Video"When you are an organization with less than $100 million in revenues, you can almost run your whole accounting department using spreadsheets," says Lee Geishecker, a vice president and research area lead at Gartner. "But as soon as you run into business complexity such as industry-specific requirements, complex incentive programs on your sales side, or multinational environments, you have to move away from spreadsheets as the engine for your budgeting." As companies start growing again, there will be pressure to fix the spreadsheet problem.
Such pressure was strong at Mentor Graphics, a $675 million provider of engineering software. A few years ago, the company's annual planning process required rolling up data from 1,200 Excel spreadsheets — one for each cost center. "When you get that many spreadsheets, it never quite ties together," says Jan-Willem Beldman, the company's enterprise data architect. "On average, it was a six-to-eight-week process each year just to get that worked out."
Today the company uses a Hyperion Essbase system with a Web-based tool that pulls all of the data into one place, automates the approval process, and allows planners to run scenarios more easily than they could in Excel. "We're now doing the whole planning process in five months, down from what was an eight-month ordeal," says Beldman.
Another force for change is the ongoing drive to reduce the cost of finance. CEOs continue to demand that such cost centers as finance be leaner, while making a greater strategic contribution. Because of its ability to automate routine tasks, technology will be vital to this effort.
Consider Delta's experience. When the airline industry suffered a sharp decline in demand following September 11, 2001, the company had to make deep cuts in all areas. Finance was able to use Delta's new SAP system to do its part. By redesigning and automating finance processes as part of the implementation, the department was able to reduce staffing by between 15 percent and 20 percent, and dedicate more employees to providing decision support to the business. "We've greatly reduced the amount of finance staff time spent on transaction processing," says Fisher. "Now we spend much more time on business matters." Delta had a curious advantage, Fisher says, in that its hodgepodge of systems were so cumbersome that when the company consolidated on a single ERP system from SAP in 2001, "we didn't have to worry about people being reluctant to learn a new system — they said, 'I don't care what the new system is, I'll embrace it.' "
More important, Fisher says that a single ERP system offered a way out of spreadsheet hell because it provides a uniform source of data that all spreadsheet analyses rely on. "In the past, you would sit in a meeting and several people would offer up business models, and you'd have to spend time sorting out what everyone's assumptions were based on," he says. "You couldn't even get to a discussion of whether the business case was good or bad because you were bogged down trying to understand what one spreadsheet was saying versus another. That's spreadsheet hell."
ERP, of course, is not new, although the major vendors constantly add new modules and capabilities to it. Among the more purely new technologies of most interest to CFOs, five rise to the top: corporate (or business) performance management, a.k.a. CPM/BPM; E-procurement; portals; E-payment/E-billing software or services; and dashboards.
Teach Them to Fish
What these technologies have in common, aside from the inevitable promises that they will provide near-instantaneous payback, is that they help finance departments do less paper-shuffling and more analysis. E-procurement and E-payment/E-billing (technologies sometimes collectively known as financial supply-chain software) help free finance from much of its routine accounting work. CPM/BPM, portals, and dashboards are tools that help finance satisfy the business's demand for better visibility into the drivers of growth or the sources of trouble.
Frank Figueroa, CFO of Sandia National Laboratories, which is owned by the U.S. Department of Energy but operated by Sandia Corp., a subsidiary of Lockheed Martin, is interested in visibility, on several levels. "As much as I'd like to drive down the cost of IT," he says, "if that spending helps us achieve our objectives, then that's fine. I would just like better insight into which IT projects provide the most contribution to our strategic objectives."
Despite those reservations, he is upbeat about the promise of CPM products. The company is using an Oracle ERP system and portals (essentially Web pages customized to provide access to data, software applications, and other sources of information relevant to a given constituency) as a way of pushing data out to business managers and customers. Now Figueroa is looking for tools to help analyze the data. "We're doing a good job of reducing the cost per transaction," he says. "The drive now is to do a better job of predicting revenue streams and taking actions to make sure we're achieving our strategic goals." One of those goals, he says, is to gain a better understanding of the link between IT spending and quantifiable performance improvements.
That need isn't lost on makers of ERP systems (such as Oracle) many of which have come out with new systems to compete with vendors that specialize in CPM and other aspects of finance IT. In particular, Oracle sees more adoption of Web-based applications for such areas as bill presentment, receivables management, and credit management.
Reader Comments» Post a comment