Business planning as practiced today is a relic, a process hemmed in by obsolete conceptions of what it should be. I use the term “business planning” to encompass all of the forward-looking activities in which companies routinely engage, including, for example, sales, production and head-count planning as well as budgeting. Companies need to take a fresh view of all these, adopting a new approach to business planning that while preserving continuity makes a substantial departure from what most companies do now. Currently, in most organizations the budget is the only companywide business plan. However, while necessary for financial management and control, budgets are not especially useful for running an organization.
Topics: Big Data, Planning, Predictive Analytics, Social Media, Office of Finance, Operational Performance Management (OPM), Reporting, Budgeting, Controller, In-memory, Business Performance Management (BPM), CFO, Financial Performance Management (FPM), Supply Chain Performance Management (SCPM), Financial Performance Management, financial reporting, FPM, Integrated Business Planning
Many finance executives want to improve their department’s effectiveness in order to play a more strategic role in their company. However, frequently they find at least three serious challenges to achieving this sort of finance transformation. One is that too much time and resources are devoted to purely mechanical tasks. Another is that the information executives need is not always available immediately. A third is that they lack the data (which is unavailable or too difficult to access), the analytic tools or both to do rapid contingency planning. One area in the Office of Finance that needs particular attention is treasury, as I commented recently. Treasury management is a challenge because it’s highly detailed and demands complete accuracy. These requirements make it an area that can benefit from more automation.
Topics: Predictive Analytics, Office of Finance, Controller, credit, debt, Kyriba Financial Performance Management, Analytics, Business Performance Management (BPM), CFO, Financial Performance Management (FPM), cash management
Along with other aspects of the finance organization, there’s increasing emphasis on having the treasury function play more of a strategic role in the organization. Typically, Treasury is charged with keeping track of and managing cash. Especially in larger organizations, this can be complicated because of multiple bank accounts, complex financing requirements and many methods of receiving and making payments; the complexity deepens when more than one currency is used across multiple jurisdictions, which also can pose regulatory issues. Treasury’s primary directive is to ensure that all funds are accounted for and that there is sufficient cash on hand each day to meet operating requirements. To accomplish this, finance professionals must perform key analytic tasks accurately to produce a clear picture of cash inflows and cash requirements. Analysis often is challenging because these numbers are constantly changing and because the process of collecting, analyzing and reporting all the data can be excessively time-consuming if done manually. This is a situation perfectly suited for dedicated applications that automatically manage the data needed to orchestrate treasury processes and provide analysis to inform decisions. Yet our benchmark research finds that more than half (56%) of companies with more than 1,000 employees either use spreadsheets exclusively or employ them heavily in conjunction with a treasury application.
Topics: Predictive Analytics, Office of Finance, Controller, credit, debt, Analytics, Business Performance Management (BPM), CFO, Financial Performance Management (FPM), cash management, Financial Performance Management
For four years Adaptive Planning has been building out its cloud-based financial software. Starting with budgeting, planning and forecasting, it added analytics, data visualization, dashboards and alerting as well as flexible reporting and collaboration tools. It recently announced the general availability of consolidation functionality in its cloud-based suite. This addition eliminates a notable gap in the company’s functionality, giving it a more complete financial performance management suite. The addition of the consolidation capability should increase its appeal to larger companies and broaden usage within its existing customer base. According to Adaptive Planning, already about one-fourth of its customers are organizations or parts of organizations that have annual revenue in excess of US$500 million.
Topics: Office of Finance, close, Consolidation, Controller, Cloud Computing, Business Performance Management (BPM), CFO, Data, Financial Performance Management (FPM), Financial Performance Management
I’m wondering whether the rapid rise in earnings restatements by “accelerated filers” (companies that file their financial statements with the U.S. Securities and Exchange Commission that have a public float greater than $75 million) over the past three years is a significant trend or an interesting blip. According to a research firm, Audit Analytics, that number has grown from 153 restatements in 2009 to 245 in 2012, a 60 percent increase. What makes it a blip is that the total is still less than half the number that occurred in 2006 as the Sarbanes-Oxley Act began to take effect. As well, the number of companies restating is still less than one percent of the total. Yet it’s a blip worth paying attention to, since the consequences of a restatement pose a serious professional challenge to finance executives. The right software can help address some of the underlying causes that lead to the need to restate earnings.
Topics: Customer Experience, Governance, GRC, Office of Finance, Reporting, audit, close, Consolidation, Controller, Tax, XBRL, Governance, Risk & Compliance (GRC), Business Performance Management (BPM), CFO, compliance, Financial Performance Management (FPM), FPM, SEC
Earlier this year we published our Trends in Developing the Fast, Clean Close benchmark research findings. The most significant was that, on average, it takes longer for companies to close their books today than it did five years ago. In 2007, nearly half (47%) we closing their quarters within five or six days, but now only 38 percent can do it as quickly.
Topics: Office of Finance, close, closing, Consolidation, Controller, effectiveness, XBRL, Business Performance Management (BPM), CFO, Data, Document Management, Financial Performance Management (FPM), Financial Performance Management, FPM
Budget season is about to open at most companies that operate on a calendar year, so this is probably as good a time as any to rethink the process. Almost all companies will undertake the construction of a budget this year the same way they did it last year, despite widespread complaints that it is a monumental waste of time. One major reason why budgeting never changes is that it isn’t important enough to be worth serious rethinking. Another reason is that too many vested interests are aligned with the status quo, especially because compensation is tied to budgets. Despite this, I think companies can do better, evolving the process from a finance-centric activity to one that serves the needs of broader business interests as well.
Topics: Big Data, Planning, Office of Finance, Operational Performance Management (OPM), Reporting, Budgeting, Controller, Business Performance Management (BPM), CFO, Compensation, Financial Performance Management (FPM), Sales Performance Management (SPM), cash management, FPM, Integrated Business Planning
If you’re considering purchasing a financial performance management (FPM) suite, you shouldn’t overlook a recent entrant in the category, Tagetik (which sort of rhymes with “magnetic”). The company, which was founded in 1986 and is based in Lucca, Italy, began by focusing mainly on Europe, but has extended its efforts in the United States in the past two years. Tagetik 4.0 is an elegant implementation of a financial performance management suite running on Microsoft’s SharePoint infrastructure.
Topics: Big Data, Planning, Office of Finance, Reporting, Budgeting, close, Consolidation, Controller, SharePoint, XBRL, Business Analytics, Business Collaboration, Dashboards, Business Performance Management (BPM), CFO, Financial Performance Management (FPM), Tagetik, Workforce Performance Management (WPM), FPM
People used to use the phrase “the last mile” solely to refer to a condemned prisoner’s path to execution. Then the telecommunications industry picked it up to describe that part of a circuit between a major trunk line and a subscriber. Later still a defunct software company, Movaris (now part of Trintech), used the phrase in an analogy to refer to the set of activities that take place between when a company closes its books and the point where it finishes its external reporting activities, such as disclosing periodic earnings and financial conditions to investors or filing financial statements with regulators or lenders. It was an attempt to focus attention on the need to automate and better coordinate the multiple, disparate but interconnected threads that have to be orchestrated to complete the external reporting tasks accurately and on time. Personally, I’ve never cared for the phrase being used in this context; there are really multiple “last miles,” with multiple and sometimes overlapping destinations. I prefer “the close–to-report cycle” because it’s more precise in its description, and because rather than pointing to finality, “cycle” defines it for what it is – a repetitive periodic activity. And because it is periodic and repetitive, it benefits from process optimization and automation, which can substantially reduce the effort required to complete a cycle and alleviate the stress certain departments often feel as deadlines loom.
Topics: Customer Experience, Governance, GRC, Office of Finance, Reporting, audit, close, Consolidation, Controller, XBRL, Governance, Risk & Compliance (GRC), Business Performance Management (BPM), CFO, compliance, Financial Performance Management (FPM), FPM, SEC
What’s a fast, free and reasonably reliable way of gauging the effectiveness of a finance department’s management? It’s the number of days it takes it to close the books. Companies that take six days or fewer after the end of the period to close their monthly, quarterly or semiannual accounts demonstrate a basic level of effectiveness that those that take longer do not. In my judgment, finance executives should regard a slow close as a negative key performance indicator pointing to less-than-effective management on their part. I draw this conclusion from our recent benchmark research, which followed up similar research we completed in 2007.
Topics: Office of Finance, close, Consolidation, Controller, XBRL, Business Analytics, Business Intelligence, Governance, Risk & Compliance (GRC), Business Performance Management (BPM), CFO, Data, Document Management, Financial Performance Management (FPM), Sales Performance Management (SPM), Financial Performance Management