Friday, February 27, 2009

Thought of the Week

Where exactly did all the money from everyone's 401K's and the bank's balance sheets go? I know I don't have it. Maybe it disappeared into the cloud?

Friday, February 20, 2009

Thought of the Week

What happens to the economy when the banks (e.g. Citi or Bank of America) that are too big to fail, fail?

Monday, February 16, 2009

2009 Finance System Resolutions: Hunker Down or Thrive?

I recently caught up with Rob Kugel of Ventana Research during a conversation with the executive team from Star Analytics. One of the most interesting parts of the discussion centered on how the economic meltdown is impacting senior executives in corporate finance departments and the ways technology can help.

Kugel mentioned, “Unfortunately, the financial meltdown has driven many senior financial executives to hunker down and focus only on survival tactics. It’s a shame because this is a great time to throw off organizational complacency and make important changes to how the finance department operates.”

The challenge, he says, is that people delay making changes in better times because they think they’re too busy, complicated by the tendency of people trained in accounting to reflexively answer “we’ve always done it this way” when asked about a policy or process.

“Now is the time to make changes because facing deep, persistent challenges, people are more willing to accept change and the results can be dramatic.”

Star Analytics CEO Trevor Hughes agreed, “From a technology perspective, we’re starting to see a shift this year as more finance executives look for ways their existing technologies can provide the slightest competitive advantage in this economy.”

Hughes remarked that the days of making decisions on yesterday’s data are long gone, and what’s emerging are continuous planning and forecasting environments and make it easy to adapt to uncertainty in the markets.

Hughes added, “The challenge is that financial data has been inaccessible in non-standard proprietary systems and beyond the immediate reach of the business decision makers. This is driving a surge of interest in simple and cost-effective solutions that allow IT and Finance to communicate and provide a stream of continuous data into the hands of everyone who needs it.”

The discussion surfaced a call to action for finance executives, with Rob outlining simple and cost effective ways Ventana Research believes they can drive change in 2009 and prepare to capitalize on an economic turnaround – both from an IT and business perspective. Over the next few weeks and months, I’ll reveal his top 10 “resolutions.”

Kugel points out, “Many of the ten resolutions are interrelated, and almost always there is a connection between the business and IT issues since the latter drives or heavily influences how well departments can do the former. Our research consistently shows companies misuse spreadsheets and consequently suffer from – for example – a longer than necessary closing cycle and ineffective business planning. It’s also not intended to be an exhaustive list.”

Resolution #1. Focus attention on more strategic activities and less on transactions processing.

For years CFOs have been advised to change the focus of finance departments from transaction processing to more strategic activities. Surveys show, however, not much has happened. The two biggest barriers to making this shift are people and IT. Sadly, too many finance executives love managing minutiae because it’s at the core of their comfort zone. Misusing technology contributes to the problem since not applying automation to rote functions or using spreadsheets inappropriately. There is a data dimension as well: frequently it is too difficult to bring together finance department data and data from business operations because companies are not using the right tools to reliably automate this process.

Is your company making headway in this area?

Saturday, February 14, 2009

Thought of the Week

Even though companies have collectively spent billions of dollars on Business Intelligence applications, it's still frightening how much financial reporting at major enterprises is still done using spreadsheets...

Thursday, February 12, 2009

A Cloud Over Your Financials?

With all the hoopla recently over cloud computing, I’ve been wondering if companies would be willing to entrust their sensitive and confidential financial data (including financial transactions, financial and statutory reports, etc.) to the cloud. I have little doubt that small companies and even large enterprises will eventually manage (and more than a few are already managing) many forms of information using the cloud, but would an experienced Enterprise CFO or CIO even risk making an “orange-jumpsuit” kind of mistake by risking legally privileged data (e.g. SEC filings, as just one example) leaking out into the public domain inappropriately?

While it might be an easy step to conceptualize the cloud as an abstract remote processing and storage mechanism that you can rent by the hour, gigabyte, or megaflop, the reality is that when you push your data into the cloud you are storing it on a real hard drive on a physical server somewhere. Compared to the expense and hassle of managing a data center it can be an extremely cheap and cost effective way of handling large volumes of information. However, using the cloud does require you have to have an extraordinary degree of trust in the provider; not just in the security of storage and transmission of your data, but also in its availability.

A graphic example recently was when a certain major online accounting package went offline for some of its users for almost an entire day – those companies were literally dead in the water, effectively unable to issue invoices, record payments, or generate financial reports for 24 hours. If that outage had happened at the end of a quarter or another similar time, the consequences could have been disastrous. If your company were put in that position, who can you call? Remember, everyone else is also calling, and you would be just one voice among many in the same position.

My impression is that at least as far as large enterprises are concerned, we aren’t quite there yet. The security of data centers is improving daily, yet the ingenuity and determination of hackers remains a constant threat. The overall uptime record of many cloud service providers is exceptional, but what happens if they do go offline? For a small company with few resources the risk/cost equation is minimal. However for larger organizations which have the resources to manage their own data, there is still some value to controlling their own destiny.

Thursday, February 5, 2009

Thought of the Week

Many businesses are cutting their spending because revenues are down, and those cuts in spending in turn cause other businesses to lose revenue, and so cut spending, and so on. When does this spiral end? Why don't all businesses just fire all their employees, and cut their spending to zero? That way everyone can at least break even...

Wednesday, February 4, 2009

Can we really afford to hide?

If we stay the course, what will change? One of the interesting phenomena of this economy is the “turtle syndrome” it has evinced. If I just become invisible and don’t do anything extraordinary maybe I can hold on to my job just a bit longer…

In fact, the opposite is the reality. I am not advocating for being outrageous or creative beyond measure, but I am advocating for innovation. This is a tough economy and no one is going anywhere if we just keep doing what we have been doing. We have less, but we have to DO MORE. That means that innovation and moderate creativity are the orders of the day, not the opposite.

Profit is measured in reduced headcount and better efficiencies, not just in increased revenue, although that would be a bit nice as well. If we introduce innovation, even at a marginal cost, or apply new education to a problem, the payback will be almost immediate and the effect, dramatic. An example of that is in the use of current technology. If a process or an event takes a tremendous manual effort or a “Rube Goldberg” string of spaghetti code because of lack of knowledge, then find and justify the solution – as long as the return on the investment is immediate.

If you are a technical user of Oracle Hyperion products and need additional hands-on experience with the products and could benefit from face-to-face access to the experts in the field, then you need to attend ODTUG Kaleidoscope – the Oracle Development Tools User Group in Monterey, CA June 21-25, 2009. . Even if you have to pay for it out of your pocket, this type of event is of immediate tactical value in helping overcome specific technical challenges that might inhibit the short term growth of your company and possibly your career. At this juncture tactical wins are more visible and may have the strategic impact we all need. This is just one example. I am certain that we each encounter solutions like this everyday. Free user groups and lectures abound if you are willing to make an effort to attend and a commitment to empower yourself to innovation. Perhaps that is the first step in the process of being innovative; making an effort.

Thanks to Gary Crisci for bringing this to our attention.