.

However, the processes of detection, investigation and deterrence are similar in managing any kind of fraud and can be pre-built into a framework:

  • Detection based on a set of rules
  • Analysis of a network of objects looking for similarities (participants in insurance claims in this instance, but just as easily dinner guests on an expense report, deductions on a tax return, etc.)
  • Combined with a timeline (in what period of time were all these claims filed?)
  • Documentation of decisions (e.g. not to pay a claim, to reject an expense or to conduct a tax audit)
  • Add deterrents and refine the process by recalibrating the rules for identifying possible fraud

But the team building SAP Fraud Management didn’t have to create all this from scratch. It also looks to HANA to speed the investigation with its ability to process and analyze massive volumes of data, seemingly in real time since there are no spinning disks to traverse. All data is stored in memory, speeding the process. Rules are defined natively in HANA, while the “calibrator” is a specific tool created for Fraud Management.

Similar scenarios could be constructed for public sectors and the detection of tax evasion or perhaps abuse of social services such as food stamps or disability claims. Or it could help private companies detect fraudulent expense reporting or questionable purchases. Given the ACFE estimates the average organization is at risk of losing up to 5% of its revenue to fraud, the potential payback is more than significant. It can be huge.

Chances are SAP will not speculatively develop these industry-specific versions themselves. It is more likely for some of its partners to develop them. Most notably, we might expect to see some of the larger management-consulting firms with large risk management practices develop these for industries they serve.

Conclusion and Recommendations

If your company is at risk for significant financial loss as a result of fraud, SAP Fraud Management is certainly worth a look. First quantify the risk and then assess the cost of your current efforts to contain and mitigate that risk. If you employ fraud investigators, you must have some measure of their success and chances are you measure the number of potential cases investigated, along with the number of real occurrences of fraud. The goal should not necessarily be to increase the number of cases of fraud detected, but to detect fraud more quickly and to minimize the number of cases you chase that lead to no fraud (fewer cases of false positives). SAP Fraud Management, powered by SAP HANA can help you stop chasing down rat holes. This will allow you to set thresholds of risk lower and investigate more cases that can be proven fraudulent. Ultimately the goal is to maximize the amount of fraud prevented by always looking up to professionals like the ones at https://www.eidebailly.com/services/fraud-and-forensic-advisory/forensic-accounting.

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SAP responds to the 3 V’s: Increasing Volume, Velocity and Variety of Data

Last week I attended one of the SAP Insider events, the one that combines Financials (Financials2012), Governance, Risk and Compliance (GRC2012) and Human Resource Management (HR2012). I have to admit that HR was the odd man out here. I work with the GRC, financial applications and Enterprise Performance Management (EPM) teams at SAP, but I only watch the HCM space from the periphery. That may change over the next year if companies that are, from my perspective, largely “ERP vendors” continue to acquire and invest in this space. For those who have been living under a rock for the last few months, SAP recently acquired HCM solution provider SuccessFactors and Oracle acquired talent management vendor Taleo. Sanjay Poonen (@spoonen), President & Corporate Officer, SAP Global Solutions made an interesting comment about this acquisition in his opening keynote to all three groups. He said that SAP had “followed our customers, who voted through their wallets.” I believe he was referring to both HCM as well as movement to “the cloud.”

Sanjay kicked off the event highlighting a key concern of many business executives today: the difficulty in keeping up with the increasing volume, velocity and variety of data. Actually Sanjay referred to it as “Big Data” although I suspect that phrase has not completely infiltrated the vocabulary of most top executives… at least not yet. I think there is still an education process that needs to happen before many will understand they have a data problem.

There is no doubt that anyone running a business today understands that both the speed of business and the speed of change, hence the velocity continues to accelerate. Nobody would argue that customers are more empowered and connected and expect service instantly and this, together with continued globalization increases the volume of data required. But have top executives really come to understand that data required for planning and decision-making also expands beyond the traditional boundaries of data that is collected and stored in enterprise applications? Some have, but many, particularly those in smaller companies, have not. This is in part impacted by the “social business” movement. CFOs represent the largest target market for Financials and GRC and CFOs are not known to be the most “social” folks on the planet.

That said, even the increasing volume of traditional data might be enough to prompt action. This was the case for Harcourt Houghton Mifflin, highlighted in Sanjay’s keynote. The merger of the two companies resulted in 8 mini companies, disjointed data, fragmented processes. All of this was going on during a financial crisis. The goal was one version of the truth on an integrated platform to support integrated business planning. Of course the reason Harcourt Houghton Mifflin was featured in Sanjay’s opener was because their solution to this problem was SAP’s Business Planning and Consolidation (BPC) solution.

Harcourt Houghton Mifflin needed to get alignment among stakeholders. According to the video played, they were “looking for something easier to use than Hyperion.” They needed to transform the planning process and they feel EPM 10.0 changed the nature of the way people manage performance across finance and operations. The real power comes not from analytics as a separate tool but from embedding them directly into the applications wherever they are needed.

And therefore the one big announcement from SAP during the event serves to emphasize the convergence of these 3 V’s: volume, velocity and variety. The announcement was that BPC is now running on HANA, SAP’s answer to the “big data” problem. According to Sanjay, “The power of SAP HANA enables financial professionals to perform faster planning, query, reporting and analysis, profitability and simulation in real-time. As a result, SAP helps companies accelerate period-end closing and smarter decision-making — faster than other vendor offerings available today.”  So the message transcends the annual planning, budgeting and forecasting exercise and applies equally to the ongoing financial consolidation and reporting exercise.

However, it is only the Netweaver version of BPC that is powered by HANA (there is also a Microsoft version) and for this to work, the customer needs to be running a version of BW on HANA. The reality is that the version of BW sitting on HANA is still in what SAP calls “ramp up” (i.e. early adopter or what other vendors might call beta testing). So customers interested in BPC on HANA either need to be in this ramp up program, or they need to wait until it is generally available. SAP is hoping that it will exit ramp up by Sapphire in May.

I am hoping to do a more in depth analysis on this once customers are running live. In the meantime, the education process around big data and data management strategies needs to continue. This is more than SAP just creating the need in the mind of their customers and prospects for the technology solution it has developed. This is a real problem for many CFOs today. Many simply don’t understand that technology has advanced to the point of providing a solution.

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SAP GRC 10.0 delivers value. The voice of the SAP customer has never been stronger

I’ve just spent a full day at the SAP Insider GRC 2011 event, where over 700 GRC professionals from all over the world gathered to network, share experiences and hear about new developments from SAP.  This is an annual event, co-located with SAP Insider Financials 2011 and HR 2011, the 9th of its kind, and my 4th. As a conference within a conference, the message from SAP had a dual focus for GRC 2011, but with a common theme – delivering more value to its customers by listening carefully to their needs. Previews of the upcoming release of GRC 10.0 (currently in ramp-up with general availability planned for Q2) were a testament to the fact that the voice of the SAP customer has never been stronger.
Sanjay Poonan, SAP’s President of Global Solutions & Go-to-Market, delivered the general keynote entitled Creating Competitive Advantage with Business Analytics. It was refreshing in that the keynote itself was less about the latter (SAP’s products) and more about the former. It’s really all about
·         seeking operational excellence
·         providing visibility for better decision-making, including analytics and performance monitoring
·         supporting a risk-aware and compliance culture
·         developing a people and talent agenda
How can SAP help its customers gain this advantage both in general and in the context of GRC specifically? Over the past few years SAP has built an impressive portfolio of solutions under the umbrella of GRC. While a convenient “category,” GRC has never been crisply defined as evidenced by all the different definitions that are floating around. Indeed over the course of the day I spent at the conference, I heard several speakers refer to GRC as Governance, Risk and Confusion. If you are looking for definitions, the OCEG Group Red Book (Standards and guidelines | by OCEG the Open Compliance and Ethics Group) is a good place to start.
For SAP, GRC is a convenient grouping of solutions that have been developed and acquired over time. However, although its GRC portfolio is extensive, it has been more of a collection than a true suite of products. As far back as March 2008 when SAP announced new versions of products across this portfolio it referred to this launch as a “unified approach to GRC”. This launch included new versions of the SAP GRC Access Control, SAP GRC Process Control and SAP GRC Global Trade Services applications. In addition, the SAP GRC Risk Management application was integrated with the SAP Strategy Management application, which was then separated as part of SAP’s enterprise performance management (EPM) solutions. The goal even back then was to enable organizations to drive an integrated corporate strategy that synchronizes the management of enterprise risks, business controls and global trade compliance.
But the solutions were still separate applications built on different technology platforms, without a common user interface. They did not share data or workflows. They felt like different products. They behaved like different products. Therefore as an existing customer who may have started with Access Control, and was looking for a trade compliance or process control or risk management solution, there really wasn’t a significant advantage in sticking with the SAP family of products.
That all changes with GRC 10.0. SAP has transformed a collection of disparate applications into a platform for GRC. There is a common look and feel. Master data can be shared across Access Control, Process Control and Risk Management. For example, the rich organizational structure that was available in Process Control can now be used in Access Control. All use the same workflow structure, supporting integrated monitoring. And perhaps just as important, is the embedded (SAP Business Objects) BI. Excelsius-based dashboards are pervasive throughout the solution and navigational tools such as Explorer are available as well.
Acknowledging the confusion over GRC and relatively low adoption rates (as compared to other enterprise applications), as a platform provider, SAP’s objectives are to simplify the message of what it will deliver, while providing a lot of meat and not just sizzle behind the messaging. SAP knows its goals need to align with the goal of the GRC professional. Simply put, that goal is to proactively balance risk and opportunity to:
  1. Better manage compliance and risk
  2. Better protect value – proactively avoid risk events;  reduce cost of violations
  3. Better perform – actively  link risk and performance management and objectives
In order to do this, the platform must support the ability to analyze, manage and monitor. One key advantage SAP will have over GRC point solutions is in making the connection back to operational systems of record (think ERP). Not only is SAP uniquely positioned to do this with its own ERP solutions, but it is also proactively working with a partner (Greenlight Technologies : Solutions : SAP GRC Cross-Platform : RTA Design Studio for Access Control) to also connect to other business systems such as legacy applications and other commercially packaged solutions.
These are all great enhancements, and create an incredibly comprehensive solution and significant market advantage in turning a collection into a platform. The old SAP probably would have stopped here. But the new SAP took two additional steps.
While SAP has been concentrating on developing the GRC platform and focusing on the technology, management understands a platform is simply a tool. Nobody looks to buy a platform. They look to solve a business problem. So the value of these efforts will be lost if the customer cannot go that last mile to connect to the business, sometimes with very industry-specific requirements. And often that specific expertise must be both deep and broad. The proliferation of regulatory requirements alone these days makes it difficult for any one company to provide this level of knowledge and expertise across a wide range of businesses. So while SAP focuses on technology and platform, it lets partners focus on the domain expertise for consulting as well as the development of plug-in applications through its Ecohub (http://ecohub.sdn.sap.com/irj/ecohub/home ).
And finally, and likely most important for the customers, has been the active listening process. Eighty six customers from the GRC customer advisory council would not have showed up for a daylong meeting with product management and development if they did not feel their voice was being heard. In the course of these types of conversations, three things have emerged: the effort required to manage GRC, the elimination of manual processes and reduction of cost. While in the past SAP may have simply concentrated on offering those high profile but often under-utilized leading edge features, this time it also included a lot of the mundane and boring features that simply can lead to improved day-to-day efficiencies. As a result it has made GRC 10.0 much more appealing to its existing customers. In many cases, the customer can justify implementation based on just one new feature.
Each new customer that moves to GRC 10.0 will be another testament to the value of listening to the voice of the customer.
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