Analyzing accounting KPI's (key performance indicators) in advance of a fiscal period end using simple aggregation of actual line items may be a useless or at least not insightful activity since actual data from day to day operations of an organization will continue to be posted until the end of the period and postings triggered by the financial close itself may also influence the accounting KPI's. However, the determination, forecasting, and analysis of key target financial figures and trends for a fiscal quarter, a full fiscal year, or other periods of time may be desired.
Some embodiments herein are associated with systems and methods for extrapolating key indicators and other characterizations of financial data for transactions systems by one or more of a computer system, apparatus, service, and application. The key indicator may be generated in response to a request for such information. As used herein, a transaction system may refer to one or a combination of a system, apparatus, service, and application performing one or more processes for a big business, company, or organization. The big organization may use a transactional system in order to collect all of the transactions performed by the organization. The transactional system may include an accounting component. It is noted that a traditional accounting system typically only reflects transactions that will have an impact on the balance sheet (BS) or P&L (profit and loss statement) according to generally accepted accounting principles (GAAP). Conventional accounting systems do not reflect transactions that will have effect on BS and P&L in the future. An example of a transactional system may be the computer system(s) of a multinational company with a number of offices located in different countries that are staffed by 1000's of people working to perform different operational transaction tasks or processes, both internal and external to the organization, to fulfill the organization's mission (e.g., sales, education, one or more other services, etc.).
The present disclosure relates to a technical approach to data extrapolation and reporting that is based on financial accounting line item entries of a transactional system. For the composition of a KPI, different types of line items may be used in some embodiments, including actual line items of posted entries for a current posing period, line items from one or more past posting periods (e.g., recurring entries that are repetitive),and new line items (i.e., not yet actual (posted) line items, such as, for example, line items tracked in an extension ledger). Being fundamentally based on line items, all data extrapolations and reports herein may be traced or tracked back to the underlying line items forming the basis of the data extrapolation. In some aspects, the processes herein may be seen as being “audit trail quality” given the traceability of the resultant data extrapolations and reports.
In some example embodiments, a full line item based approach as outlined herein may rely on a superfast in-memory technology platform (e.g. HANA by SAP) in order to process the usual and expected data volumes. Additionally, example embodiments herein may correlate line item entries and the analysis thereof to a “CPU-date/time”. CPU-date/time” based KPI's are not compatible with traditional accounting systems based solely on a posting date/period.
In some aspects, a process herein may rely, at least in part, on some standard financial accounting and reporting tools. In some regards, the particular accounting and/or reporting tool is not itself of critical importance. What is important in some embodiments herein is that the financial data reported by a transactional system accurately reflects the realities of the business or organization associated with the transactional system. That is, the financial data reported and analyzed by the transactional system should be accurate so that the processes disclosed herein may provide results accurately indicative of the business or organization associated with the transactional system currently and at some future point in time.
In some embodiments, a financial data model including an accurate record of the financial details for a transactional system is provided (or otherwise exists) and access to the data of the financial data model is at least made available to the processes and systems herein. In some aspects, the financial data model may include all of the financial data relating to the transactional system, including in some embodiments at least the financial data deemed reportable by an industry or governmental agency or association. In some instances, the data recorded in the financial data model may exceed the standards, requirements, or recommendations of an industry, government, or professional organization related to the transactional system. In one embodiment, a financial data model herein may be provided or based on the Universal Journal by SAP (the assignee hereof). The Universal Journal is a single source document including the all of the relevant entries for a transaction for all categories of financial data related to a transactional system, thereby eliminating a need for data reconciliations. All of the data may be organized in a same format and conform to common constraints and specifications. A data model herein may provide cross component definitions and implementations for multiple parallel currencies, valuations of data, use entities, etc.
An illustrative example will be used throughout the following portion of this disclosure to highlight some features and aspects of some embodiments. It should be appreciated that this example is not meant to be limiting or exhaustive but instead illustrative of one or more of the features introduced herein. The example scenario includes a desire to, on September 15th, anticipate and predict a key financial indicator for the third quarter that ends on September 30, where the key indicator is the earnings before taxes (EBT) for the third quarter. The key indicator could, in some instances, be other metrics or key performance indicators (KPIs).
It is noted that conventionally, the EBT figure could only be provided after the closing of the books of the fiscal quarter for the subject organization, that is sometime in early October (at best).
The present disclosure includes a technical solution that is schematically represented, at least in part, by the illustrative depiction in
In some instances, the posted actuals (and other types of data herein) may be recorded and maintained by a database system, including in some instances an in-memory database system that is capable of processing, aggregating, and filtering large amounts of data extremely fast.
Costs and revenues from running (i.e., on-going) operations are represented by bar graph 115 in
In some instances and aspects, upcoming costs and revenues may be indicated, at least in part, by one or more early indicators in a transactional system. For example, different parts of a process chain may indicate or anticipate upcoming costs and revenues. Examples can include purchase requests, opportunities, sales orders, invoice alerts, etc. That is, portions of a process chain may very well indicate approaching costs and/or revenues even though the costs and revenues have not yet been realized. Therefore, some embodiments herein may key on processes to better determine upcoming costs and revenues.
In some embodiments, respective transactional steps or operations may be translated into a format for entry as a line item in a data model (e.g., “Universal Journal”, table ACDOCA). Accordingly, ACDOCA (or other) may be the target format wherein respective entries will technically operate as regular journal entries (e.g., G/L account, balance zero, profit center entities, etc.). Based on this translation, the process chain steps may be recognized and treated as costs or revenue to be realized until the end of the period.
In some aspects, the process chain events represented at 205 in
In some aspects, changes to process chain events indicative of future costs and revenues of running operations may be processed as each change occurs by translating and “posting” each change in an extension ledger or by performing translations and extension ledger entries periodically in a batch mode. Either way, the important consideration is that the changes to the process chain events are accurately captured and represented in the data model (e.g., Universal Journal and/or extension ledger). For example, once an event is realized and triggers an “actual” Universal Journal entry it may be necessary to invalidate a previous corresponding extension ledger entry, for example, once a purchase request becomes “real” in terms of accounting wherein it has to be posted as an actual entry. In this manner, the data model accurately reflects the reality of this particular situation. Additionally, this aspect of the present example further illustrates the traceability of extension ledger items (i.e., via the line item entries) to respective, for example, orders, requests, etc.
On September 15th, it is noted that at least some recurring entries may have not yet posted. While they may have not yet posted, they will by the end of the period and should therefore be accounted for in the determination of EBT 105. Examples of recurring entries may include financial items such as, for example, (base) salaries, fixed asset depreciations, recurring invoices, and other matters and are represented by bar graph 120 in
In some aspects, missing periodic postings may be substituted with a posting form a previous period. This approach may be appropriate where the periodic posting has a similar value in different periods of time (e.g., each month or quarter). For example, base salaries and asset depreciations may often fit this criterion by having a similar value over a number of periods. In some regards, the particular activity being reported may determine how similar the values for the periodic postings need be in order for the values to be represented by a substitute value. A user or system may have to recognize the value for a transaction is consistent period to period and appropriate for this type of substitution. In a continuing effort to maintain traceability and accountability in the processes herein, the source of the substitute entry should be tracked and maintained.
Bar graph 125 represents extraordinary effects or postings that occur only during the current period of interest (i.e., not yet posted and not recurring in a predictable manner). For example, one such costs may be due to restructuring of a company. This type of event and the costs associated therewith are not recurring but must be accounted for in the determination of the key indicator (e.g., EBT 105). In the present example, the restructuring costs have a negative impact on the EBT and bar graph 125 is visualized in the color red.
In some embodiments, the classification of events as extraordinary is key to accurately accounting for such events in some of the processes herein. Also, extraordinary events may be entered into an extension ledger since they may rightfully be entered as a regular entry only later in a posting period when they are posted (the preliminary entry in the extension ledger will be wiped out by the actual posting). However, processing of both the regular “base” ledger and the extension ledger(s) herein will yield an accurate view and determination of the target key indicator(s).
In many instances, the closing of a period will itself have an effect on a target key indicator. This may be due to one or more activities associated with closing out of a fiscal quarter. One such activity may be, for example, a currency remeasurement activity that can only be accomplished after the period of interest is closed. For this activity, the exchange rate needed to execute the remeasurement can be known, at the earliest, on September 30th (i.e., the end of the period). However, the determination of EBT on the 15th of September requires some accounting of the remeasurement activity in order to have an accurate determination of the EBT.
In some embodiments, a currency remeasurement can be simulated and “posted’ to an extension ledger in an effort to have some reliable predictive value for the measurement before the actual calculation of the currency measurement. In an instance a simulation is used for this or other similar functions, then the simulated value is replaced by an actual value upon the actual remeasurement. In some embodiments, extension ledger entries resulting from other categories herein (e.g., costs and revenues from running operations) may be included in a remeasurement simulation run. Hereto, the source of line items is tracked and maintained for tracking (and other) purposes.
In some embodiments, activities that may typically be processed in a batch run during a period closing may be processed on a transactional basis. In some instances, as process is performed in a transactional system, a revenue recognition posting can be triggered. As an example, an employee staffed on a project performs a time confirmation, thereby triggering a posting of revenue event. Such “soft close” events can be accounted for as the triggering events occur, thereby eliminating a batch run at the need of the period. Also, in this manner, the actual posting data is enhanced and made richer sooner in a period.
In some instances, closing activities may be predictable since some follow very strict and repetitive patterns each period. As such, the result of past periods may be used to supply values for those closing activities that repeat, until the actual data for a particular closing activity is obtained based on an actual performance of a closing activity.
Referring still to
For the actual data 315 component of the KPI as indicated in the Universal Journal (or other tool, system, or service), the actual data is selected from the Universal Journal (or other tool, system, or service) for inclusion in the determination of the KPI.
For recurring data 320 (e.g., revenues and/or costs that repeat in different periods), a determination is made regarding whether value(s) for the recurring data is available in the period of interest (e.g., a current period). If the value(s) for the recurring data are available, then process 300 proceeds to operation 340 where the value(s) for the data are selected from the Universal Journal (or other tool, system, or service) for inclusion in the determination of the KPI. If the value(s) for the recurring data are not available in the period of interest, then substitute value(s) can be obtained for the recurring data at operation 335. In some instances, a substitute value may be calculated based on another period including historical data for the recurring value. In some instances, the value(s) for the recurring data may be the same or similar in the other periods including the recurring data. In one example, the value(s) for the recurring data may be determined based on a calculation using historical data from other periods. The substitute value(s) for the recurring data are selected by operation 340 from the Universal Journal or an extension ledger of the Universal Journal (or other tool, system, or service) for inclusion in the determination of the KPI.
Regarding running operations and extraordinary effects data as represented in
For the effects of closing activities data shown at 330, an appropriate source for the data is obtained, whether it is a substitute value determined by a simulation or historical data that is reliable because of the repeating nature of the activity. After the governing rules and other considerations are processed at 330, closing effects data is selected by operation 340 from the Universal Journal or an extension ledger of the Universal Journal (or other tool, system, or service), where an analysis of the financial data is performed to generate the KPI.
From operation 340, a report of the key indicator is provided. In agreement with other aspects herein, aspects of the key indicator reported at 345 can be traced to the line items providing the source of the data contributing to the determination of the key indicator.
In some aspects, a determination of a key indicator herein allows an end user the benefit of the analysis of a period of time (e.g., third quarter EBT) each calendar day. In some embodiments herein, a “CPU” date or date of the transactional system (e.g., a CPU clock of a component system or device comprising the transactional system) is used instead of a “posting” date. This approach is used herein since a fundamental question addressed in some aspects is what key indicator value do we get on a specific date (e.g., September 15th, September 16th, etc.). The specific date on which data was actually visible in the system is critical to this determination. This date is the CPU date. The posting date for the data is not as or very useful for some of the analysis herein, since a data item might be visible to the system on September 15 and yet have a posting date of September 30. For example, data may have a CPU timestamp of September 9th, whereas it will have a “posting” date of September 30th. In order to get an accurate extrapolation of data to determine a target key indicator before the end of the time period, we desire the use of actual known data when it is actually obtained/known (i.e., the CPU date of the data). In this manner and strategy, the methods and systems disclosed herein may provide a mechanism to more efficiently and accurately detect, for example, trends.
The closing activities of curve 430 occur between September 28 and October 3rd. As such, this is where this curve approaches zero since this data is then included in actual data. Likewise, the extraordinary data represented by curve 425 is stored until September 28th in an extension ledger and is posted as actual values on September 29th, wherein this curve goes to zero.
In the example use-case presented above, a single transactional system key indicator (KPI) was determined. However, the concepts and processes disclosed herein may be extended to cover more than one KPI, to an extend that the underlying data is structured accordingly. In some aspects, the Universal Journal can accommodate this scenario. Accordingly, an appropriate data model can be obtained as well. In some aspects, features of some embodiments may be tuned over time based, in part, on data obtained as the processes herein are implemented. That is, the systems and processed herein can “learn” and improve.
Apparatus 600 includes processor 605 operatively coupled to communication device 615, data storage device 630, one or more input devices 620, one or more output devices 625 and memory 610. Communication device 615 may facilitate communication with external devices. Input device(s) 620 may comprise, for example, a keyboard, a keypad, a mouse or other pointing device, a microphone, knob or a switch, an infra-red (IR) port, a docking station, and/or a touch screen. Input device(s) 620 may be used, for example, to enter information into apparatus 600. Output device(s) 625 may comprise, for example, a display (e.g., a display screen) a speaker, and/or a printer.
Data storage device 630 may comprise any appropriate persistent storage device, including combinations of magnetic storage devices (e.g., magnetic tape, hard disk drives and flash memory), optical storage devices, Read Only Memory (ROM) devices, etc., while memory 660 may comprise Random Access Memory (RAM).
Extrapolation engine 635 may be executable by processor 605 to provide any of the functions and processes described herein, including process 300. Embodiments are not limited to execution of these functions by a single apparatus. Rules engine 640 may be consulted in regards to closing effects activities. The data model as supported by the Universal Journal 645 may be stored in storage device 630. Data storage device 630 may also store data and other program code for providing additional functionality and/or which are necessary for operation thereof, such as device drivers, operating system files, etc.
Embodiments have been described herein solely for the purpose of illustration. Persons skilled in the art will recognize from this description that embodiments are not limited to those described, but may be practiced with modifications and alterations limited only by the spirit and scope of the appended claims.