Financial BI: More than the FD`s sanity at stake

The role of financial directors (FDs) in organisations across the globe needs critical re-evaluation. Specifically their task, which more than ever has to involve information analysis and participation in business growth, has in reality become an indefensible trap of repetitive, mind-numbing reporting.

According to Caron Mooney, director of IS Partners, the FD and finance team are most likely spending the majority of their time doing the wrong thing. When they should be controlling expenses and managing forecasts and decisions, they are, instead, compiling information from any and all operational sources into a spreadsheet.

"As most information originates from different departments and systems, generated by different people on different days, by month-end the finance function becomes one best described as Excel chaos," says Mooney. "With no agreement between processes, a lack of data integrity, multiple versions of the truth and a lack of robust analytic tools, tracking and timing becomes nearly impossible. And, it is according to this highly undisciplined mechanism that the FD is making extrapolations," she adds.

Finance is starting to play a more strategic role in business, and the pressure is on for more stringent disclosure practices, to get more timely and accurate information to shareholders and to contain and reduce costs. Yet, finance managers remain bogged down by transaction processing, perhaps an overhang from "elegant" ERP systems that may well be good for the purposes of transaction processing, but not for reporting and analysis.

While the FD is committed to long-term company growth, the question is whether finance has the ability to meet this challenge. Cap Gemini Ernst and Young in a recent report indicated that 56% of CFOs say that inadequate IT systems are obstacles to transforming their companies financial accounting systems, indicating a clear need for solutions that give time back to the FD for forward-looking activities.

The new focus for finance is on implementing operational decision support, formulation of corporate strategy, profitability measurement and risk management. This effectively means closer monitoring of results, improved decision-making, streamlined processes and cost reduction.

And, this requirement has never been more apparent, particularly when the FD`s reporting efforts end with the board of directors. "The FD`s number one customer is the board and, in preparation of boardpacks, the manipulation, formatting and presentation of information has to be uncomplicated. An automated backend process will ensure that the FD`s job starts with discovery, rather than a static report.

"One of the first areas of transformation is transaction management," says Mooney. "Organisations need to look at improving the quality and timeliness of financial information, reducing the cost of processing and shifting resources towards analysis. Decision support is next, with finance having to provide analytical support to business decision-makers in the form of financial analysis and more accurate forecasting.

"Achieving this level of business intelligence (BI) for the FD starts with the financial system itself, and requires real-time access to consolidated financial information, formalising the back-end process of data acquisition, knowing where your data comes from, collecting it and aggregating it into a multi-dimensional database for access through familiar reporting tools."

The payoff is in realising that not transforming means loss of shareholder value, poor decision-making, an increase in business risk and increased costs. "For the FD, it`s about leaving the boardroom with some degree of satisfaction," Mooney concludes.