Julio Dalla Costa, Bramasol’s Director of Technical Accounting, discusses the concept of using a holistic embedded analytics approach to unify all of the complementary systems that must work together for success in the Digital Solutions Economy.

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Also, below is a transcript of the podcast episode:

Jim Hunt: Hello, this is Jim Hunt for Bramasol’s Insights to Action podcast series. Today we’re going to look at embedded analytics in the Digital Solutions Economy, and we’re really lucky to have an expert on it. Julio Dalla Costa, who is Director of Technical Accounting at Bramasol. Julio, It’s great to have you back. Welcome.

Julio Dalla Costa: Hey, Jim. How are you today?

Jim Hunt: I am good. Thank you. Well, why don’t we start off for those who aren’t familiar with the Digital Solutions Economy to maybe provide a brief overview and touch on some of the things that are different about it, that will play into our discussion of analytics.

Julio Dalla Costa: Yeah, so, you know, the digital economy is really about the next evolution of the subscription economy. It’s really about using products as services. So in the traditional economy, a company would come out and produce goods or services and they would sell it outright to the customer. What we find now is everything coming out, especially in the technology space, you find that everything is as a service. So what’s the benefit to that? From a customer perspective you only pay for what you use. So if I have a subscription and I use it, you know, two or three days a month, really, I’m only going to be charged for two or three days a month. From a company perspective, you know, it seems like all the valuations for these companies are much higher because it’s a predictable form of revenue.

Julio Dalla Costa: So when you have a subscription, you know, I have my Amazon subscription for music, I pay 9 99 a month. Or, Fitbit or what have you, where I’m paying $10 a month. If you think about it from that perspective, a company can forecast my $10 for the next 10 years, as long as they keep the product up to date and I’m still loving the product. So think about that times 10 million users, you know, Wall Street really appreciates a forecastable business model. The other thing about the digital economy is you have a lot of dynamic pricing and it’s often based on usage or consumption. So when you think about it that way, it changes the dynamics of how companies internally do accounting and reporting for the products and services, but more importantly for the user, it changes the user experience.

Julio Dalla Costa: So, if you think about the digital economy, we have broken it up into six different areas. t really begins with the CRM and the e-commerce side of it. How does that customer buy or purchase, or use or consume services? So once you have that platform available for customer experience, you really started looking what the customer is doing on my platform. How does he, or she execute an order? How do they consume, how do they order my product? Do they do it online? Do they have to fill out something? And that is a very important part of it because if you can get the customer to your platform, the order management and execution is a very critical aspect. The next stage is really okay, the customer has ordered my product, or he has ordered my service. What is the back office? Supply chain, logistics, fulfillment of that product or service.

Julio Dalla Costa: So a lot of companies now are starting to do subscription models for the usage of vehicles. If you think about it that way, once a customer says, I’m going to do a subscription with Tesla; I’m going to be a thousand dollars a month. I went to Tesla.com. I ordered a product. Well, there’s a whole number of challenges that Tesla now has to do to provide that service. How do they deliver the vehicle to your home address? How to they fulfill it? So I also get my Tesla subscription service. For Tesla in the back office, what are the finance and billing procedures? How are we invoicing? How will we be recognizing revenue?

Julio Dalla Costa: And then every month I start to pay my thousand dollars a month in subscription fees. What is the cash receipt? What is the cash treasury process to receive those dollars? And how am I allocating those dollars to the right customer? And then finally, you know, as I report my numbers to the public, since Tesla’s a public company, I have to start thinking about how am I going to report these outcomes of my subscription economy to the public? So what tools am I using in the SAP? Will I be using SAP Revenue and Accounting? I may be using some type of reporting tool to put information in my 10K or 10Q. So Jim, sorry, that was a little long, but I wanted to just go through to make sure we all have a good footing on that.

Jim Hunt: Oh, that that’s a perfect overview. And a part of what comes out of that is that data is coming from a lot of different places and it’s coming faster, more volume, more velocity and more complexity. And you have to put all those pieces together, which to my next question, sounds like analytics are more important than ever in your Digital Solutions Economy environment. So maybe you can elaborate a little bit about the analytics challenges.

Julio Dalla Costa: Absolutely. And the challenge really is how do you assimilate, especially, I like what you said about the dynamic changes and volume and velocity of the scenarios, because if you go back to the Tesla example, they have millions of people using their products. And remember the vehicle is just the platform. They have all these services built into the vehicle that actually has software updates, that need to be managed. So what that means from a analytics perspective is that you need it in basically every stage of the digital economy, from the beginning of the journey where you start thinking about your customer engagement. How am I going to handle my platform? Well, there’s a whole bunch of analytics that you need to understand. Am I keeping the customer on my platform long enough? Is he or she engaged on the platform?

Julio Dalla Costa: Because the higher level of engagement, the more likely is the customer will buy more from you. And obviously that goes to the user experience. So am I creating a dynamic solution where a customer can easily go into my platform to order products or services. And then obviously another big piece of analytics is really the logistics of it. So where’s my product. It was shipped today. Amazon has a really good feature when you buy from Amazon. Most companies do, but I like Amazon, especially because you can track exactly where your product is at any given time. Well, that is analytics in itself. Right? So if you think about the delivery of the project and the logistics of it for a customer, and it ties right back into user experience, a customer can find out where his or her product is and the company can be tracking all that to make sure that the user the experience is acceptable.

Julio Dalla Costa: Let’s flip to the billing and invoicing, the payments and collections, the revenue, accounting, and reporting. It’s all built into analytics. And, you know, the question we get most Jim is how do you really assimilate all that data? Because you may have a hundred different data streams. So what is useful is the creation of these dashboards that are pulling data from all over the organization, whether it be in platform, user experience, logistics, internal billing, to the company externally reporting. So you could create a number of different dashboards where you really have this visibility into what you’re looking for for each user. So the procurement manager may be more interested in logistics, data fields, whereas the director of finance, he or she is more interested in understanding what have we built so far, how much money have we collected and what have we reported?

Julio Dalla Costa: So, you know, there’s really no way to silo in all the information from one section or the other, because really as dynamic changes are happening, volumes are increasing. The data’s flowing very quickly. It’s very important that you use a real time tool, but I think more importantly, you’re going to have more focus dashboards that flows into certain areas because obviously you have to make sure that the data you’re pulling is relevant to the party that’s reviewing the data or using the data.

Jim Hunt: That’s great and, as you were discussing that, it occurred to me that on the user side you’ll want to keep everything engaging, calm, simple, responsive, but on the other side of the curtain, it’s almost a complexity nightmare to have all those moving parts correlate and work together and to give all the stakeholders inside the company the information they need. So it’s a really interesting dichotomy between what the user sees and what’s going on behind the curtain

Julio Dalla Costa: From that perspective, you know, especially myself as a former auditor is how do you understand the dynamics of a single source of truth for that platform? Because, you know, you may have a hundred orders that came in yesterday, but if the procurement manager is pulling his or her dashboard and the orders are not updated, and it says I have 50 orders, then you’re missing 50 potential revenue opportunities. So it’s very important that you’re using a single source of truth where you can then slice and dice that data into different areas of people who are using the data. So a good example of that is if a user goes onto our platform and says, we have 100 customers and they have placed 100 orders at the end of last night. You know, if the procurement manager comes in and pulls his report and, you know, he has a hundred vehicles to procure, that means the same data is flowing into billing and invoicing.

Julio Dalla Costa: So now we have orders, we have to set up those 100 invoicing requests to go out to the customer as receivables, you know, and on invoice once the customer product is delivered, we will report that as revenue transactions. So, as you can tell, I’ve just shown you three examples of the same 100 orders from one day. You know, that’s a very simplistic example. Think about Amazon or whoever else, they have millions of these transactions happening on the hour. So, challenge is how do you make sure that everybody’s aligned and in sync with the real data coming out of the system.

Jim Hunt: Yeah, I love the way you mentioned the single source of truth because that’s kind of at the heart of what we call tend to call embedded analytics. And, maybe you can discuss specifically some of the, the SAP tools and so on, because embedded analytics to me means it’s in every process. It’s not an add on, but it’s an integral part of how you design all of those related processes that you talked about earlier.

Julio Dalla Costa: So you think about DSE, you know, we have six major areas, every area needs to have an analytic analytical component to it because you can’t function without it. And why that’s important is because someone or some system needs to be able to streamline all the information coming in. You’re going to have hundreds of data sources, some companies, probably thousands of data sources, and you need a way of really streamlining the data sources into a platform that’s going to give the results for each specific user. I think that’s the really important point, Jim, is that you need to have a specific user request because the finance person’s request is going to be different than the procurement person’s, and it’s going to be different than the user engagement person. So, you know, I think if you think about a large funnel, the funnel is all the data sources, and as it comes in, you have one set of consistent data sets coming in to the system.

Julio Dalla Costa: Obviously Bramasol is clearly affiliated with SAP. So something like,SAP Analytics Cloud is key, where it has the ability to take data from multiple sources and then combine it and report it as if it was one source for the specific user. I think that whole process of streamlining and bringing all the data sources into one analytical umbrella is very important. And what we have seen from our users is they really enjoy it because they don’t have to worry about, you know, if I slice and dice this data and I give the CFO, we need to avoid the problem like we talked about 100 orders and the chief procurement officer sees 50. I don’t have to worry about that that gap, because they all are seeing the same numbers in different formats or different, uh, formats and forms. So I think that is the critical piece of this whole puzzle, Jim.

Jim Hunt: Yeah. Thank you for bringing up SAP Analytics Cloud and, just correct me if I’m wrong, but my understanding of a SAP Analytics Cloud is, becuase it’s agnostic and it’s in the cloud, it can really be a unifying force even before SAP users make that big move to S4/HANA. But the analytics cloud actually kind of helps pave the pathway to get there, right?

Julio Dalla Costa: Oh, absolutely. So I think SAC Analytics Cloud was built as a format to take non SAP data streams as easy as SAP data streams. So you can have, you may do your accounting in SAP, but you may have your sales commission in Xactly. Or you may use a Hyperion or you may use other tools, you know, maybe Vertex for taxes. And essentially it’s just a data feed. And the data feed is no different, whether it comes from SAP or whether it comes from, you know, Xactly or Vertex or whoever else, it just comes in as data. And then you as the user, and it’s pretty user friendly, you set up that link or API, and once you set it up and it starts flowing the data, then you tell SAP analytics cloud, how you want to see that data.

Julio Dalla Costa: And actually the cool thing about SAP Cloud Analytics cloud is it’s going to suggest some formats or some design formats for you. And then if you don’t like it, you can create your own. And then you just set it up as a daily report. You can have reports running every hour. You can have reports running every month. So the message I have seen from our customers is it’s very flexible and it’s basically agnostic. It doesn’t matter if it’s SAP or not. I mean, that’s the whole point of using the cloud tool is that it analyzes from hundreds of different data sources, SAP or not. That’s great.

Jim Hunt: We only have a few minutes left, but maybe you could just really quickly enumerate a few examples of how the embedded analytics would be used to.

Julio Dalla Costa: Yeah, absolutely. So if you go back to what I was talking about before, you start thinking about things like customer engagement, order management, delivery, and procurement billing, cash receipts and also privacy, security and risks. For example, if you think about how you check the use of entitlements, a customer comes in, let’s take the Tesla example, for instance, they ordered the vehicle, but then you can do the self-driving component. How do you bundle those two goods and services under one arrangement? You know, in the Tesla example, there clearly is upselling. So if you want to get the vehicle, I believe you have to pay $10,000 more for the self-driving component and then an additional subscription fee. So those are the kind of things that analytics are going to help you with.

Julio Dalla Costa: You know, when it comes to the back-office within companies, you’re integrating the reporting of all these analytics, for example coming right out of SAP, RAR, or revenue and reporting. And then lastly, you can start bundling. Because, you know, we just talked about revenue, but obviously beyond revenue, there are assets, so you need asset management, or there’s cost components, how do you track costs? And then even if you think about it, if you’re in a manufacturing environment, and I think we have actually used this case study with a couple of companies before, if you have safety checks and you’re looking at the maintenance of like, let’s say airplanes, you want to make sure that that maintenance record is transparent. It’s auditable and it’s it’s real time. So, you know, every time you jump on a plane, you want to make sure that maintenance record is accurate and transparent. Those are the types of things that, you know, the accuracy of that is critical. It’s not just a nice to have. It’s critical in an environment such as flying airplanes for the population. So I think those are some good use cases for that example.

Jim Hunt: Yeah. I like how you brought in some things that are literally life and death. Those are important. Just in the minute or so we have left, um, maybe you could switch and talk about what should a listener to this podcast that wants to get into the DSE space and is looking at embedded analytics, based on the discussion we just had, what should they be doing? What are their next steps?

Julio Dalla Costa: It really it’s, you know, it starts with user experience. It starts with what are you looking for? What type of data is important for you, and how can you be more focused on that data? And if the answer is this data is more important to me, then it becomes very simple. We start with that and start from using analytics from that perspective.

Jim Hunt: So you start with what you need to know and then build a system around it. Correct. And based on everything we discussed, if you start with a system that is extensible and adaptable and agnostic, then you can pull more things in as you need to.

Julio Dalla Costa: Yes, exactly.

Jim Hunt: Julio, thank you again. I always learn something when I talk to you and I certainly did today. Thanks again so much. Have a great day.

Julio Dalla Costa: You too. Bye-bye.