The well-worn axiom "time is money" manifests itself in surprising ways. In the 1800s, the Rothschild brothers built their vast financial empire in part with a private courier service that allowed them to get vital information faster than their competitors. Later, they used carrier pigeons to transmit buy and sell orders for the stock markets. So eager were they to shave precious seconds off a transaction that their notes contained simple one-letter codes — B for buy and D for sell — so they could act more quickly. When the telegraph was first invented, James Rothschild bemoaned the loss of the family's competitive edge. "Over here, people are too well-informed," he wrote his brother Nathan, "and there is therefore little opportunity to do anything."
—Niall Ferguson, The House of Rothschild: Money's Prophets, 1798-1848
If technology has proved something of an equalizer in business, it has hardly been a panacea. Today, companies still labor mightily against time. In fact, despite more than a century of wired communication, the fundamental problem of receiving payment for goods and services has barely changed: 45 to 60 days was the norm at the time the Rothchilds's pigeons were flying, and it remains the norm today.
The truth is, CFOs and treasurers have been notoriously slow in flocking to technologies that could streamline financial functions or simplify back-office transactions. Today, the Internet is ushering forth a new breed of business applications, everything from browser-enabled financial software to portals and exchanges. But compared with other senior managers, CFOs have been slothlike in embracing this technology.
The reasons for this vary. Until recently, there hasn't been a lot of Web-enabled financial software to embrace. "What tends to move to the Net first are applications that touch customers," explains Stacy McCullough, an analyst at Forrester Research. Beyond that, some finance directors are not overly tech savvy, tending to shy away from investments that resist a traditional rate of return analysis. Other CFOs have simply been worn out by lengthy rollouts of ERP software. Still others have seen so many Next Big Things that they're not sure of the real thing when they see it.
The Internet is definitely the real thing. According to the latest research from the Gartner Group, a technology consultancy, business-to-business E-commerce will top $7 trillion by 2004. Online applications are revolutionizing the way companies buy their supplies, manage their inventory, and process their front-office transactions. "While many companies haven't yet decided where to place their chips, they understand that it's now an E-commerce world," says Mark Paulson, a partner in the finance and performance management area at Andersen Consulting. "It's the next wave, and it's upon us."
CFOs finally seem to be waking up to the revolution. Over the past six months, a growing number of companies have started purchasing, testing, and deploying a new generation of browser-enabled financial software. The applications run the financial gamut, including accounts receivable programs, enterprise resource planning modules, payroll and accounting applications, and treasury systems. "There's a huge trend toward moving financials to the Net," McCullough confirms. "If transactions take place on the Web, it makes sense to have the supporting applications running in the same space."
We're not talking E-mail here. Porting financial applications to the Internet dramatically alters the way finance managers do their jobs. In their most basic incarnation, Net-enabled financial applications use the Web as a low-cost, easy-to-manage distribution medium. Users access the applications via the Web, choosing whatever portion of it they need. The software looks just like its Windows-based predecessor, and in fact, users may not even realize they're working on a Web-enabled version.
But experts say this is only the beginning. Over the next year, virtually all these applications will be ambitiously retooled for the Net. They'll look different, mimicking the blue-underscored, point-and-click friendliness of a typical Web page.
More important, these applications won't simply use the Internet as a hassle-free way to reach users' desktops. The redesigned programs will incorporate all the functionality of leading E-commerce software. That, in turn, will enable the finance department to access information from across the organization — from back office to front office, from department to department, from operating unit to business partner. "Things are moving so fast," says Amy Mizoras, an analyst at market researcher IDC, "that in three or four years, the landscape will be completely changed in ways we can't imagine."
Gary Darst is not waiting. The director of financial planning at Litton Electron Devices (www.littonedd.com), Darst has turned to the Internet to help improve the company's cash management. "Our receivables are averaging 55 to 58 days DSO (days sale outstanding)," he acknowledges. "If there's a way to reduce that significantly, we're going to sit up and take notice."
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