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FINANCE
Shakespeare, Sexism, and Branding
Posted by David McCann | CFO.com | US
April 24, 2012 2:19 PM ET

Asketh Juliet of Romeo, ıWhatıs in a name?ı Well, a lot. Those two committed suicide, you know, after the question was posed and answered and all hell broke loose.

An image of the tragic lovers invaded my brain today after I got a pitch from a digital-media firm that provides resources for businesswomen looking to advance their careers. Mostly it offers tips: How to ask for a raise. How to ıcommunicate up.ı How to invest in your career. Success secrets for women CEOs. Stuff like that.

This firm calls itselfı Little Pink Book.

Thatıs so easy to make fun of, I donıt think Iıll bother.

A press release accompanying the pitch suggested that the firm has a self-conscious ıI am woman!ı identity that extends beyond its name. The first line spoke of ıambitious, intelligent womenı who are actual or aspiring entrepreneurs. Would anyone ever characterize men in such pandering fashion? The phrase seemed to contain a subtle but unmistakable (to me) and somewhat defensive message that women too (!) can be ambitious and intelligent. Iım afraid I viewed that as demeaning to the very population that Little Pink Book means to support.

The release says ıhundredsı of women will convene in Atlanta next month for Little Pink Bookıs third annual ıSpring into Ownershipı event, and that among its many sponsors are noteworthy names like FedEx and Southwest Airlines. Thatıs great. But I ask you, might the made-for-women event be even more successful if the organizer were marketing a less-sexist brand name? Reasonable minds may disagree, but I believe it might.

The point, dear readers, is not about sexism but rather that what you call yourself matters. It matters to potential customers, business partners, your bottom line, and even your conscious or unconscious understanding of what youıre trying to accomplish.

Quick story: A number of years ago, there was an organization called the American Society of Association Executives ı to me a great name in that it clearly expressed what the group was all about. It then merged with another entity called the Center for Association Leadership, whereupon the combined organization took for its name ı its official name! ı ıASAE and the Center.ı All of a sudden the association community and the convention industry were abuzz, not over how the merger could improve services for association executives, but rather how confusing the new moniker was. A marginally better solution was later settled on, with the name changing to simply ıASAEı and ıThe Center for Association Leadershipı used as a tagline. An outsider may still reasonably wonder, ıWhatıs an ASAE?ı

Companies, too, might want to consider calling themselves something that suggests what they do. If it doesnıt insult anybody, so much the better.

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GOVERNANCE
Boards Should Focus on Big Picture, Not Gadgetry
Posted by Norman Marks | CFO.com | US
April 11, 2012 8:54 AM ET

Nearly half of corporate directors started using tablets or smartphones over the past year for reading their materials, according to PricewaterhouseCoopers' most recent survey of board members. And an additional 38% wish that their board would use them. At the same time, directors have been complaining that the information they receive is insufficient for them to provide effective oversight of both risk management and strategy-setting.

Some companies have chosen to send the directors the same information they have always received, but on a tablet. (I donıt believe it is practical to expect directors to read board materials on a phone.) The directors will be grateful that they wonıt have to carry a heavy board briefing book, and the technology exists -- and has for some years -- to ensure that the information is secure and only delivered to the directors' devices.

But is that practice sufficient? Will it meet the directors' needs for information so that they can not only provide oversight but share their wisdom when it comes to setting objectives and strategies, managing risk, and optimizing performance?

Executives can now obtain real-time information on their mobile devices, especially tablets, with ıdrill-downı capabilities to explore the reasons for trends and unexpected variances. CFOs may want to provide directors with similar, real-time financial, operational performance, and risk information that lets directors explore the details behind the data to satisfy their information appetites.

Balance is required. If I were CFO, I would first recognize that if they donıt already have tablets, all my directors will have the devices very soon and will expect to receive board documents on them. They will want the ability to search and drill down, and I would want them to do so - within reason. As it is, board meetings are usually strapped for time, and you'll want directors to focus on the data that matters most, away from the minutia of a few data points. So I would go further than simply sending board materials electronically and think about how to change the formatting of this information.

To begin, consider meeting with the board members and have a frank discussion about what they want, what the management team can provide and when, and agree on a plan for action. Have periodic follow-up meetings to discuss what is working and what is not, as well as options for further improving board effectiveness.

Norman Marks CPA is a vice president with SAP and a long-term internal audit and risk-management practitioner. He has been honored for his thought leadership by the Institute of Risk Management (honorary fellow) and the Open Compliance and Ethics Group (fellow). He regularly blogs and provides updates on Twitter, @normanmarks.

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TECHNOLOGY
Accidents Will Happen
Posted by David Rosenbaum | CFO.com | US
April 6, 2012 3:00 PM ET
Today, as the week draws to a close, the world seems a little riskier than it did Monday.

For example:

Yesterday, President Obama signed the new JOBS act which, among other things, will give new-ish companies with less than $1 billion in annual revenues a pass on a variety of SEC regulations, specifically a temporary waiver on outside audits of their internal financial controls. The thinking is that such Sarbanes-Oxley-derived auditing requirements are onerous and can inhibit emerging growth companies from, well, emerging and growing. While that may be true, the passage of the law, coming hard on the heels of the much-publicized revelation of Groupon's "weakness in its internal controls," has to give one pause, especially if one is an investor, auditor, or accountant.

Not that most finance practitioners like regulation. Indeed, as Brian Tankersley, a CPA and associate with K2 Enterprises, a provider of continuing accounting education, warns, if the profession doesn't get serious about monitoring itself, and about information security, far from giving anyone a pass on regulation, the government will add to its list of "Thou Shalts" -- HIPAA, SOX, Dodd-Frank -- and, says Tankersley, "that will cost money. If we as a profession don't wake up, we're going to get one-size fits all regulation."

Meanwhile, the BYOD trend continues to accelerate. A recent Forrester Research Forrsights Workforce Employee Survey of almost 10,000 information workers in 17 countries found that 74% of them use two or more devices for work; 52% used three or more, and 60% of those devices are used for both work and personal purposes. (And it's not like these workers are lugging PCs; we're talking phones and tablets.) Now CFOs may love outsourcing device support to their employees at minimal cost, but there's still a price to be paid. That price is that BYOD equals mobile, and mobile means those employees are accessing data remotely, communicating with co-workers via e-mail and text, and syncing their devices in the cloud. Therefore, critical company and customer data is stored and being passed around outside your corporate firewall, outside your control. As Tankersley says, accountants "send e-mails, unencrypted, un-password protected, all the time. And e-mail is as secure as a postcard." (Tankersley uses iTwin in his practice -- a paired set of USB keys that create a secure connection between two machines, essentially creating an instant virtual private network, or what Tankersley calls "stupid easy VPN.")

Speaking of stupid, last night Google co-founder Sergey Brin went out to a charity event wearing Google's new "smart" glasses that display maps, photos, Tweets, you name it, right on the inside of the lens. You can see what that experience might be like here. As if people aren't already distracted enough.

Well, apparently, they're not. Intel and Nissan just brought a new concept Infiniti to this week's New York Auto Show that will let drivers receive real-time traffic information, watch movies, and order ham sandwiches from the nearest deli recommended by Yelp, all at the same time! And, no doubt, the car will automatically contact the driver's insurance agent when he or she rear-ends you.

We live in amazing times. Look around. Everything is bright, shiny, and new. I think that's good reason to be especially careful with how we use all this new stuff, and how we do business.
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TECHNOLOGY
Piling on Groupon and Our Taste for Misery
Posted by David Rosenbaum | CFO.com | US
April 4, 2012 2:48 PM ET
Groupon's $100 million earnings restatement announced late last Friday and its 10-K filing noting a "material weakness in its internal controls" were sins swiftly punished this week. Despite the fact that the restatement lowered Groupon's fourth quarter earnings a mere 3%, Groupon's stock plunged 17% on Monday and closed yesterday at its lowest price since its IPO last November. (Tuesdays are always crummy; see below.)

The bad news for Groupon came fast. The SEC reportedly will be investigating the company (which is not all that uncommon following restatements); a shareholder lawsuit was filed yesterday, and there has been an outpouring of articles questioning Grouponıs business model. Today, a "Seeking Alpha" headline reads "Groupon: The Beginning of the End." Note: no question mark.

All this seems extreme given: the restatement was more like a revision; it was small; new companies often struggle with growth and new products. Plus, restatements are hardly rare. A recent study, "Financial Reporting Credibility After SOX: Evidence From Earnings Restatements," notes "the volume of restatement announcements has risen significantly over time" since the Sarbanes-Oxley Act was passed into law in July 2002.

But everyone is piling on Groupon, just as they're piling on RIM, the once-beloved company that makes what's almost always referred to these days as the soon-to-be-extinct BlackBerry, a tool once so compelling that it earned the nickname CrackBerry. With only 13% of the U.S. smart phone market as of last February, people are basically saying that RIM should just crawl into a hole and die. On the other hand, the BlackBerry's security advantages are rarely disputed, and today's Washington Post suggests that you'll have to rip those Blackberries from official Washington's cold, dead hands. President Obama still loves his.

Now everyone knows that if it bleeds, it leads, but the enthusiasm with which bad news is devoured and shared, and the immediate reactions and over-reactions to it, points, I think, to a growing epidemic of schadenfreude. (It will make me happy if you don't know what that means.) A recent University of Vermont study of 46 billion words contained in 4.5 billion tweets posted over a 33 month-span by over 63 million unique users (talk about Big Data!) found that over the first half of 2011, the general public's happiness was trending downward.

(The study even breaks happiness down into days of the week. Not surprisingly, Saturday is the happiest day, bracketed by Friday and Sunday. The weekly low occurs on Tuesday not, as one might suspect, Monday or Wednesday. So the common practice of breaking bad news on Fridays may not be so wise. It might be better to break it on Tuesdays, when people are going to be miserable anyway, and bank on the upswing as moods improve heading toward Friday.)

Why are we so unhappy? I have no idea. But our ability to share our unhappiness, thereby infecting others, has never been so robust. Technology has industrialized crankiness through the internet and social media, and we're consuming its products in larger and more frequent bitter bites than ever before. That has to have an impact on our lives and it's probably not a good one. The trick, at least for business, is to factor in an unhappines quotient when analyzing opportunities and devising strategies.

Perhaps things aren't as bad as they seem; it just seems that way.
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HEALTH CARE
Merger Ump Misses the Call
Posted by David McCann | CFO.com | US
April 2, 2012 3:29 PM ET

Many observers of the pharmacy benefits management (PBM) industry, including myself, were disappointed to learn this morning that the Federal Trade Commission had approved the merger of the largest and third-largest PBMs, respectively Medco and Express Scripts.

With less competition in the PBM market, most of the unhappy observers ı legislators, state attorneys general, consumer-protection groups, retail pharmacies, and certainly many corporate users of PBMs ı were likely concerned about the financial consequences for companies and/or individuals. As for me, while I think the FTCıs decision is absurd, Iım miffed mostly because I predicted the deal would be quashed.

Express Scripts CEO George Paz said in a statement that the merger ıis exactly what the country needs right now. It represents the next chapter of our mission to lower costs, drive out waste in health care, and improve patient health.ı If you believe that, I have a friend in Africa whoıll be happy to share his millions with you if youıd please provide your bank account number.

What the country needs right now is a long, hard examination of the FTC, which voted three to one in favor of the merger. The dissenter, commissioner Julie Brill, said in a separate statement that the merger will create ıa duopoly with few efficiencies in a market with high entry barriers ı something no court has ever approved.ı Duh. Doesnıt everyone know that?

Not the other three commissioners, who said in their own statement that ıthe merging parties are not particularly close competitors, the market today is not conducive to coordinated action, and there is little risk of the merged company exercising monopsony power.ı I donıt have a degree in economics, but Iım comfortable in my skepticism.

The Express Scripts-Medco combination will command more than half of the countryıs retail PBM market. The lone remaining mega-player, CVS Caremark, will control something on the order of 20% to 25%. ıItıs scary,ı says Ed Kaplan, national health practice leader for the consulting firm The Segal Company. ıSome of my [corporate] clients are disappointed.ı

Still, Kaplan says, the fear is probably unjustified. ıThere are just enough other playersı ı like Catalyst, Cigna, informedRx, Optimum, and SXC ııı ıthat have enough investment infrastructure that our clients could move to one of them if the terms the jumbo PBMs offer become noncompetitive. And they would move. Moving a PBM contract is not like moving a medical plan.ı Kaplan says heıs talked to a number of other informed observers who think that too.

Fair enough. But opposition to the deal has been so widespread and heated that I donıt know who could be very surprised if it ultimately does push up drug prices, and at a time when companies and their health-plan participants are collectively nearing the breaking point after years and years of steep increases in overall health-care costs.

Let the games begin.

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