Host Analytics a key provider of corporate-focused financial performance management applications recently announced it has over 8,000 users of its software and that it completed its Series B financing round. The company also has just released and announced version 9.0 of its Software-as-a-Service (SaaS) suite, which is noteworthy for (among other things like business planning and budgeting) making the company’s consolidation software more affordable for a wider range of companies in what they call Team Edition – Financial Consolidation.

There are two sets of companies that we believe ought to look into using this consolidation software: those that do their statutory consolidation using Microsoft Excel or desktop spreadsheets. The other group are longtime and now Oracle Hyperion Enterprise users (particularly midsize companies or standalone business units or larger corporations) that either do not have or do not want to spend the money or time to update or migrate to some other solution.

Our research finds that most companies with 5,000 or more employees use some form of dedicated consolidation software to help them close their books. A majority of these corporations either have ERP systems from multiple vendors or multiple “instances” (different charts of account) running on the software of an individual vendor’s ERP system, or a combination of the two. These large companies have to deal with a great deal of complexity and have budgets to match their need. At the other end of the spectrum, smaller companies frequently have a single accounting system and one chart of accounts and therefore have little or no use for dedicated consolidation software. In the middle, however, are corporations that must deal with more complex data integration issues during their closing process but have limited resources. They rely on desktop spreadsheets, but that’s usually a mistake. Desktop spreadsheets inherently are not well suited to performing accurate consolidations quickly. Our benchmark research shows that companies that use consolidation software execute their monthly close about 38% faster and on average can close their quarters 20% sooner. Spreadsheets are notoriously error prone, which is another reason why it takes longer to close using them, since checking for errors and correcting them is a time-consuming process. This same research shows that companies that are heavy users of desktop spreadsheets during the closing process have far more issues with data quality than those that use them sparingly or not at all.

There also is a group of longtime Hyperion Enterprise users that may benefit from replacing their existing software, especially if they have customized or configured the software in ways that now make it difficult to implement important (or even simple) changes. These are companies that may have considered migrating to a newer version but are put off by the initial and ongoing cost of doing so. For these organizations, the SaaS approach may be the most cost effective over the long run, especially if it is part of a broader effort to enhance reporting and/or implement a performance management effort. In addition, a few of these companies (generally those that must file financial statements with the US Securities and Exchange Commission) may need to consider the implications of moving from US GAAP to International Financial Reporting Standards (IFRS) with respect to their consolidation software. Companies with aging and heavily customized consolidation software are likely to find their existing systems cannot support the change.

CFOs and Controllers who want to close faster and more accurately as I have discussed but think they cannot afford other on-premise consolidation software should look into Host Analytics as an alternative to desktop spreadsheets or to upgrade their existing consolidation software. Making these continuous improvements in finance is critical and Host Analytics is now an alternative to traditional financial application providers or should be evaluated along side of them for enabling the top priority of enabling financial performance management for your corporation. For many organizations also need to apply the same type of applications beyond finance and support consolidations, planning, budgeting and reporting into operations or IT should also recognize that Host Analytics SaaS approach to their application can make it simple and easy to get up and using these applications for managing performance.

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Regards,

Robert D. Kugel CFA & SVP Research