Multi-Currency in Project Management Systems

With more and more of the business in the creative industry taking place in a global dimension, many creative companies now have to handle foreign currencies as well as there local currencies. Traditionally this is often done in a manual ad-hoc way where up to the time when documents for foreign clients or suppliers are produced everything is based on the local currency. Only at the final stage of generating those documents in word or excel an exchange rate is applied and currency values are added on.

Again when payments are processed this is in many companies handled via the local currency bank account, e.g. a cheque for an AR invoice in foreign currency is received and banked via the home currency account . In the accounting system the bank statement is then allocated to the home currency invoice amount with the foreign currency invoice settlement recorded manually outside the accounts package. Any fluctuation differences between the time of the invoice and the payment are adjusted on a regular basis using manual accounts journals.

Whilst such a manual system will usually work sufficiently for smaller enterprises with only few overseas transactions it is a different picture for global groups or for companies with a high international turnover.

In these circumstances many companies consider the introduction of a project management and accounting system that is able to handle multiple currencies. On the project management level this offers big advantages as the conversion of home currency budgets or costs incurred into foreign currency quotations or invoices is completely automated, controlled by a currency table that is updated regularly. Thus the danger of user mistakes that occur with a manual system outside of the accounting software is minimised. The ability for the finance user to overwrite the system table on a transaction by transaction basis offers sufficient flexibility for sudden exchange rate variances.

It also means that for quotation purposes the clients see fee values in their currency based on the initially agreed rate card. Those client facing fee values remain unaffected by any exchange rate changes, whilst for internal budget and comparison reporting all the values can be compared either in the local currency or the foreign currency. The same applies in the case where goods are supplied by overseas suppliers. POs can be generated in the foreign currency quoted by the supplier, keeping details of costs on the job in two currencies.

On the accounting side of course all transactions have to be recorded and valued in the legal tender of the home country, but again foreign currency values can be stored as memo information on GL accounts that are marked as foreign currency accounts, e.g. FC bank, AR or AP accounts.

Experience from the implementation and training of integrated foreign currency systems shows that Agencies, who have introduced them, have all experienced improvements with the following being the main benefits:

- big time saving as no more manual documents need to be prepared outside of their integrated project management software

- manual mistakes extinct for the same reason

- availability of reporting in either currency on a click of a button

- client facing correspondence being generated and visible on a click of a button in either the foreign and the local currency

- streamlined reporting of payments due both AP and AR in foreign and home currency

- banking of money in different currencies simplified

- reconciliation of management accounts in either the local currency or the memorandum values in foreign currency at the click of a button

- currency gains or loss journals made easier as the necessary reports for the ledger valuation are programmed into the accounting side of their systems

Could Multi-Currency Mortgages Provide All The Answers?

This is a risky product but it allows for a certain amount of flexibility, the loan is secured against a UK property but can be denominated in a range of varying currencies, such a Sterling, US Dollars, Euros, Swiss Francs and Japanese Yen. Borrowers can benefit from the lower interest rates, thus reducing the outstanding sum on the mortgage by switching the funds between difference currencies as the values of each rise and fall.

The turbulent market 2008 has seen so far may be the perfect time for investors to choose their mortgages very carefully, options such as this allow borrowers to keep their money safer than it may be tied into the UK property market. This is good news for advisers, brokers and mortgage lead companies who are likely to see money continuing to go into mortgages if a wider range of mortgage options are available.

HSBC recently launched a multi-currency mortgage called 766, it gives customers access to three month fixed term deposits offering rates of interest in Sterling, US Dollars and Euros.

HSBC's deal pays 7% on deposits in Sterling and 6% each on US Dollars and Euros, the offer is currently available until the end of March, and to take it up customers need to open a Premier Bank account with the company and have £60,000.

Having a Premier Bank account with HSBC will get you a dedicated relationship manager who will deal with any questions or problems, it will also give you exclusive access to 250 Premier centres around the world and access to your accounts at any time of the day or night.

The 766 account will also provide fee-free international money transfers over the internet and financial guidance on tax, property, investments and pensions.

Alexander Associated Group (AAG) has said that investors would be wise to look into multi-currency mortgages to avoid the damaging effects of the falling UK property market. The financial management company believes that multi-currency loans can reduce mortgage debts by 5% per year, although single currency mortgages can prove beneficial in some cases.

Similarly to all investments, these deals should be looked at from a long-term perspective. AAG's CEO, David Alexander said: "You would hope over a period of 25 years that you would clear your whole mortgage if you're managing it via a multi-currency mortgage.

"It's just like any other type of fund: it's a currency fund, and you need a currency manager to move it from one currency to another, to where he perceives the likelihood of sterling strengthening against the other currency.

"What you have to do is understand that it's a long-term, not short-term investment - just as a mortgage is a long-term debt. And over the long term you should always do very well," Mr Alexander finished by saying.

Consumers must however be aware that there are serious risks involved in investing the large sums required into multi-currency mortgages as the level of return seen is reliant on the interest rates in different countries, which no one can predict, especially in today's uncertain market.

Mortgage specialist, James Cotton, who works for London & Country, said: "There is a danger in getting a foreign currency mortgage for interest rate purpose reasons only. If you look at US interest rates, they are currently above UK Base Rates and stand at 5.29 per cent, whereas in 2001 they where cheap as chips at 1 per cent. However, the main risk comes from having a different currency mortgage to that of your income as there is an exchange rate risk. Luckily for people holding mortgages in US dollars, the currency has recently depreciated against the sterling

Agresso Bucks the Slump

Sadly, it is not difficult for so many of us to concede that, except for maybe the historic elections in the US and the successful Olympic Games in Beijing, 2008 was a terrible and somber year. It felt long-drawn-out, and many of us will have trouble sinking it easily into oblivion.

Without even talking about our retirement funds and investments being slashed by about 40 percent (as part of a potentially more far-reaching financial crisis) or about 2.6 million jobs lost in the US only, just look at mushrooming late 2008 layoffs news at even the biggest and typically impervious enterprise applications vendors. For example, both Bruce Richardson of AMR Research and Frank Scavo of Enterprise Systems Spectator have reported in their respective December 2008 blog posts about Infor’s deliberate preparations for a downturn.

Along similar lines (although about some vendors there have been rumors rather than a public acknowledgement by the vendor) were the recent cost-cutting and restructuring moves by Sage, Consona, Lawson Software, Oracle, and Epicor Software. The market leader SAP has not yet been plagued by major layoffs per se, although there have been rumors/reports about the recently enacted stringent internal corporate-wide cost-cutting policies, such as restricted traveling, training, events, and so on.

I am indeed aware of the fact that there was no traditional SAP Influencer/Analyst Summit this past fall/winter, after several years of being a major winter event solely for industry analysts and media. Thus, trying to think positively, I am happy to report about coming across at least one vendor with upbeat news and upright posture in these dreary days.

In fact, how often have we heard about a mid-market enterprise resource planning (ERP) provider’s quarterly global results in late 2008 revealing a 37 percent increase in revenue and sales (with 30 percent growth in North America), with the company claiming many significant new orders worth over US$ 1 million?

These results would be even more impressive against the backdrop of its major rivals’ results; for instance, SAP reported a 9 percent year-over-year decline in new license revenues over the same period.

So, Who’s Above the Fray?

The vendor in case is Unit 4 Agresso, an international provider of business software headquartered in Sliedrecht, the Netherlands. The company has over 3,500 employees in offices in 12 European countries and 9 countries outside Europe, with sales activities in several other countries. Depending on the ever-fluctuating exchange rates, Unit 4 Agresso’s revenues for 2008 are expected to be between US$500 million and US$600 million.

Unit 4 Agresso’s major subsidiary is Agresso, a mid-market ERP company and one of the top five providers of solutions for professional services and public sector organizations. With over 10,000 deployments and 1.5 million users in 100 countries, Agresso is also lauded as the sixth largest mid-market ERP provider worldwide in a recent market share report by IDC. Besides, the vendor is the undisputed top provider for public sectors in the United Kingdom (UK), Norway, and Sweden.

Many previous TEC articles and blog posts have talked about Agresso’s go-to-market strategy that starts with targeting Businesses Living IN Change (BLINC) with the business advantage of post-implementation agility. Namely, service organizations with 500 to 5,000 employees in market segments like government, higher education, not-for-profits, utilities, architecture, engineering & construction (A/E/C), information technology (IT) services, real estate, business services, marketing/communications, etc. continually experience a number of change drivers.

Breathing Open Air at NetSuite

NetSuite positions itself as “a leading vendor of on-demand (or cloud computing) integrated business management software suites for midsized businesses and divisions of large companies.” In other words, contrary to its software as a service (SaaS) peers that excel in one departmental function (e.g., Salesforce.com in the on-demand sales force automation [SFA] niche), NetSuite enables over 6,600 mid-market companies to manage their core business operations holistically in a single system.

Its flagship product, NetSuite OneWorld [evaluate this product], includes the realms of accounting/enterprise resource planning (ERP), customer relationship management (CRM), and electronic commerce (e-commerce). Moreover, NetSuite’s patent-pending “real-time dashboard” technology provides easy-to-use views of up-to-date and role-specific business information. Lately, NetSuite has also been acting as a reseller for AdaptivePlanning’s business performance management (BPM) solution.

But the “suite” and “SaaS” themes are only two legs of a three-legged stool that represents NetSuite’s product strategy. Namely, “verticalization in the cloud” is NetSuite’s third “big idea” when it comes to on-demand software differentiation. In fact, NetSuite has made great inroads into certain industries. Particular success has been noted in wholesale distribution, with the NetSuite OneWorld for Distributors product. There is also a healthy install base amid software companies (NetSuite’s peers).

Building Cuckoo Nests Within SAP (and Oracle) Customers

One of the major developments of late has been NetSuite’s hub-and-spoke approach to divisions of large SAP (and perhaps Oracle) corporate customers. Earlier in 2009, NetSuite boldly took the fight into SAP’s “back yard” by becoming the first SaaS suite vendor to receive IDW PS 880 certification in Germany. This involved an audit of the company’s financial management software to determine whether its software complies with the German legal regulations of trade and tax laws.

Some bloggers have meanwhile taken sides in the debate about whether NetSuite is indeed a viable alternative for larger on-premise suites. Paul Greenberg and Vinnie Mirchandani have somewhat favorable views towards NetSuite’s “peaceful coexistence” strategy, while Frank Scavo and Dennis Howlett have expressed some doubts and skepticism.

Sure, both NetSuite and its foes can tout successes in stealing each other’s customers (and point to some customers’ unhappiness and departures on the other side), but the fact remains that NetSuite is now a company with about US$160 million in revenues that has lately had a few profitable quarters. In terms of mere features and functions, NetSuite is likely not the strongest solution in the market, but it is “just enough with simplicity” that wins in the on-demand world. But as a staunch “freedom of choice” proponent, I was at least impressed by NetSuite’s recent moves to support Google Chrome, Apple Safari, and other non-mainstream technologies.

Agresso + CODA, VITA + Link (+ CODA 2go): What’s the Sum

The blog post attempted to explain how the product’s underlying VITA architecture differs from contemporary service-oriented architecture (SOA)-based architectures. Part 2 of this blog series analyzes the CODA Financials product and its underlying Link architecture. Contrary to Agresso VITA, CODA Link (a.k.a. CODA 2link) architecture is indeed SOA-based and supports superior connectivity.

Enter CODA Link Architecture

For its part, CODA’s value proposition is in being a best-in-class financial management solution with possibly unmatched connectivity (i.e., it plays nicely with others, if not almost everyone in the yard). By the very nature of its narrow functional scope, CODA’s financial management software provides a stand-alone solution that simply must fit into customers’ existing IT infrastructure to work with other business systems without negatively impacting them.

CODA focuses on solutions targeted at chief financial officers (CFOs) and controllers. The “best-in-class” financial management designation comes from the single Web browser-based general ledger design that accommodates the “multi-everything” mantra (i.e., multi-currency, multi-country, multi-dimension, multi-subledger, etc.). This way CODA is able to meet both local and global requirements, and the system is compliant with the Sarbanes-Oxley Act (SOX), Generally Accepted Accounting Principles (GAAP), and International Financial Reporting System (IFRS).

CODA’s customers have been raving about the vendor meeting their needs for consistent and accurate data, and an up-to-date “single version of the truth.” In addition, they often talk about improved financial processes (e.g., purchase-to-pay, invoice-to-collection, record-to-report, etc.), more streamlined and effective financial period closing practices, complete audit trails, and flexible enterprise reporting and analysis capabilities.

CODA-Financials is targeted at midsize and large companies across all public and commercial sectors, while CODA Dream targets small and medium enterprises (SMEs) , primarily in the UK. Both products have a long heritage, and CODA certainly has a remarkable reputation in the UK’s CFO/controller community.

CODA-Financials has a similar number of customers as Agresso, and has customers in all geographies (about 2,800 customers in over 100 countries). CODA has local sales and service & support hubs in the US, Europe, and Singapore.