ROI CASE STUDY INTACCT EMERGENT GAME TECHNOLOGIES

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1 ROI CASE STUDY INTACCT EMERGENT GAME TECHNOLOGIES THE BOTTOM LINE Emergent Game Technologies deployed Intacct as its sole financial management system. This enabled the company to consolidate financial information across three non-us subsidiaries that were all operating in their own base currencies, significantly increasing productivity and streamlining processes while improving accounting accuracy and deferred revenue management. ROI: 73% Payback: 1.9 years Average annual benefit: $72,790 THE COMPANY Emergent Game Technologies develops tools and technologies required to build, test, manage, and expand interactive games. Its engine is designed for use with every major interactive game platform, from its roots in PC games to nextgeneration platforms such as PLAYSTATION 3, Xbox 360, and the Wii. THE CHALLENGE Emergent was using Intuit QuickBooks to manage its deferred revenue accounting. With several non-us subsidiaries reporting in their own currency, Emergent was forced to utilize many manual processes, which resulted in frustration, lost productivity, and accounting inaccuracies. Additionally, QuickBooks did not support multiple-currency accounting. The QuickBooks import-export process was extremely cumbersome and prone to errors, which required: manual data extraction from QuickBooks importing that data into Excel data processing and currency conversion re-importing the data back into QuickBooks manipulating the data to ensure accurate monthly consolidation. Emergent needed an accounting application that would enable it to reconcile multiple currencies across its multiple subsidiaries, reduce manual data entry and monthly consolidation processes, and streamline revenue management. THE STRATEGY In November 2008, Emergent began looking for a software-as-a-service application that automated financial consolidation. Emergent needed to combine all entities Corporate Headquarters Nucleus Research Inc. 100 State Street Boston, MA Phone: Nucleus Research Inc.

2 TOPICS Software as a Service Enterprise Applications into a single accounting system. It researched other applications including NetSuite, but mainly Oracle and SAP. Emergent chose Intacct because: The application had robust financial management functionality, and could support multi-currency and multi-entity accounting, as well as financial consolidation. Emergent liked the on-demand model because it meant not having to maintain servers or other IT resources. Intacct was cost competitive. The application was user friendly and required minimal training and support. Mapping the data was the most time-consuming aspect of the project, but the overall migration to Intacct was unproblematic. The most difficult part related to the deferred revenue schedule whereby the calculations to be entered on the template for upload had to be calculated manually. If there was any slight variance, an error message occurred noting the file was rejected. It would have been easier had Intacct included a module to help compute these calculations automatically, which would then populate the template for upload. However, users adopted the system quickly and found it was user friendly. The conversion began at the beginning of January 2009 and was deployed March 1. Currently, Emergent has two full-time users and a number of other users who view the real-time dashboards on Intacct. It is soon deploying a module for employee expenses, which will increase the number of users on Intacct. Additionally, Emergent already uses Salesforce.com for CRM management and plans to integrate it into Intacct this year, once Emergent is fully familiar with the Intacct application. KEY BENEFIT AREAS Intacct simplifies and automates the financial consolidation process for Emergent by creating more efficiency for monthly consolidation. The application streamlines deferred revenue management and revenue recognition, resulting in more visibility for the department. The ability to upload CSV files into Intacct makes payroll faster and more accurate and enables Emergent to provide greater granularity and visibility into accounts payable. BENEFITS Indirect 3% Direct 97% TOTAL: $218,370 2

3 Key benefits from automation resulted in significant productivity gains specifically in: Reduced month-end cycle time. Emergent s non-us subsidiaries can report in their own currency. The system automatically performs the currency conversion and no longer requires manual import and export for deferred revenue management. Increased payroll accuracy. The automated process resulted in one employee spending 2 fewer days manually correcting payroll errors in QuickBooks. Simplified financial consolidation. As Emergent grew, it needed to deal with multiple currencies, various accounting standards, and a host of reporting and compliance regulations. Intacct allowed Emergent to combine three entities into one system, making the monthly close faster and more efficient while turning disparate data into useful, business-critical information. In addition to productivity gains, Emergent was also able to re-deploy one accounting staff position. KEY COST AREAS Key cost areas for the deployment included software, consulting, personnel, and training. Although two full-time employees are needed to support revenue management on an ongoing basis, that cost is not included in the ROI calculation because these positions already existed and were previously used to support QuickBooks (there was no net increase in IT resources). Personnel costs were minimal; upfront consulting costs necessary for the conversion were also minimal. Training costs were negligible and there were no other costs. COSTS Personnel 12% Training 2% Consulting 16% Hardware 0% Software 70% TOTAL: $145,936 BEST PRACTICES The more intuitive nature of the application made for minimal training. There are approximately seven, 40-minute pre-recorded online training sessions, which users found very effective in order to accomplish basic tasks. However, specialized users who utilize more advanced functionality need to contact Intacct Support. Emergent also learned two key points while deploying the application: Less effort to convert and roll up subsidiary ledgers will be needed if conversion is in place at the beginning of the fiscal year. 3

4 Default locations and product codes need to be administratively set up at the beginning of the deployment, as they cannot be added once a payment is received. CALCULATING THE ROI Nucleus calculated the costs of software, hardware, consulting, personnel, training, and other investments projected over a 3-year period to quantify Emergent s total investment in Intacct. Direct benefits calculated included a staff reduction of one full-time accountant position. Indirect benefits included reduced month-end cycle time, payroll accuracy, and deferred revenue schedules all contributing to increased productivity of employees. Productivity is calculated based on the average fully loaded cost of employees using a productivity correction factor to account for the inefficient transfer of time between time saved and additional time worked. 4

5 DETAILED FINANCIAL ANALYSIS EMERGENT GAME TECHNOLOGIES SUMMARY Project: Intacct Annual return on investment (ROI) 73% Payback period (years) 1.86 Average annual benefit 72,790 Average annual total cost of ownership 48,645 ANNUAL BENEFITS Pre-start Year 1 Year 2 Year 3 Direct 0 70,900 70,900 70,900 Indirect 0 1,890 1,890 1,890 Total Benefits Per Period 0 72,790 72,790 72,790 DEPRECIATED ASSETS Pre-start Year 1 Year 2 Year 3 Software Total Per Period DEPRECIATION SCHEDULE Pre-start Year 1 Year 2 Year 3 Software Total Per Period EXPENSED COSTS Pre-start Year 1 Year 2 Year 3 Software 34,000 34,000 34,000 0 Consulting 24, Personnel 1,292 5,169 5,169 5,169 Training 2, Other Total Per Period 61,532 40,065 39,169 5,169 FINANCIAL ANALYSIS Pre-start Year 1 Year 2 Year 3 Net cash flow before taxes (61,532) 32,725 33,621 67,621 Net cash flow after taxes (30,766) 16,362 16,810 33,810 Annual ROI - direct and indirect benefits 53% 54% 73% Annual ROI - direct benefits only 50% 51% 70% Net present value (NPV) (30,766) (16,538) (3,827) 18,404 Payback (years) 1.86 Average annual cost of ownership 61, ,597 70,383 48,645 3-year IRR 44% 44% FINANCIAL ASSUMPTIONS All government taxes 50% Discount rate 15% All calculations are based on Nucleus Research's independent analysis of the expected costs and benefits associated with the solution. 5