Centralise, simplify, optimise: Back to basics financial management

"Conservative acc
21 February 2006

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.