VideoState-of-the-art software systems can help finance become a more efficient collector and analyst of data, well-equipped to model and test the impact of changes both within and external to the organization — and able to share that power with other parts of the enterprise. These systems allow budgets and forecasts to be created and updated on-the-fly, based on a continuous inflow of both financial and non-financial data. Because such a system allows business units to feed in much of that raw data and market intelligence directly, it makes operations managers part of the planning and forecasting process.
And it frees finance to spend more time on data analysis than data collection. The best systems offer capabilities for analyzing data and modeling "what if" scenarios. In sum, today's performance management software can bind finance and operations in a single effort and create tight links between budgeting and business strategy.
John Kurtzweil hopes this will be the case for his company, ON Semiconductor, now that it is nearly done implementing a new performance management system. Kurtzweill, the SVP, CFO, and treasurer for the global manufacturer of advanced power-management and data-management semiconductor devices, says that with actual revenue and expense data loaded into the system on an ongoing basis, he'll be able to call up that data in a matter of minutes. While divisional controllers are, for the time being, still entering the data using worksheets given to them by the business units, he plans to turn that work over to the department managers. "They're already preparing the worksheets, so why not have them put the data into the system themselves?" he asks. Over the first six months of this year, he says, teams from his finance group will be visiting with the department managers on site, one at a time, and training them how to do just that.
Esther Blum, SVP, controller, and chief accounting officer for Taubman Centers, a real estate investment trust that develops, owns, and operates shopping centers, has already seen improvements first-hand since implementing a new performance management software system in 2001. Not only does finance have access to data faster, but the subsequent analysis that finance is able to provide to the business units is better. "It's higher quality because you can slice and dice the data so many ways," says Blum. "You're able to provide more interesting analysis that you couldn't do so easily in the past." (See the case study "How Taubman Centers Streamlines Financial Analysis," at the end of this article.)
What should CFOs look for in performance management software? In a recent survey by CFO Research Services, many of the financial executives we interviewed stressed the value of having a Web-based product. The goal is to eliminate the hassles and pitfalls of trying to ensure that all users have the same current version of the software on their desktop, along with the latest version of the file they want to use. "I wanted something that was going to be fully Web-based, which means that you turn on your computer, grab your browser, and you're in the application," says Robert Vesely, executive VP and CFO of Advantage Sales & Marketing in Irvine, California.
In our survey, respondents said that in addition to Web-based analytical tools, they plan to have technology that provides them with the ability to automate the generation and distribution of reports, create an executive "dashboard" of key performance metrics, offer an enterprisewide portal where managers can drill down in greater detail on the company's performance data, and automatically alert users to potential budgeting or performance problems using exception analysis techniques. Today, high technology companies are somewhat more advanced than others, but in the future these tools will be used evenly across industries.
Such tools have the potential to help resolve a number of long-standing challenges for the CFO. "If you really believe in finance transformation, the accounting side will all move on to computers, and the strategic value-adding side will reside with people," says Kent Potter, senior VP and CFO of Chevron Phillips Chemical Co. "We will lose the finance label as we become part of the business and are able to provide input into major decision-making activities."
Best of Breed or Single Solution?
While many companies have sought to enhance their performance management capabilities by adding additional software to their arsenal of tools, they typically have used those systems only for discrete portions of the process, with varying degrees of success. In our survey, 50 percent of respondents said they use a hodgepodge of IT applications for performance management, meaning that they use applications from different vendors for different parts of the process, without any consistency across business units. Twenty-two percent said they use best-of-breed technology (different applications for different parts of the process, but all business units use the same applications), and 28 percent use a single solution across the company.
In three years, respondents plan to move away from a hodgepodge of applications to either best of breed or single solution. According to interviewees, whether a company takes a best-of-breed or a single-solution approach is less important than whether the applications are consistent and integrated across the organization. "Clearly, planning, budgeting, forecasting, and reporting tasks all go hand-in-hand," says John Picek, VP and corporate controller for Alliant Techsystems (ATK), a defense contractor based in Edina, Minnesota. "The systems you use to do all of those should be tied in and integrated."
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