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Finance automation and recent trends in fixed assets December 2018
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Page 1: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

Finance automation and recent trends in fixed assetsDecember 2018

Page 2: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

3© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

Panel Introduction

Anuj Mathur is a Director in the Financial Management Advisory practice, specializing in Finance Process Transformation, Strategy implementation and Finance Governance Technologies, Shared Services Implementations and Automation Transformation Strategies. Anuj has served global clients by designing and executing finance transformation strategies and leading process improvement initiatives. With deep finance and procurement functional expertise he has worked extensively across the P2P, O2C and R2R cycles across multiple ERP platforms.

James Murphy is a leader of the Financial Management (FM) Advisory practice in Silicon Valley specializing in digital finance transformation, cloud/SaaS business implications and finance business processes and delivery models. James has substantial experience leading and delivering solutions focused on finance business strategy and operational efficiency. His focus is on continually improving operations and execution on strategic delivery models in digital finance areas while providing for an exceptional internal and external customer experience.

Diana Jajeh is the VP of Business Transformation at Juul Labs. Prior to Juul, she was the Business Lead for Equinix Long-Term Fixed Assets Remediation Program. Diana was also the controller at e.l.f. Beauty, Inc. leading a private to public journey and spent over 18 years at Visa Inc. leading several global controllership initiatives including SEC reporting, Technical and Operating Policy group, Controllership Optimization, Global Accounting Process Enhancements and M&A accounting integrations.

Shannon Meiner is the Record to Report Global Process Owner covering the close process, general ledger, fixed assets, intercompany, project accounting, lease accounting and all general accounting matters. She has a team in San Diego supporting process design with the execution occurring at an in-house center of excellence located in Hyderabad, India that has been in operation for over two years. Shannon has been with Qualcomm for 21 years and over that time has held a multitude of roles, including leading the Finance and Accounting teams supporting SG&A functions and leading business unit finance teams supporting consumer product offerings.

James Murphy, KPMG

Anuj Mathur, KPMG

Diana Jajeh, Juul

Shannon Meiner, Qualcomm

Page 3: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

4© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

The CFO agenda for disruption

Leading finance organizations have developed an agenda to deal with disruption

Leading strategy and capital allocationIncreasing role in innovation

— Trends and economics behind disruption— Approaching disruption at the organizational level— Maintaining an innovation portfolio— Disciplined portfolio process and structure

Risk management: Response to disruption impacts how risks and controls are managed in an organization and the need to continuously evolve.

Extreme automationIntegrating new technologies: — Cloud ERPs— Robotics— Artificial intelligence— Blockchain— Mobile

Insights and analysisNew insights through:— Automated descriptive

and diagnostic analytics— New predictive and

prescriptive analytics— Integrated business

planning— Local decision

support

Organizational simplificationChanging work:— Fewer people— Less hierarchy— Fewer offshore locations

Skills and talentChanging requirements:— Both strategy and finance

skills— Process and control

leaders— Relationship and

collaboration

Page 4: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

5© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

Extreme automation

Digital analytics and deliveryFinance will be delivered real-time, custom insights via new mobile interfaces thereby driving accelerated decision making capabilities, allowing finance to positively influence business outcomes.

Machine learningAdaptive technologies will radically change the work that finance does through the use of smart algorithms that can be leveraged to accomplish activities and tasks.

Data managementData management will no longer be an aggregation of performance data; finance will lead data strategy utilizing new data sources (internal and external) to drive deeper prescriptive insights.

BlockchainBlockchain is expected to accelerate transaction recognition and provide enhanced security, lesser storage requirements, and shorter delivery cycle times; integration with cognitive technologies will result in extreme automation.

RoboticsRobotic Process Automation (RPA) will drive “extreme automation” within rules-based finance processes resulting in greater capacity for value-added activities.

Natural language processingNLP will provide finance with unconstrained, real-time information accessibility, beyond just the numbers.

Cloud ERP and EPMCloud technologies will give finance the ability to select best-in-class application solutions, real-time data accessibility, and business partnering capabilities.

CognitiveCognitive technologies will advance automation past execution, through the ability to reason and infer trends and patterns from both structured and unstructured data.

The finance technology ecosystem will continue to evolve and be integrated.

Page 5: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

Blockchain and Fixed Assets: Introduction

Page 6: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

7© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

Introduction to Blockchain H

ow it

wor

ks

Blockchain enables trust between parties,

without the need for an intermediary/guarantor

Bob

Alice

Digital-Trust

Alice wants to send money to Bob

Bob receives hismoney from Alice

Transaction is represented online in

a block

Block added to chain as transparent and

irreversible record of transactions

The block is broadcast to every

party on the network

Those in the network approve

transaction as valid through consensus

A Blockchain is a permanent record of transactions in a network. The system is protected by using a reference to the previous block ("hash"), which is encrypted. Breaking into the system, would be so evident than any illegitimate changes to the system can be detected and cancelled.It’s like there’s a notary present at each transaction. This way, everyone has access to a shared single source of truth. This is why we can trust the Blockchain.

Page 7: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

8© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

Finance impacts: Acquire-to-retire

Turn legal obligations into automated processes. Expected to provide a greater degree of security, reduce reliance on trusted intermediaries, and lower transaction costs.

Process issues/pain points today— Single source of truth for asset records and information are difficult to

implement— The finance function has little visibility into asset transfers, sales,

impairments, and retirements— Transactions between legal entities can be difficult to track

Asset ManagementAsset Creation

AssetRecord

Creation

FixedAssets

Month End& Reporting

Capital Planning

ProjectWorkOrder

Mgmt. & CostAccumulation

FinanceConsolidation

ProcessControls

AssetDepreciation/Retirement/Impairment

Acquire-to-Retire: Process Decomposition

Impacted by Blockchain Non-Impacted Process

Summary impact of digital ledger technologies

High

Page 8: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

9© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

Blockchain as a fixed asset solution

Client ChallengesSolution potential benefits

— Demystify Blockchain technology for S2P and A2R finance processes — Expected to generate successful Blockchain opportunities across various clients

(e.g. Equinix)

Fixed asset + S2P: Pain pointsManual / Complex Asset Management: Existing systems and processes around Fixed Assets are labor intensive, with high propensity for errors due to lack of automation.Decentralized System of Record: Data is often not comprehensive and decentralized across an enterprise –inhibiting proactive and timely responses to potential issues. Limited Financial Visibility: The finance function has little visibility into asset transfers, sales, impairments, and retirements.High-Cost Solutions: Current Enterprise Asset Management solutions are costly for businesses to implement and maintain.

Page 9: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

10© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

The Blockchain stores and tracks multiple asset and transaction attribute types.

Origin

Requester

VendorDate of Purchase

Vendor

Depreciation Schedule

Location History

Maintenance History

Maintenance Schedule

Invoice and Payment History

Shipment Date

Approver

Category

Blockchain for physical asset transactions

Page 10: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

11© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

Blockchain for physical asset transactions

Smart contracts are stored on the blockchain as part of the distributed ledger. Changes to the ledger require approval by participants according to an agreed upon endorsement policy. This goal is achieved through consensus.Smart contracts not only define the rules and penalties around an agreement in the same way that a traditional contract does, but also automatically enforces those obligations.

Seller BuyerSmart Contract

If all conditions are true, the transaction is verified

Page 11: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

12© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

SettlementConditions metEvent triggersPre-defined contract

Smart contracts

The contract dictates movement based on

conditions met.

The smart contract triggers the pay-out

event upon consensus

By initiating a transaction the code will execute the step triggered by those

parameters

Computer code that automatically

executes all or parts of an agreement and

is stored on a blockchain-based

platform

Turn legal obligations into automated processes. Expected to provide a greater degree of security, reduce reliance on trusted intermediaries, and lower transaction costs.

Page 12: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

13© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

FA + S2P – Centralized ledger vs. Blockchain

Centralized data Distributed Blockchain ledger

Receipt

Single Point of Failure

A centralized database essentially has a single point of failure while a distributed ledger gives control of all its information and transactions to the users and promotes transparency.

Page 13: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

14© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

FA + S2P Key attribute – Shared information

Smart Contracts

Shared information is often not fully trusted. Each record is time-stamped and appended to the event before it creating a permanent, auditable and shared record of every associated transaction.

Page 14: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

15© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

Blockchain: Fixed asset + S2P lifecycle processes

ReceivePurchase Asset Shipped Installation

Create PO Link Asset Tag to OrderApprove PO EnhanceReceive / Install Maintain

Service APIs to upload P.O to Blockchain

Service APIs to update P.O status on Blockchain

Service APIs to update Asset Tag status on Blockchain

Service APIs to update Receipt / DPIS status on Blockchain

Service APIs to update Asset status on Blockchain

— Web page to upload P.O into Blockchain

— Dashboard that shows P.O

— Web page to update P.O Status on Blockchain

— Dashboard that shows P.O Status

— Web page to update Receipt / DPIS Status on Blockchain

— Update FA Register

— Web page to update Asset Status on Blockchain

— Dashboard that shows Asset Status— Web page to update Asset UL (if needed)

Accounting

Report / Analyse

Update FA Management Module

— Real time view of Fixed Asset across lifecycle

— Web page to update P.O Status / Asset Tag Link data on Blockchain

— Dashboard that shows P.O Status

Proc

ess

Even

tsB

lock

chai

n In

terf

aces

Blo

ckch

ain

Flow

VendorMSFT

(Proc-Ops)

Enhancing the business process on the Blockchain

Reporting / Analytics

Approver Ops

Retire

Disposal / Replacement

Service APIs to publish Asset Disposal Date & DPIS for replacement asset

— Web page displays Asset Disposal Date & DPIS for replacement asset

P.O P.O

P.O + App

P.O

P.O + App +AT

P.O

P.O + App +AT

P.O + App +AT + Receive + DPIS

P.O

P.O + App +AT

P.O + App +AT + Receive + DPIS

P.O + App +AT + Receive + DPIS + Asset Update

P.O + App P.O + App P.O + App

Legend

Service Integration Points

< ReST API >

Web Capabilities

BlocksP.O

P.O + App +AT

P.O + App +AT + Receive + DPIS

P.O + App +AT + Receive + DPIS + Asset Update

P.O + App

P.O + App +AT + Receive + DPIS + Asset Update +

Disposal

OpsBuyer Ops FA

Page 15: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

Blockchain: Finance Process deep-dive

Page 16: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

17© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

Fixed asset E2E lifecycle

Requisitioninitiation

PO creation and approval

Goodsreceived

System updates and G/L posting

Asset status change

Assetretirement

= S2P Processes= Fixed Asset Processes

Page 17: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

18© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

Initiate requisition

Validate PO withPO category

Purchase ordercreated

Goods received

Purchase Order details stored: Amount, Product details, Date, etc. Vendor details stored: Name, Address, Contact Information, etc. Order details stored: Shipping, Tracking, Goods receipt date, Invoice information, etc.

Approval process

Update AP module

S2P processes

PO Approval details stored: Approval and workflow/audit requirements for purchasing policyPayment details stored: Payment amount, Payment date, Check Number, etc.

Requisition details stored: Asset Number, Asset Specifications, PO Category, etc.PO validation details stored: Updated PO Category, if needed

Page 18: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

19© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

#KPMGGFRVC

Fixed asset processes

Asset procurement

Asset enhancements /repairs

Asset creation inFA module

Asset write-off

Enhancement details stored: Useful life adjustment, etc. New asset details stored: Asset description, Location, DPIS, FA Category, Cost Center, Cost, Depreciation schedule, etc. Write off details stored: Write-off date, amount, etc.

Maintenance and repairs

G / L posting

Maintenance details stored: Date of repair, Part replaced / repaired, etc.G/L Account details stored: G/L Account number, respective FA category, etc.

Asset details stored: Asset description, Location, DPIS, FA Category, Cost Center, Cost, Depreciation schedule, etc. CIP details stored: CIP account information, Asset completion percentage,

156K+Transactions &

$1.3B Spend

Description,Location,DPIS, etc.

Page 19: Finance automation and recent trends in fixed assets · 2020-02-27 · Finance automation and recent trends in fixed assets ... Strategy implementation and Finance Governance Technologies,

© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 759718

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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