By: Nelson M. Nones CPIM, Founder, Chairman and President, Geoprise Technologies Corporation
On November 30th, 2018, Geoprise Technologies released a brand-new General Ledger subsystem. It’s the first of four new financial applications we are adding to the GM-X ERP for Blockchain application suite. We’ll be adding Accounts Receivable, Accounts Payable and Fixed Assets subsystems soon.
The sceptics out there (and the world is full of sceptics) are already asking, “What? Another General Ledger Application?” If you are one of them, this blog post is for you.
Here I shall focus on what makes our General Ledger subsystem different from all the other accounting software on offer these days, and why those differences are important.
It Runs on the Blockchain
The GM-X General Ledger subsystem is the world’s first and only fully-functional financial application to run on blockchain technology, out of the box. Our nearest competitors are still in the proof-of-concept phase. Don’t expect to see fully-functional, enterprise grade applications from them until 2022 (at least).
Why is this important? Forget about paying suppliers in cryptocurrency, and using artificial intelligence (AI) to seamlessly execute “smart contracts” with trading partners. These are indeed bold, exciting and forward-thinking ideas, but way out in front of what matters today to every Chief Financial Officer (CFO) I know. Instead, focus on just one pressing concern: security.
Nearly a year ago, when Geoprise first published its GM-X ERP For Blockchain White Paper (PDF), I wrote:
As hacking by cybercriminals and state sponsored entities grows ever more frequent and sophisticated, ‘hardening’ existing systems has become a never-ending, costly and ultimately futile effort. Businesses and consumers no longer trust the patchwork approach to adequately protect their information assets.
In October 2018, Bloomberg BusinessWeek reported how operatives of China’s People’s Liberation Army inserted tiny microchips into server motherboards to infiltrate America’s top companies, among them Amazon Web Services (AWS) which dominates the market for cloud infrastructure services. To be fair, Amazon (and Apple, which was also named in the report) immediately denied that their servers were compromised, but Bloomberg BusinessWeek continues to stand by its story. Still, intellectual property theft remains a major issue in the ongoing trade dispute between the U.S. and China which has roiled world markets in recent weeks.
For today’s CFOs the stability of capital markets, and managing information security as well as intellectual property risks, are much more urgent concerns than figuring out how to receive payments in Bitcoin. Recent news from the information security front is reinforcing their widely-held belief that mission-critical financial applications must remain on company premises, under lock and key, even if it were less expensive to run them on cloud services.
An enterprise, like Geoprise, which operates from several locations around the globe, can keep its information assets completely secure by running the GM-X General Ledger (along with other integrated GM-X ERP subsystems) on premise at each location. Journal entries created within those organizations are posted immediately to the local GM-X ledger, and are also passed immediately and automatically to the headquarters organization over a private blockchain network, where they are posted again to the global GM-X ledger which runs on premise at the headquarters office. This gives both the local and headquarters organizations instant visibility of their current financial position.
This solution is completely secure because:
- It runs completely on premise. Each of the local GM-X applications, and the global GM-X application, are accessible only from trusted corporate networks situated behind internal firewalls.
- Everyone on the blockchain is trusted. The only participants in the private blockchain network are the headquarters organization and its subsidiaries, so all participants are trusted.
- Only headquarters can unlock the data. Although each participant has a complete copy of the blockchain database, each local GM-X application encrypts every journal entry before adding it to the blockchain, and only the headquarters organization is given the decryption key. Confidentiality is preserved because the remaining subsidiaries cannot read or post these journal entries to their local GM-X ledgers.
- Data in transit can’t be hacked. Even if the blockchain propagates over the public Internet, no one other than the headquarters organization can read the journal entries because they are encrypted end-to-end. Any attempt to tamper with the blockchain database will be immediately and automatically rejected by all participants because, by its very design, a blockchain database is permanent, tamper-proof and verifiable; and cannot be hacked.
You Can Run It on Your Smartphone (If You Want)
The GM-X ERP for Blockchain application, including our new General Ledger subsystem, is the first and only full-fledged ERP application in the world that you can run completely from your smartphone.
SAP enthusiasts will say that SAP Fiori®, which runs in front of the New General Ledger available with SAP S/4HANA®, delivers a “mobile first” user experience which is both responsive and adaptive (depending on the use case). But SAP’s Help documentation for displaying general ledger account balances says that this application runs on desktops only. Not so with GM-X General Ledger, which you can run on any device in any orientation.
Now, there are many reasons why users will continue to prefer their desktop and laptop computers over their smartphones, particularly when entering lots of data, but seeing today’s general ledger account balances is something a busy CFO just might want to do from a smartphone.
My point here is not to disparage SAP® software, but rather to prove our claim that the GM-X is the first and only full-fledged ERP application in the world that you are free to run completely from your smartphone ― or your tablet, laptop or desktop PC.
It’s A Modern, Perpetual General Ledger Built for The Age of Big Data
Let’s face facts: most general ledger applications in use today were designed a quarter-century ago, or even earlier. That takes us back to the dawn of the Internet.
Greybeards like me still remember when “perpetual” inventory systems replaced old-fashioned “periodic” inventory control. Back in the day, you had to roll closing inventory balances over at the end of each month to create opening balances for the next month, and people couldn’t use the system at all before this was done. Actually, old-fashioned general ledger systems used to work the same way, and only kept one or two years of history online.
These limitations existed for a very simple reason: online storage was scarce, and extremely expensive. In 1981, when I designed and built my first ERP system, an 80 megabyte hard drive cost today’s equivalent of about USD 70,000!
But fast forward to today, and you’ll find that all of the world’s popular general ledger systems (except GM-X General Ledger) require organizations to run some sort of procedure at year end which carries closing account balances forward to the next fiscal year. Until that happens, users (including the CFO) will not be able to see the closing balances for the previous year. Yet in this day and age there is no economic or technical reason why this needs to be done.
For this reason, the GM-X General Ledger subsystem only has one set of opening account balances. These are the initial opening balances created when migrating from a legacy application to the GM-X General Ledger subsystem. From that point in time forward, the system automatically calculates opening and closing balances on-the-fly (including the accumulation of profit and loss balances into retained earnings) for whatever time frame is of interest ― be it the current month, current quarter, current year-to-date, quarter-to-date last year, year-to-date last year, or any other time frame for that matter.
And, because the GM-X General Ledger subsystem keeps a full history of journal entry details alongside the original business transactions and historical account balances, CFOs can instantly drill down to individual business events ― shipments, invoices, payments, inventory movements, expense reports and so on ― no matter when these events occurred.
I invite you to explore the many features and functions which our new GM-X General Ledger application delivers. You will see that it has all the multi-company, multi-currency and multi-language capabilities you would expect from a robust, enterprise-grade application; but it should be clear at this point that a simple feature comparison isn’t the whole story. Thanks to its use of secure and proven blockchain technology, mobile-first design and perpetual general ledger built for the age of big data, it’s a product which delivers value that no other application on the market today can match.