A worthwhile enterprise

Extracting data using traditional methods can be time consuming

When you are consolidating and reporting financial results from some 580 subsidiaries in more than 100 countries, business decisions depend heavily on the integrity of financial data.

Chief information officers (CIOs) faced with the task of bringing together IT and business will probably be asking questions such as: Are the results correct? Where do the results originate and what do they mean, both for the host business unit and for the parent company?

Help in answering such questions comes in the form of enterprise performance management (EPM), which many experts believe could be the key to intelligent business decisions.

Before EPM, spreadsheet-based systems reigned. Source transactions originate in enterprise resource planning (ERP) systems, while hundreds of spreadsheet workers extract transactional data and then manually manage and report budgets, forecasts and monthly consolidated data.

For a company such as BT Group, where hundreds of subsidiaries submit data to a central system ­ and high-level business decisions depend on the accuracy and timeliness of consolidated results ­ month-end can be nothing short of chaos.
Such spreadsheet-based management, then, poses key problems.

First, it provides no audit trails, workflows or transparency.

Second, as well as poor commentary, continuity and virtually no guarantee of accuracy, one of the biggest drawbacks of a spreadsheet-based system is the amount of people required for data preparation.

Most importantly, holding crucial information in disparate databases can prevent companies from achieving a competitive edge ­ and it is becoming more and more evident that business today is all about the competitive edge.

CIOs need to be answerable to the board as they spend money on technology. And the questions executives across the business should be considering include: what unique service or product does your company offer, and what makes your company different?

As IT is used to create a competitive edge, there is no scope for wasting brain time and money on processes that could be automated.

Online analytical processing (Olap) technology is available, and if harnessed correctly can be invaluable to performance management in every organisation.
Automation of transactional financial data, from local subsidiary ledgers
directly to a central consolidation system, is one of the most significant benefits
of an EPM system.

The process eliminates countless hours of spreadsheet data entry and a host of related inaccuracies. It also then affords business decision-makers confidence in the integrity of the data.

EPM is not only about efficient financial planning, consolidation and reporting systems. Extended EPM, for example, can harness the concepts of balanced scorecards, and measure financial and non-financial metrics according to defined key performance indicators.

The need for EPM and related business intelligence applications is especially prevalent in companies where there is a strong drive for organisational change.
Aside from core profit-generating operational activities, every business strives to establish efficient management processes for planning, analysis, consolidation and reporting.

Process consistency can be even more challenging for large companies with many subsidiaries, and EPM provides the opportunity to cull unnecessary and costly processes through detailed reviews of existing practices and systems.

More efficient working practices, cost savings and the ability to quickly adapt to market changes are also popular candidates for performance management improvement wishlists.

Organisational change in financial management terms inevitably boils down to a shift from people preparing data to people analysing data.

The technology is obtainable; let it do the preparation of data and free up the IT workers to perform their professional roles as intended ­ to analyse data and to make informed business decisions that can provide an important competitive edge to your firm.

It is crucial, however, to recognise, that organisational process change spells IT system challenges.

As most IT managers know, managing the profound organisational process change brought on by a change of systems and processes can be a massive task.

If the solution is geared to improving working practices, stakeholders are most often pleased to be finally given the means to apply the skills that they are trained for ­ and to be given the opportunity to work more efficiently.

To ensure user adoption of any new system, it is absolutely imperative to implement a change management plan, including involvement in projects, regular communication and adequate training.

EPM is imperative to guaranteeing financial data integrity enabling truly meaningful analysis and intelligent business decision-making.

After an intense programme, consisting of 17 individual projects, BT Group’s EPM implementation has had a profound impact on senior management and there is now effective management of performance throughout the group.

Maybe now is the time for you to have a careful look at your spreadsheet management processes.

Warren Clements is head of consolidation at BT Group. He has been speaking about enterprise performance management at this week’s Softworld Business Performance Management and Project Management event at the NEC, Birmingham.