As an investor, you invest for many reasons. But chances are, the primary motivation is a return on that investment (ROI). You look for ideas, innovation, differentiation, marketability and sustainability. New ideas based on hot technology are very appealing. After all, a little sizzle doesn’t hurt. But that next “new thing” must address a real need. It can’t be elegant technology in search of a problem. And the need must be sustainable, or the business is not. And finally, businesses don’t run themselves, so strong management with a proven track record is a big factor in your decision.
It’s not often that investors can quickly and confidently check all the boxes. So when an opportunity like Apparancy comes along, it makes perfect sense to take a closer look. Apparancy is a new venture, powered by and launched as a sister company to Corefino. Its tag line: Purpose-built, compliance-centric workflow solutions for transparent business process management. Apparancy is the brainchild of Karen Watts, founder and CEO of Corefino, herself a former CFO. While Corefino delivers a turnkey, outsourced model to manage recurring financial processes through the cloud, Apparancy was inspired by the very real need to apply the same level of control and business process optimization to every structured process.
Who are Apparancy and Corefino?
Apparancy and Corefino are sister companies. Corefino is the big sister, founded in 2004. 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 business process outsource (BPO) provider, 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: Operating as a value added reseller (VAR) of software as a service (SaaS) accounting solutions, Corefino established strategic partnerships with cloud-based 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.
Apparancy is actively recruiting these partners, tapping into a huge market potential with the prospect of establishing win-win relationships. 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: BPO service providers. In turn these BPO providers need to:
- Leverage leading edge technologies
- Create new opportunities
- Scale their businesses
As a true cloud-based, compliance-proven veteran, Apparancy can provide a jump-start in building or extending BPO portfolio offerings.
It’s All About Process: Filling a Real Need
Apparancy is a unique blend of technology and rich content to preconfigure, manage and monitor industry-specific best practice processes. Every business must manage processes but especially for the first industries and organizational roles targeted, these processes aren’t “nice to have.” The first industry Apparancy has set its sights on is healthcare. Healthcare 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. So the ability to manage, monitor and control falls in the “must have” category.
The first organizational role that Apparancy will go after is closely related: The human resources management function in mid-sized U.S. businesses and organizations in the private/public sector needing to comply with the new Affordable Care Act (ACA) requirements. Confusion is rampant and a plethora of questions remain regarding roles and responsibilities. While some will try to go it alone, many will turn to “experts” in the field, including BPO providers. But where do these experts turn when they need to scale their businesses? Instead of just throwing more people at the opportunity, BPO providers can benefit enormously from pre-defined best practices and a framework of compliance.
While every business recognizes it must manage processes, there might be more here to manage than initially meets the eye. In addition to business processes, there’s also the decision-making process itself. These are processes often overlooked. While there is a lot of talk today about big data and hot technology to analyze it, data and technology are useless unless you have processes in place to utilize both and bring value to the business. This is an area where Apparancy can add even more value.
Recession proof: Healthcare, Death and Taxes
While the Affordable Care Act adds some urgency and unprecedented opportunity, it isn’t just a flash in the pan. Healthcare, along with food and pharmaceuticals are probably the most recession-proof of all industries. So whether the economy continues to recover or takes another dip, the demand for Apparancy will continue to rise. Regulation and the increasing scope of government oversight and compliance requirements is similarly recession proof. The old saying that “there are two things you can’t avoid – death and taxes” is the truism for why both healthcare and compliance are growing markets under any circumstance, people have to choose between ira vs 401k every day among all the other challenges they face.
Feeds the growing appetite for cloud solutions
The platform on which Apparancy’s solution is delivered as software as a service (SaaS). The appeal of SaaS has been growing quite steadily over the past decade. The Mint Jutras 2013 Enterprise Solution Study found that interest has accelerated dramatically over the past two years. The study asked survey respondents which deployment options they would consider for future purchases of enterprise applications like Enterprise Resource Planning (ERP) (Figure 1). ERP is the source of much of the data used in compliance reporting, particularly when the ERP footprint is extended to include human resource management.
Figure 1: Which deployment options would you consider in the future?
Source: Mint Jutras 2011 and 2013 Solution Studies
Respondents were instructed to select all that apply
Note: the time span between when the 2011 and 2013 responses were collected was actually about 18 months. Also, Mint Jutras believes the percentage that will consider SaaS may be understated. Some survey respondents, particularly business users (versus IT), can’t clearly distinguish between SaaS and a solution “hosted by their solution provider,” particularly if they access it through a web-based interface. This supposition is substantiated by the fact that we found a certain percentage of participants known to be running via SaaS (because the solution they use is only available as SaaS) who did not indicate they would consider SaaS. But in each of these instances, they would consider it hosted by their solution provider.
The bars on the far right hand side of the chart (circled) speak volumes. The percentage of companies that will even consider a traditional on-premise deployment shrunk dramatically over a short 18 month time period. The appetite for cloud-based solutions is becoming voracious. However, even though demand is high, the transition to cloud-based deployments will not happen quickly, simply because so many currently implemented solutions are on-premise today.
Figure 2: Percentage of Business Software that is SaaS
Source: Mint Jutras Understanding SaaS Study
Many companies will be looking for ways to gain advantages from the cloud without ripping and replacing current solutions. By layering a cloud business process management (BPM) solution on top of existing solutions, Apparancy will be feeding the cloud frenzy without requiring a full-scale, big bang change.
It is also likely that this cloud frenzy will result in hybrid environments, where cloud-based solutions will surround and extend existing applications with a proliferation of niche functionality acquired from specialist providers. When these cloud-enabled “apps” play a role in business processes, it will be increasingly important to have a single interface to keep them all “on process.” Apparancy can provide this unified user interface.
Other Trends: Social and Mobile
In addition to cloud, social and mobile are equally hot trends. Applying social concepts to business process management results in improved collaboration, connectivity and transparency. Concepts like “friending” and “following” are particularly effective in fostering improved two-way communication. Apparancy is building in these social components, including following or subscribing to the communications of people that play a role or perform a function within the workflow. This keeps everyone on the same page and encourages and supports more active communication.
As more and more human touch points become embedded within workflows, it becomes equally important to support more real-time communication, particularly in compliance-centric processes. The good news today is that mobile devices allow these decision-makers to be “always on” and “always connected.” Of course the bad news for those workers is that the more untethered these devices become, the more tethered they are to work. Yet if the critical process can be completed, monitored and managed entirely from a mobile device, they suffer less from the intrusion on their personal lives. Get an alert, monitor the process, take action… and move on, without leaving Apparancy or your child’s soccer field.
Proven Expertise and Vision
As an investor, you need to have confidence in the person (or people) at the helm of the business venture. Where technology and trends are involved, those individuals must have a vision to see beyond what others see. Karen Watts established herself as a visionary when she launched Corefino. She saw the value proposition of delivering services supported by cloud-based systems back when others were still wary of the concept and fearful of security and privacy issues.
She proved herself to be patient as the industry caught up to her vision. And in the meantime she has proven she can deliver a compliant process in what is probably the most heavily regulated segment of anyone’s business: the financials. And she is showing she is still a step ahead as Apparancy is the natural evolution from Corefino to advance the technology as well as the business needs in a field where it can be best applied.
Summary and Key Take-aways
As an investor, you look for innovative ideas, differentiation, marketability and sustainability. The concept of a purpose-built, compliance-centric workflow solution for transparent business management is new, innovative and different. In some ways it is “one of a kind.” Of course, investing in a “market of one” where there are no viable competitors is risky. But Apparancy does have competitors. There are plenty of business process management tools and lots of applications that provide the data that flows through these processes. This validates the market for the product. However Apparancy is alone in providing a unique and complete solution.
Apparancy satisfies a real need in managing compliance-centric processes. While there is some very real urgency in the first target markets for Apparancy (the healthcare industry and the human resource management organization), this urgency does not signal a small window of opportunity. Just as you can’t avoid death and taxes, businesses will always be faced with managing the process of compliance.
Cloud, social and mobile are important ingredients. It is much easier to attract attention with hot technology trends, and in the world of enterprise applications, you can’t get much hotter than these. And capping off this investment opportunity is a true visionary with a proven track record for managing compliance-centric processes. All these factors combine to make it very worthwhile for a potential investor to take a closer look at Apparancy.