After the "crash and burn" of Enron, executive accountability, with stiff penalties for misreporting financial statements, information credibility acquires an urgent dimension. By Stephen Brobst*, chief technology officer, NCR Teradata.

"Conservative accounting" is in again. Gone are the days of looking at unrealistic growth projections or innovative accounting techniques. The "crash and burn" of Enron killed that period and ushered in the Sarbanes-Oxley Act which legislated penalties and jail time for executives who failed to report their financials appropriately. It's back to basics. The emphasis today is on what a company's real bottom line earnings are, an emphasis that makes understanding earnings more important than ever.

But at the same time finance departments must take revolutionary measures to survive. Compounding the push for finance organisations to produce faster and more in-depth analysis is the seemingly contradictory demand for those same organisations to cut costs and people. However vital they may be, finance organisations are essentially viewed as overhead; just another non-revenue-producing segment of a corporation that is forced to become leaner. CFOs are being asked to do more with much less.

They can only succeed by radically changing the means by which they provide information to the business. Finance organisations must provide better information in real time, helping the business to quickly identify changes in the marketplace and to adapt accordingly. However, disparate financial systems with widespread sources of data make this challenge seem insurmountable.

It is a dramatic situation - and the enterprise data warehouse (EDW) is emerging as the optimal platform for dramatic business improvement. Companies that use an EDW for financial management have been able to shorten their close cycles, reduce their overhead, manage expenses more closely, reduce inventories and provide managers across the business with the fresh, accurate information needed to make better strategic and tactical decisions faster.

The issues of information credibility, quality, timeliness and accuracy have never been more critical to financial management and reporting. In this light, the option of centralising all enterprise information on an EDW is attractive - yet the scope of the implementation can seem daunting. Thus, some companies adopt alternatives to an EDW that on the surface appear more expedient. What are the alternatives?

Enterprise Resource Planning (ERP) systems are designed to be transactional systems through which global business processes can be harmonised. However, ERP systems fall short in meeting the analytical needs of the business. Once reporting becomes even mildly complex, operational performance falters. Moreover, rare is the company that has only one ERP system covering its entire informational framework. Consequently, an alternative foundation is still required for complete enterprise analytics.

Point solutions have arisen to provide deeper analytics into select business processes. For example, companies have implemented supply chain management (SCM) tools and initiatives to better manage vendor interactions, and customer relationship management (CRM) to optimise profitable customer relationships. These, coupled with numerous operational systems, create a web of applications that contain critical data about business performance, yet many of these do not efficiently and effectively 'talk to each other,' and indeed, may deliver conflicting views of the business.

A new suite of applications - 'business performance management', 'corporate performance management', and 'balanced scorecards' - have entered the marketplace with a promise to provide executives with a 'central' or single snapshot of all the data across the enterprise that will help them proactively manage the business. A robust performance management solution can not only link disparate points of an enterprise, it can help a business better align its functions with its corporate objectives. But can such applications succeed on their own?

The real problem remains the reliance upon an assortment of financial data marts. Many of the problems finance managers are faced with - including the inability to forecast accurately, plan properly and report efficiently - are rooted in the fact that the company's data is often stored in separate silos across the enterprise. Without a business performance management application, silos cause "disjointed spreadsheet mania" making even the most common business tasks frustrating and suboptimal. With a business performance management application, silos create a sourcing nightmare which often dooms the long term viability of the application.

Why build an EDW? And where would you begin?
What's really needed is to centralise, standardise, and simplify the data, then make it available to the appropriate decision-makers in a data repository capable of pulling data from the disparate sources spread across the enterprise - an enterprise data warehouse (EDW). The EDW provides an integrated, single view of the business. It allows for top-down and bottom-up navigation across all performance management applications - built on a uniform data model.

A company's financial management system is a logical place to start building an EDW, since it is the primary lens through which business results are realised. Financial intelligence drives decisions that affect the entire business, and for optimal credibility and utility, it must be quickly compiled from across the entire business. Second, financial data significantly increases the value of other data in the warehouse. Customer order data in itself may be valuable; but when shown in the light of its bottom-line impact it is much more valuable.

By building an EDW around financial data, you can quickly capture your up front investment through more efficient reporting and improved expense management. The automatic integration of data eliminates the need to manually integrate multiple spreadsheets and reduces inconsistencies and manual errors. Resources are then freed up to use the newly available detailed financial data to better understand what is driving expenses - and to help management identify ways to reduce those expenses.

Benefits of an EDW-based financial management solution
Most finance managers recognise that the cross-sectional, cross-functional view of data that an EDW can provide has enormous utility and value. Yet they ask "How can I quickly realise value out of the EDW?" Let us count the ways:

• Controllership, where an EDW optimises the consolidation process by helping to pinpoint manual adjustments that can be automated or eliminated, shortening the close cycle. With the use of an EDW, companies have reduced the time it takes to close their books by as much as 50 per cent.
• The planning process, by increasing forecast accuracy, improving cost management, recognising spending trend shifts, and improving profitability analysis. An EDW serves as a single source of 'actuals' and prior year results from all systems, and makes them available to planners at any time for analysis on any dimension. Analysts can drill down to see detailed transactions which may drive variances.
• Financial modeling, where advanced analytics forecast based on detailed data. Analysts see how reorganisations could affect the bottom line, how a divestiture might impact earnings, or what an acquisition might do to company performance.
• Profit and loss management, using detailed expense data. Having detailed information around travel and entertainment spending can facilitate more effective negotiations with air and hotel vendors. Alerts can identify spending pattern changes. The possibilities for improvement are profound.
• Accounts receivable management, by providing a complete view of open receivables, to more quickly identify trends around customers or best-in-class processes. Triggers or alerts can automatically flag accounts or invoices that have reached past due status, allowing for easier escalation of issues without sorting through reports or individual operational systems.
• Inventory management, by integrating inventory across business units and regions into a top-down, scorecard view. You gain a holistic view, which helps finance identify ways in which inventory can be managed more effectively.