Implement savings in Finance with detailed reports

A high percentage of financial professionals reportedly say they struggle to collect data from multiple sources and perform the analyses required to answer questions about corporate financial performance. This then limits their visibility into the business dynamics that affect financial results and delays actions that might improve corporate performance.

It is no surprise, then, that the finance function has been leading the adoption of business intelligence software. Indeed, much of the recent consolidation in the business intelligence tools market has been driven by larger suppliers looking to expand their foothold in the finance department, such as the acquisition of Cognos by IBM and the purchase of Hyperion by Oracle.

In 1997, a book from accountancy firm Pricewaterhouse Coopers - CFO: Architect of the Corporation's Future - highlighted the way that some chief financial officers and finance directors were beginning to play a more central role in defining their organisations' strategies, thanks to business intelligence technology that made it easier to analyse the figures at the heart of the business and take the guesswork out of decision making.

Since then, as business intelligence systems have evolved, the suppliers' focus on the finance department has increased, says John Hagerty, vice-president at analyst firm AMR Research.

In particular, he says, the finance director is a prime user of corporate, business or enterprise performance management - umbrella terms that the industry has variously applied to both business intelligence's traditional query, analysis and reporting tools, and its applications for planning budgeting and forecasting.

For suppliers, corporate performance management (CPM) equals finance, say many experts on this subject. Business intelligence tools sold under the CPM banner comprise a well-established buyer category, with many suppliers delivering products and services, focused largely on financial data and tailored to meet the demands of the finance function.

Experts define the business intelligence tools of most use to the finance department (all of which are sold as part of CPM platforms) as:

● Planning, budgeting and forecasting - contribution, aggregation, manipulation, and approval of the financial plan on a periodic or continual basis.

● Financial consolidations and reporting - legal and statutory consolidation systems, along with more generalised financial statement generation capabilities.

● Financial analytics and dashboards - profitability applications, role-specific dashboards, metrics, and specific financial analytics for detailed financial processes.

● Financial governance, risk management, and compliance - governance and control requirements that include national and international regulations, such as Sarbanes-Oxley or the International Financial Reporting Standards.

● Scorecards and strategy - methodology-based scorecards, such as the Balanced Scorecard, and strategy management applications.

"Selling these products directly to the office of the CFO flared in prominence shortly after Sarbanes-Oxley captured the attention of executives and boards of directors," says Hagerty, and compliance continues to drive enormous business intelligence spending by finance departments five years after the law was passed.

Although the initial panic that drove big spending has transitioned to "acceptance and good business practice", the office of the CFO has grown as a consumer of business intelligence products, he says.

Source: Computer Weekly January 2008

 

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