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This is something I have been following since the first study in 2003; maybe many of you do as well, or have already read it? Every couple of years IBM produce their Global Chief Financial Officer Study. Normally, as you might expect, many of these things tend to be very US centric and as Australians in Australian/APAC companies we can get a little tired of hearing about the fantastic stories of US companies and how they have turned around their fortunes with a single piece of software…..or something like that. Certainly, I think having just shy of 307 million of the world’s most voracious consumers on your doorstep helps a little.
However, this 2010 study is well worth the time on a lazy Sunday afternoon if you can escape for 30 minutes or so. And let’s face it, if Collingwood win on Saturday then I think we’ll all be looking for a quiet place to hide on Sunday.
IBM survey, in detail, 1900 CFO’s from all around the world and from all size and type of business on extremely valuable and relevant topics. There are some good case studies and excellent graphical representations of results.
I have to say that in pointing this out to you that I am not trying to infer any relationship between NXG and IBM (IBM Lawyers please take note……..).
Below are a couple of quotes I found particularly poignant.
“More than 70 percent of CFO’s are advising or playing a critical decision-making role in areas such as enterprise risk mitigation, business model innovation and the selection of key metrics linking performance to strategy execution.”
“Certainly, Finance can gain efficiency by enforcing the same financial processes and data interpretations across every business unit and region and moving the entire company onto a common financial platform. However, if finance only provides financial information and not business insight, it short-changes its influence.”
“With more than 41 percent of CFO’s saying they lack sufficient operational and financial data standards and 45 percent producing these metrics manually – generating timely, reliable business insight is challenging.”
NEED TO PRODUCE A BUSINESS CASE / ROI FOR A PROPOSED BUDGETING/REPORTING/ANALYTICS SOLUTION?
In recent times I have been asked to produce or assist in the writing of a business case / return on investment case for either a new budgeting/forecasting system or a reporting/analytics system. This is a bit of a thorny topic and there is much debate and research over the measurement of tangible and intangible savings. For example, no one debates that having access to the right information or being able to manipulate and analyse the right information leads to better decision making – but what is the measurable benefit of “better decision making”? Many financial professionals believe that intangible assets are relevant to the understanding of a company’s earnings prospects and future cash flows.
In many, if not most of the projects we do, one of the key drivers is actual “manual time saved” – i.e if we are replacing a very complex and messy spreadsheet based budgeting or reporting application with a sophisticated multidimensional web based solution then we can easily measure the time saved in producing the end of month report pack – a tangible saving. Unfortunately the first thing that managers under cost pressure do is translate this saving into headcount.
This is, in our opinion, is a dangerous game. Assuming the staff in your finance team are there because they are competent, highly skilled individuals and have an intimate knowledge of the business, a far better approach is to look to where these skills are better applied. Simply replacing your systems with new technology and not undergoing a business process review to support and take advantage of the new applications will yield limited results.
You can download a basic business case / return on investment document from our web site here at;
It’s not exhaustive, but it’s a good start. If you want to explore a more complex and detailed business case ROI then give us a call as I have some very comprehensive models and even some ROI Calculators that work well in some circumstances. We’d love to assist if we can.
FIVE OF THE MOST COMMON PITFALLS IN IMPLEMENTING A NEW ENTERPRISE PERFORMANCE MANAGEMENT (EPM) SYSTEM.
There are hundreds of articles on project implementation methodologies and the traps to avoid. After a hundred or so (implementations), we have a few ourselves – but here are the most common five we think relate specifically to your new budgeting/reporting system.
1) Better technology doesn’t mean better performance management
Simply replacing what you have today with a new piece of software won’t yield significant performance improvements. “New Planning” is a core driver of Business Performance Management and is totally integrated with other management applications and is no longer an “island”. Use the project to review business processes and roles and use the savings in time and manual effort to better analyse information.
2) Don’t forget the strategy
The finance department and the CFO’s role in the setting and measurement from strategy to execution is greater than ever. Modern applications put the power of alignment from the boardroom to the customer in the hands of the CFO. Use the opportunity to go back and review how your reporting is aligned with the company’s strategy and how you can implement behavioural change. Tools such as distributed and shared scorecards, management and operational dashboards and scenario modelling allows the finance department to leverage data into planning and budgeting and to allocate resource to initiatives that support corporate objectives.
3) Don’t do too much at once
I guess this applies to any new software implementation but even more so to a new financial reporting or budgeting application. The desperation to break free from “spreadsheet hell” can lead to a “want it all” approach when looking at implementing a new system. In addition, today’s technology allows for quick, rapid start and proof of concept models to be developed with little effort during the functional specification stage. Giving users and business units the ability to actually see what the finished product might look is invaluable in sorting out the absolute necessities from the “nice to haves” and to develop a staged approach to the implementation.
4) Look outside the financial world
The distinction between strategic, operational and financial planning has been “blurred” forever. One of the major advantages offered with modern Performance Management software is the ability to seamlessly integrate data from disparate systems – not just from the ERP. Integrating data from other sources such as sales, marketing, HR or production also offers the finance department the ability to move to a more driver-based planning and budgeting regime.
5) Don’t get lost in features and functions.
The way you architect and design your new budgeting or reporting system is more about business rules and process than about the technology. The software will do just about anything you want, the question is, do you want to. For example to what level of consolidation or detail do you distribute to different managers. You don’t want every manager drilling down into every expense transaction if there is a variance – just because they can! Careful planning and design through hands on workshops and prototyping will ensure you drive behavioural change in line with strategy.
Information
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