Could you describe Clarity Systems, an IBM company?
Clarity Systems was founded as a consulting company in 1995 and began selling software in 2000. We launched Clarity FSR in January 1997 and we were acquired by IBM last October. We�re headquartered in Toronto, with regional headquarters in the UK, France and Singapore, with smaller offices around the world.
We deliver software solutions to the Office of Finance. We have two products � Clarity 7 and Clarity Financial Statement Reporting, or FSR for short. Clarity FSR is the major reason IBM bought Clarity Systems � it�s the leading software solution that helps companies automate financial statement reporting to create annual and quarterly reports more quickly and reduce the risk of mistakes in those reports.
Because Clarity FSR can be used as a platform for any complex report that combines lots of data with narrative text, we�re finding that companies are also using it for regularly produced internal reports as well as external reports. Last year we were the world�s fastest-growing CPM vendor, largely as a result of the growth of FSR. Its support for financial statement reporting aligns nicely with IBM�s focus on the Office of Finance.
Could you describe what Clarity Systems software does, who uses it and the value it provides?
Clarity FSR is really dedicated to the Office of Finance, especially to the CFO and anyone involved in external report creation, because getting annual and quarterly reports done accurately and on time is really important to outside investors. When something goes wrong with one of these reports, the CFO is really on the hook for it.
For example: United Technologies is a multi-billion-dollar, multinational company based in the U.S.. It makes Sikorsky Helicopters, Otis elevators and Pratt and Whitney aircraft engines. They bought FSR a few years ago because they saw problems with their financial report creation processes. For example: each division had to export the latest numbers from lots of different databases and unsecured spreadsheets, which meant a lot of spreadsheets in a lot of people�s hands. Then they had to consolidate all of these spreadsheets without making any mistakes. Then someone would embed the most important numbers inside a narrative text to explain the numbers to investors, which is what you see in a typical annual report.
Then the all-important review and approval process saw hundreds of emails going back and forth all over the place. So the report creation process was really manual and inefficient. And if a mistake was found in one of the numbers, it might require edits in several places and even impact the narrative, and that�s assuming the mistake was even found. Once the final document was ready, it would have to be exported into different formats, which introduced more opportunity for error.
So the process is tough. But on top of that, the SEC in the U.S. mandated the tagging of every number in the financial reports using XBRL format, which means extensible business reporting language. XBRL tagging was a huge amount of work at the end of the process which increased the risk of late filing.
So in essence you have a manual, inefficient, risk-prone process for a really important report that�s read in detail by external investors. You can see why any CFO who has to sign off on the final numbers would find this a little scary.
This is where FSR came in. With FSR, the exports feed into a single database, so there�s lower risk of error. The numbers are viewed in Excel spreadsheets and easily link into standard Word documents, where much of the standard narrative explaining the numbers exists. And since the numbers automatically flow from the spreadsheets into the Word doc, any time a number changes, it�s automatically changed in the document. That guarantees consistency throughout the document even after last-minute changes.
These links reduce the risk of error and the use of Excel and Word make it easy to set up. It also leverages automated workflow between groups that need to review of approve the datat. And because all the outputs are coming from a single data source, you�re guaranteed that the outputs are always consistent and accurate.FSR also uses something called Integrated XBRL, which means you only have to tag the data fields once � after that all your future reports will use the same tags.
So after deploying FSR, United Technologies lowered their process costs, reduced their risk of late filing and error, and reduced their risk of insider leaks because people could be given access on a need-to-know basis, and they had a good audit trail showing how they came to the results. The CFO lowered cost, lowered risk and increased confidence in the accuracy of the final report. That explains why we�ve had over 300 companies buy it.
Clarity Systems software is now part of the IBM Business Analytics software portfolio. What additional value do Clarity customers gain because of this? What additional value do IBM customers gain?
There are a lot of benefits for Clarity customers. The power of IBM R&D means Clarity products deliver more features sooner than clarity could have delivered on its own. The scope of IBM delivery engine spans every country in the world, so local subsidiaries can easily leverage a local IBM Clarity resource.
The products will be integrated within the IBM business analytics portfolio, which increases the scope of benefits customers can get. At the time of the acquisition, IBM had invested more than $14 billion in 24 analytics-related acquisitions, dedicated more than 7,000 consultants and opened eight analytics centers of excellence around the world, which is a phenomenal amount of investment that our customers will benefit from.
On the IBM side, the IBM Office of Finance customers will obviously benefit from using FSR. And FSR complements the IBM business analytics software portfolio for finance professionals nicely. Also, IBM is also adding 400 Clarity financial management experts from Clarity, so it expands IBM�s capacity in the sales, services and support.
Vision 2011 is the annual Clarity Systems customer conference. What will attendees see and what is different from past years?
We�ve repositioned Vision this year to be the Premier Event for Financial Management. We�re expecting close to 700 attendees, so it�s a lot bigger than in past years, with more sessions spanning both Clarity and IBM, including some great general session speakers including former SEC chair Christopher Cox. We�ve got fantastic case study presentations done by well-known companies including Prudential, Time Warner, CIGNA, Omron Healthcare, Holt Cat, Exelon, and attendees are going to learn about the latest innovations in our products, have a chance to network with their peers and ask questions of IBM and Clarity executives regarding the acquisition.
The big difference from last year is that people will see more � more speakers, more keynotes, more networking and more demos. Essentially, everything you�d expect at something called the Premier Event for Financial Management.
Christopher Cox was instrumental in modernizing the technology driving the SEC, including the creation and adoption of XBRL. Could you comment on his story as it relates to Clarity Systems software?
Christopher Cox was a champion of investors� transparency rights. He spearheaded the �plain english initiative� aimed at eliminating legalese from investor communications. But the biggest thing he did that impacted Clarity Systems was mandating a new interactive disclosure systems using XBRL. Tagging every number in an investor report with XBRL made it easier for investors to extract and compare data across or betwen different companies, which further helped the transparency initiaitve.
Clarity FSR had an Integrated XBRL engine, so we could not only automate the creation of external reports, but we could embed the XBRL tagging process inide the external report creation process, so the mandate that Christopher Cox initaitived a huge amount of interest in FSR, so we have him to thank in many ways for our growth.
It�s almost as if with XBRL, every number tells a story and through Clarity FSR you can read the story more clearly.
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