Intelligent Enterprise

Better Insight for Business Decisions

RSS
Webcasts
Whitepapers
Subscribe
Home

October 30, 2002

No Help

CFOs are under immense pressure, and IT isn't relieving it.

by Justin Kestelyn

Think you've been under extra pressure at work lately? Try being your company's CFO for day. After a year of lurid financial scandals and ensuing government regulation, no corporate officer is under greater scrutiny to fortify your organization's credibility in the short term, and to play a strategic, transformational role — a hot topic in financial management circles for a decade — in the long one.

Two years ago that description would better fit the CIO, but don't look for smiles of relief in the IT department just yet: New research from Cap Gemini Ernst & Young ("CFOs: Driving Financial Transformation for the 21st Century," August 2002) suggests that many CFOs feel unprepared to address these challenges successfully, in large part because their IT systems are slow, poorly integrated, and contain inadequate data, even after 10 years of discussion about IT's importance in "finance transformation." The authors conclude that "The gap between stated finance transformation intentions of the last five to 10 years and the minimal overall progress evident in the survey results brings finance's ability to address both short- and long-term demands into question."

The Top Line

Here are a few interesting highlights from the report:

81 percent of respondents (CFOs and senior finance executives from 265 large, U.S.-based corporations) call "accuracy of revenue and earnings forecast" a high or the highest priority in 2002; 58 percent called "financial reporting transparency" a priority.
63 percent claim to struggle with "inadequate, non- or partially integrated budgeting, forecasting, and decision-support systems."
56 percent say that technology is stifling finance transformation. However, 59 percent attribute that problem to lack of support from senior management.

What can we learn from these results? It's clear that CFOs are under pressure to avoid any suggestion that reported results do not accurately reflect the economic impact of financial transactions, even if they do obey the law. It's also clear that this short-term pressure works at cross-purposes to the longer-term strategic goal, which the authors characterize as the ability to give line-of-business managers "a true sense of the company's growth prospects or a quantifiable assessment of the risks and opportunities of different strategic options."

Rate This Article

Comments:

Optional e-mail address:

Why? Because although the former goal can be addressed by tactical, one-off point solutions that contribute to the disintegrated chaos cited in the survey, the latter calls for a broader organizational change that this chaos prevents from occurring. Consequently, as the authors put it, "History suggests that without a significant change in approach, there is a strong likelihood that finance will implement short-term, Band-Aid solutions that fail to launch or sustain longer-term transformation efforts."

Through the Niche

This dichotomy suggests that business intelligence platform vendors, such as Hyperion Solutions Corp., Applix Inc., ProClarity, and MicroStrategy Inc. (which recently added new financial reporting functionality to its platform), could have a big role to play in the aforementioned finance transformation. Although few new customers are likely, existing ones may be enticed to extend their platforms into the finance department via new, collaborative financial reporting applications that replace a mosaic of legacy systems. Perhaps then, the CFO will get some breathing room.