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Accounting Software & Financial Reporting Software

The path to higher value: Alison Curran, IBM Global Business Services (Dec 11)

Following on from its 2010 Global Chief Financial Officer study, IBM conducted further research on the transformation stories of 15 enterprises which the original study identified as ‘value integrators’, so that others could learn from their experiences. Recent IBM C-suite studies including CEOs, CIOs, CHROs and CMOs have shown that all executives are challenged to be dextrous and leverage information to optimise business performance, but they are inhibited by structural complexity and analytics capabilities. Value integrators enable all parts of the business to partner more effectively, in order to cut across the organisational barriers and focus on enterprise value and enhanced decision-making ability. To do this, they integrate technology, processes and data, and then enable business insight by investing in the appropriate capabilities and talent.

Time for the invoice to pay its way: Louella Fernandes, Quocirca (November 2011)

It is hard to believe that, in the 21st century digital age, one of the most business-critical documents – the invoice – is still generally created and sent in paper format. In 2010, of the 30 billion invoices sent in Europe only 10% were done so electronically. This reliance on manually processing paper invoices is one of the greatest challenges for accounts payable (AP) and accounts receivable (AR) departments, being expensive, time-consuming and prone to error. In a global economy where many other business processes are being automated, inefficient financial processes can put a company at a significant competitive disadvantage. It is not surprising, therefore, that more businesses want to implement electronic invoicing (e-invoicing) to remove manual processes, speed up invoicing cycles and eliminate non-value add activities for accounts departments.

10 deadly mistakes of software selection:Spencer Arnesen, SoftResources (Oct 11)

Selecting accounting and financial reporting software can be a formidable undertaking for any company. You need to identify the key requirements unique to your organisation; determine the best vendor and application to meet those requirements; obtain buy-in from employees, executives and boards; negotiate a contract; successfully implement the software; and hopefully complete the project on time and within budget. Selecting a new accounting and financial reporting system generally doesn’t happen often. You will need to acquaint yourself with the dynamic software market where vendors, products and technologies are ever-changing (ie, cloud computing); and learn to sort fact from marketing hype. In the face of this overwhelming job, it can be tempting to look for shortcuts in the software selection process. Whether you are using the help of a consultant or your own inhouse resources, there are certain pitfalls you should be aware of. This article outlines 10 deadly mistakes commonly made by companies when selecting software.

Bringing finance out of the paper age: Gary Waylett, Eclipse Group (Sep 2011)

With the global emphasis on cost saving and leveraging detailed insight to improve efficiency, financial departments have had a key role to play in achieving effective management over the past two years. But how many organisations have turned the spotlight on finance themselves? And, as a result, how many finance teams are still running highly inefficient processes? In many companies, finance is inherently inefficient and remains a significant cost centre. Processes are manual and disjointed, and key information resources are not integrated. Organisations are still reliant on paper-based records, adding cost, inefficiency and risk to dayto- day operations. Specifically, too many finance teams are still reliant on print, photocopy, post and the manual filing of paper documents. Yet those who electronically create, deliver, authorise, store, manage and process their financial documents can reduce manually intensive administration whilst significantly cutting costs, freeing-up filing space and supporting environmental policies.

Playing fast, but not loose: David Watson, Concentric Solutions (August 2011)

During the recent economic difficulties there have been a number of high-profile business casualties. These have shown that it is no longer enough to have a timely reporting process; it is no longer enough to publish summary financial statements; and it’s no longer enough to rely on manual procedures and processes to validate the integrity of reported results. Managers are required to intuitively understand the health of their business and to vouch for the reliability of the numbers. Shareholders and external authorities are demanding better internal controls, more robust corporate governance practices and ever-increasing statutory disclosures. Meanwhile, financial markets expect more informed guidance on earnings and greater transparency in the results; and analysts strive to compare and benchmark companies operating within similar sectors, penalising entities that fail to meet expectations. As a result, group finance departments have never been so challenged.

Get ready for the challenge: Julian Griffiths, Clear Consulting Team (July 2011)

Selecting and implementing a replacement business and accounting software suite is, for most organisations, a major investment in terms of time and money. But careful preparation and planning before selecting a system will help to ensure that you maximise the return on your investment. I have outlined below my top five tips to act upon before starting the selection process and these are all independent of the software you choose. 1. Establish the rules of engagement with your preferred vendor. Most vendors will quote for and work with a number of assumptions. Make sure you are aware of these and agree with them, to avoid any nasty surprises when you engage with your preferred vendor.

Under pressure: Cliff Mills, NCC Research (June 2011)

As we enter a period of stuttering economic recovery the finance department and the systems they control become an even more crucial focal point for the organisation. Senior management, in particular, are looking to the finance department to deliver increased value to the organisation. They are requiring and expecting more insight and advice. Finance functions, who only focus on compliance and control, have found themselves under great pressure, not only to tightly manage costs but also to provide more and better business insight. There is strong dissatisfaction with the quality of management information. Many managers complain that it is slow to arrive and lacks the forward-looking perspectives needed for informed decision making. This requirement is emphasised in our latest survey, where the principal business driver for recent developments in financial and accounting systems, mentioned by 51% of respondents, is the need for improved management information; no doubt this has been driven by the current economic uncertainty, which is also highlighted by the pressure to reduce costs (46%) and to centralise business operations (41%).

Successful system selection: Yvette Lamidey, Paris&Parks (May 2011)

Selecting a new payroll system may seem a daunting task but if you follow a few simple guidelines, then the process should go much more smoothly. The first thing you should do is spend time looking from inside out to truly understand the current situation, including any ‘failings’ of the existing payroll service and the cause, and if there are potential quick and longer-term wins. The more information you have about the current situation, the better decision you will make about the new solution, including the way it will be used. If there are quick wins to be had, consider implementing these since it will deliver immediate benefits and is preparation for a new system. Secondly, research the other products or versions of existing products the current supplier can deliver and the costs, as well as the payroll solutions offered by existing system providers – eg, accounting and HR systems. This will act as a benchmark for good or bad, if nothing else, but may also identify viable solutions.

Cost of doing business: Tim Cray, Virtrium (April 2011)

In unprecedented conditions of market economic instability, the cost pressure on companies has never been greater. One key target area is IT where, as well as direct budget savings, business demand for efficiencies – often enabled and leveraged by technology – has become an increasingly urgent imperative. This article examines the key challenges faced by CFOs and suggests some ways in which they may be addressed. Recent research by Virtrium has identified a number of IT financial management issues, including: what is a reasonable target for cost saving in IT right now?; how can we deliver it without destroying IT’s future?; should we invest in IT to save money elsewhere?; how do we market-test if we haven’t got much money?; should we consolidate suppliers and contracts? Can third parties help?; can IT prove its value for money and fit for purpose?; and do stakeholders agree with IT’s approach? Does it fit our wider business agenda?

Zero-based cost management: Booz & Company (March 2011)

For virtually every company, the need to manage costs is an imperative. This is especially true now. After two years of recession and a hesitant recovery, today’s business environment leaves no room for error: demand lags in nearly all markets, placing unrelenting pressure on the top line; new competitors from emerging markets are entering global markets; and capital funding is still difficult to come by. Yet, more often than not, companies attack costs the wrong way: by settling for intermittent top-down interventions – for example, across-the-board percentage spending cuts, deferral of investments, snap reorganisations or layoffs. These approaches typically yield short-term results, but the benefits are difficult to sustain and stress the organisation. In fact, before long, companies often find that dramatic increases in expenditures – replacing ageing equipment, building up depleted inventories, launching new products and services, staff expansions or rehiring ex-employees as expensive contractors – are required to remain competitive. Which leaves the organisation back to where it started…needing to slash costs again.

Running the last mile: Mark Cracknell, Aramar Solutions (February 2011)

In recent years, CFOs have been forced to focus on business survival, with improvements to the efficiency and accuracy of financial data being their paramount concern. The main area of improvement has typically been data collection, both through financial accounting systems and, in many cases, corporate data warehouses. However, one area has remained a problem in all this, an area that has been described by many commentators as the ‘last mile’ of finance. So what is this challenge? To many people outside the finance function, the last step in the financial process is the consolidation of data and the delivery of the result to the organisation’s stakeholders. Most financial professionals, unfortunately, will tell you that this is not the case. What this does not take into account is the series of steps from consolidation through the company’s disclosure of its financial results, including regulatory filings…and this is the ‘last mile’ of finance.

Are you in denial about spreadsheet hell?: M Hancock, Altius Consulting (Dec 10)

The term ‘spreadsheet hell’ was coined five years ago by software companies intent on driving up demand for a series of new financial planning applications. At the time, analysts were talking about the value of enterprise performance management (EPM) and business intelligence (BI) software – and vendors like Cognos and Business Objects were frenziedly buying small planning software companies in a race to deliver connected planning and analytics capabilities. BI is still a hot subject, but the world has moved on from ‘spreadsheet hell’. The BI market has consolidated, with Oracle, IBM, SAP and – to a certain extent – Microsoft all buying the marketleading vendors. Many organisations have, by and large, now implemented data warehouses. Themes like metadata management (MDM), data quality, unstructured data reporting and collaborative BI are now flavour of the month…which suggests that spreadsheets are no longer a problem in organisations.

New breed of CFO: Carl Nordman, IBM Global Business Services (October 2010)

Not surprisingly, cost reduction has been top of mind for finance professionals recently, according to the IBM 2010 Global CFO Study. This has essentially translated into margin management, given that company revenues have been typically flat or in decline. But more importantly, the CFOs responding to the survey highlighted that the global economic crisis has magnified their role across a much broader range of business activities than the traditional focus areas of compliance, controls and performance management. As a result, finance professionals have been drawn into more frequent conversations about forecasts, profitability, risk management, and strategic decisions related to supply chains, pricing and production. This means many CFOs and finance managers are now playing a more significant corporate role – moving beyond a focus on purely reporting, to an advisory or even a decision-making role, helping their organisation navigate a challenging business climate. CFOs’ focus on company-wide concerns has increased sharply. Simply put, corporate leaders are counting on CFOs for fact-based insight and reason.

Keep on running: Cliff Mills, NCC Research (October 2010)

As companies adapt to a world of continuing uncertainty in both the general economy and their particular marketplace, the finance department has an increasingly important role to play in the organisation. There is growing demand for timely information about all aspects of the business, as line managers require more detailed performance analysis to react rapidly to market conditions and make informed business decisions. Cost also has to be controlled throughout the organisation, and the finance department is not above the requirement to examine the efficiency of its operations, ensuring the right structure is in place to deliver services in the optimum way. Doing things in the same old fashion may no longer be good enough. It is clear that the way financial services are delivered in an organisation is continuing to evolve, as our latest Evaluation Centre survey shows. The use of shared service centres is gaining in popularity, with 31% of organisations adopting this approach, while a further 5% are in the planning stage and 2% are evaluating the option.

Calling the CFO: Larry Oglesby, Bob Iversen & Mike Iezzi, Accenture (Sep 2010)

Unceasing economic pressure has driven senior executives, especially chief financial officers, to focus closely on operational excellence. Since the start of the recession, businesses have emphasised the need to streamline and re-invent their operations, in the process becoming more competitive by being more flexible and customer-oriented. The financial returns from such programmes, however, frequently fall short of financial objectives. To generate greater value from operational excellence programmes, CFOs need to take a more active role and position themselves as trusted business advisors to boards and CEOs, helping set a firm foundation for projects that can deliver strategic advantage. More than just cost savings are at stake. Operational excellence can also help companies differentiate themselves, thereby establishing and maintaining competitive advantage in an extremely challenging environment.

Is finance rising to the challenge?: Nick Jarman, PwC (July 2010)

Against today’s background of gradual economic recovery, CEOs are looking to the finance function to provide more insight and advice. Yet according to a recent PricewaterhouseCoopers benchmark analysis of over 100 companies, only 11% of finance personnel are now engaged in true business partner roles. The PwC study examines whether finance teams are equipped to provide the levels of strategic insight, risk oversight and other key aspects of the ‘partnering’ role now expected by many CEOs. It also looks at how the best-performing finance functions – those in the top quartile of benchmark evaluation ratings – are able to meet evolving business needs, balance being a business partner with their traditional responsibilities and ultimately deliver real value to the enterprise. What comes through clearly from the report is that while considerably more finance functions now regard themselves as true business partners compared to a year ago, many organisations still lack the necessary capacity and capabilities to fulfil this role.

Waking the un-dead: Simon Tennant, PA Consulting (June 2010)

While the UK may have avoided an economic apocalypse, it is clear that any form of recovery is going to be limited and a long time coming. We are now experiencing what might be termed a ‘zombie’ economy – made up of half-dead, half-alive banks, governments, consumers and companies staggering along, struggling to function in the new world: the banks have suffered further global exposure to toxic assets and are too weak to support sufficient lending, which in the UK is now at a 10-year low. Government finances from Greece to China are too stretched to support expansionary policies; consumer wealth and spending power is too depleted to allow them to consume; and commercial companies are saddled with debt that they cannot comfortably service, impeding growth and investment. All these factors are having a dramatic effect right across the corporate landscape. Some leading companies are waiting for recovery, but in the zombie reality this is a high-risk strategy.

Keeping the FD's feet on the ground: Gary Waylett, Eclipse (March 2010)

At the top level of companies, there is growing recognition that to compete effectively in what continues to be a challenging economic climate, organisations need to drive greater value from their financial software. Critically, companies have to improve their financial reporting and analysis, through access to greater granularity of reporting enabling information to be sliced and diced. Organisations also need real-time access to reports and faster month-end closes to support fast, relevant decision making. In addition, in an increasingly legislative/regulatory environment, organisations recognise the opportunity to leverage software to automate compliance processes and impose greater security through authorisation, access controls and audit trails. This growing realisation of the strategic importance of IT to organisations is reflected in the financial director’s role in specifying new financial software.

View from the front line: Tristram Bardrick, NCC (January 2010)

In most organisations the economic decision maker for large-scale IT purchases is the FD, CFO or board of directors of which they are part. Despite this, there is a lack of understanding between IT and the finance function – as highlighted in PwC’s recent ‘Best of Enemies’ article. Evaluation Centre’s publisher, the National Computing Centre (NCC), runs a series of CIO Round Table events which enable IT suppliers to sit with CIOs to discuss their needs and challenges. Given the large influence that the finance department clearly has on IT decision making, the NCC approached the Institute of Chartered Accountants in England & Wales (ICAEW) to collaborate on a similar programme for a CFO audience. One such Round Table took place recently, with the support of HP Enterprise Services (formerly EDS). The topic was ‘Gaining greater commercial competitive advantage whilst minimising the impact on the balance sheet’ – and areas of discussion ranged from the role of the CFO to dealing with legacy applications. All of this clearly took place in the context of a severe economic downturn – and all conversation was coloured by the prevailing state of the economy.

CFO's search for business alchemy: John Bronjewski, Logica (November 2009)

CFOs are increasingly under pressure to re-establish corporate trust and business integrity, protect their company’s bottom line, enable profitable growth and shareholder value creation, and do more with less by increasing the efficiency and quality of financial operations. Yet some finance operations are still not adequately prepared to support the business in a proactive way, because they have significant weaknesses in their existing organisational, process and system design that tie too much resource to the daily operations. These weaknesses include: too much finance resource spending too long every month producing numbers they don’t trust, with little or no supporting qualitative analysis and decision support; sub-optimal finance functions characterised by high operating costs, financial control/risk management issues, and regulatory and compliance challenges (SOX, SEC reporting, IFRS). According to a recent benchmark study, the cost of world-class finance organisations is 2.4 times lower than at average firms.

It's about adding value – not just adding up: A Hamlington, Touchstone (Oct 09)

The recession is predicted to be waning, but its effect will be felt permanently among financial and accounting software users. The downturn has prompted drastic changes to budgeting requirements as organisations have struggled to retain profitability in a fragile market. And one fact has clearly emerged: the traditional budgeting aid, the spreadsheet, is patently not up to the job. Love it or hate it, the spreadsheet merely delivers isolated, one-off budgets. Compiling information across departments stretches resources to the limit, yet the final result lacks business credibility. In the new economy, organisations require a cost-effective and reliable, yet proactive and dynamic, approach to controlling costs – understanding all cost elements at a detailed level and forecasting profitability. So why place your company’s future in the hands of a tool clearly not up to the job?

Setting a target: Jeff Herman, Blue-Plate Consulting (September 2009)

“If you don’t know where you are going, you might wind up someplace else.” – Yogi Berra. When an organisation embarks on radical change, it may need a representation of how it intends to operate in the future, in the form of a target operating model (TOM). Developing a TOM is a cross-functional team effort with, for example, the finance function describing how financial processes and systems support the business and its regulatory obligations. A fully developed TOM will usually comprise a graphical representation with supporting explanatory documentation. This article provides some ideas from practical experience of how to develop a TOM and the particular issues for finance. It also covers why TOMs often have a completely different look and feel from each other, despite using a common development framework.

Quick wins: Michael Blythin, Adventus (July 2009)

A number of major issues are confronting finance and accounting professionals as a direct result of the credit crunch, or of the business culture that pervaded organisations prior to the credit crunch. They include: how do you get purchasing right? How far should you push cost reduction? Why can’t we get BPM to work? Until now, the mantra in many businesses has been that all problems can be solved by projects and consultants. If the problem was particularly big, then just throw more consultants or externals at it – and if the project starts to fail, then change the consultants! But this behaviour is not sustainable in the current economic climate that demands ‘right result first time’. This article explores what is needed to deliver successful projects in a cash and resource-constrained environment.

Moving finance to the future: Steve Culp, Accenture (April 2009)

The challenges confronting finance professionals in today’s global and recessionary business environment are intense and diverse. It’s imperative that finance teams have the skills, resources and management processes needed to achieve high levels of performance and help their enterprises achieve their business objectives. Yet CFOs are challenged by a scarcity of talented finance professionals at a time when there is increasing complexity in the role, coupled with a strong demand for finance skills across the marketplace. Among the drivers for this increased demand are: heightened levels and depth of analytics required by business leaders; complexity of operating models across broader geographies and diverse customer sets; and compliance requirements resulting from increased levels of regulations in many geographies and industries.

Rewriting the rules: I Heinz, J Niebuhr & J Pettit, Booz & Co (March 2009)

The most unusual advice on mergers and acquisitions (M&A) that Mittal Steel CFO Aditya Mittal has ever heard came from a Roman Orthodox bishop. Mittal was considering how to turn around a newly acquired and struggling steelmaker in Romania when the local bishop told him to build a church at the entrance to the facility. “I’m telling you that will work wonders,” the bishop said. Mittal was taken aback, but decided to follow the advice. “We built a beautiful Roman Orthodox church. All the workers got involved in it part time – and that changed everything,” said Mittal, recalling how the integration barriers dropped away and the plant’s workers embraced a new set-up. Thus a church played a key part in the success that the company, now ArcelorMittal, the world’s largest steelmaker, has had in Romania. The story underlines an important point: not every deal is done by the same rules, and no one strategy fits every company. There are many ways to succeed at M&A, a fact made clear in interviews with CFOs of leading companies recently published in the strategy+business Reader, ‘The CFO as Deal Maker: Thought Leaders on M&A Success’.

Getting serious about service: Mike Holmes (February 2009)

Once they have established their own automated accounts processes – like procure to pay (P2P), the subject of my previous article – finance directors will clearly need to measure the overall efficiency of such systems. This efficiency is defined in service level agreements (SLAs) and measured using key performance indicators (KPIs). So how should the FD practically establish individual SLAs with the other departments in their organisation? The agreement should include the following core elements: introduction and purpose; service(s) to be provided. This expounds on the concept of ‘quantified tasks’ and their associated quantified services. All services to be delivered should be considered in these terms; performance, tracking and reporting. This provides details of the organisation, benchmarking targets and metrics, service monitoring, reporting and the framework for SLA meetings.

Perils and profits of P2P: Mike Holmes (January 2009)

The procure-to-pay (P2P) process can be defined as the steps that need to be taken between someone in your company first making a decision to buy goods or services, and finally making the payment for those goods or services. This end-to-end process includes all departments within the business, overseen by the accounting & finance or procurement function. The process runs as follows: 1. User departments will raise requisitions for goods or services from preferred suppliers and the relevant user department manager will need to authorise the requisition. 2. The procurement department will raise a purchase order, based on the requisition details, and forward this to the preferred supplier. 3. When the goods or services are received, the user department will be responsible for producing a goods received note (GRN), thereby receipting the goods. 4. Once the invoice is received from the preferred supplier, assuming it matches the purchase order price and GRN details, the finance accounts payable people will be responsible for ensuring it is paid.

Forecasting with confidence: Nick Mountcastle, KPMG (November/December 2008)

Many organisations will currently be frantically re-running their budget models in a vain attempt to try and reflect the unprecedented market turbulence in commodity prices, exchange rates and credit constraints. There will be little or no time for intelligent review of the underlying value drivers as all available effort is spent crunching and re-crunching the data. And sadly, within hours it will probably be out of date again. Is there a better way? The short answer is yes. KPMG’s recent Forecasting with Confidence research report shows there is a small pocket of companies who get this right through flexible planning models that can better sense the environment and lock in the course of action more quickly and effectively. Even in more ‘normal’ times, planning, budgeting and forecasting is a process which business executives rarely get enthused about. Time-consuming, tiresome and just a tick in the box, very few see forecasting as a worthwhile process or one they look forward to. This goes a long way to explaining why so many companies are so poor at it.

Best of enemies?: Grant Waterfall & Tom Gunson, PwC (October 2008)

Earlier this year, the CFO of a major company asked PwC to investigate what he believed were some major shortcomings in his business’s IT function. The CFO was holding back from signing off on a major technology-dependant investment because he had concerns about IT’s ability to adequately support the business to deliver such investment. Over the previous couple of years, IT had been managing or was heavily involved in a series of failed projects, and was not delivering the quality of support, infrastructure and services that finance needed to do its job properly for the business. However, when the consultants went in, the situation turned out to be more complex than it first appeared. On the one side, the CFO was indeed very disenchanted with IT’s performance and delivery against his (which he considered to the one and the same as the business’s) objectives. But on the other hand, while there was recognition of some ‘challenging’ projects in the past, the IT function in general – and the CIO in particular – had no idea that it was regarded as failing.

Not so fast: Jim O'Connor, Archstone Consulting (September 2008)

The benefits of a fast close are well-known. However, speed without supporting structural changes can increase the risk to organisations instead of improving their situation. This article challenges the hypothesis that a fast close equates to operational excellence, and offers an alternative approach to achieving faster close cycles and the associated nimbleness gained through a fast-close process. The drive for a quick close process has pervaded finance literature for a decade. The ability to close financial books rapidly serves companies’ strategic need to access real-time information, so that problems and opportunities can be identified and addressed in a timely manner, and financial results can be reported to analysts and regulatory agencies. This has also become a key performance measure for analysts and investors in terms of how they perceive the quality of the information presented and the quality of the management team. Yet very few companies recognise that the simple ability to close the books and report quickly does not yet truly reflect the organisational excellence of the close-to-consolidate (CTC) process.

Biting the BPM bullet: Robert Gill, Parson Consulting (August 2008)

Recent consolidation in the business performance management (BPM) software market has raised a number of questions for CFOs and other finance professionals. All the leading vendors claim to provide solutions which are able to integrate smoothly with any data warehouse, ERP and operational system, whilst also promoting ‘enhanced’ levels of integration with their own product family. But can both positions be true? And what are the key considerations for organisations investing in a BPM solution at a time of significant market and application change? First of all, let’s examine what has happened in the market. Last year witnessed a dramatic consolidation as software giants SAP, Oracle and IBM together acquired five of the biggest BPM players – Business Objects, Hyperion, Cognos, Cartesis and OutlookSoft.

Surviving tough times: W Mincey, M Janssen & E Dorr, The Hackett Group (June 08)

Whenever tough economic conditions loom, companies usually aim to cut the costs they have most control over, such as their general and administrative (G&A) expenditure and working capital. But instead of arbitrarily cutting costs across the board – which can lead to serious deterioration in service-delivery capacity – it is vital to make the cuts in ways that minimise the impact on business value delivery, both in the short and long term. For senior finance executives, one of the biggest challenges is knowing when to pull back on costs, where to make the cuts, and by how much. Being indecisive or slow about cuts can put the entire business at risk; but cutting too fast or too deep can leave companies unable to grow again when financial seas are once again calm. In avoiding across-the-board cuts, organisations should look for savings in areas where they are significantly out of line compared to world-class efficiency organisations, and therefore have a relatively low exposure to risk. So before considering how much to cut, be sure you know what is considered a ‘normal’ spend level.

Neither fish nor fowl: Alasdair Gill, James Gill & Co (May 2008)

Most organisations spend more on developing, using and maintaining spreadsheets than they need to. One reason why costs get out of control is that spreadsheets are taken for granted and hence forgotten – nobody is paying attention to how they are used or to their total cost of ownership. In part, this is because spreadsheets are neither fish nor fowl. IT departments tend to provide only limited support for them because they are seen as a business tool. Business users on the other hand tend to assume that the IT department is responsible for them because they are software. Spreadsheets are, however, ubiquitous. Even in companies that run Oracle, SAP or Sage as their primary accounting and financial reporting software, there is often some residual spreadsheet use: at the board meeting of one former client, just before sending the annual report to the printers the chairman wanted to have one last look at the summary spreadsheet – ‘just as a check’.

Tips to improve change: Martin Taylor, Allasso Consulting (March 2008)

My first tip for improving the implementation of financial & accounting systems dates back to my earliest experiences in this area. I was working in the finance department of a FTSE100 company, on a site that employed over 3,000 people. The company ran its three financial ledgers on three different systems, at three different locations. The general ledger comprised hand-written ledger cards; bought ledger details were entered into an ICL system that produced a payments schedule on disk that was sent to London for processing; and the sales ledger was operated by a different division on another site. Financial reporting was a long manual process, with the final schedules produced on a typewriter…those were the days! This situation could not continue as the company had expanded and become extremely profitable, so one of the accountants initiated a review of available software and a proposal was presented for introducing an integrated financial system. This would negate all the duplicate data entry and provide a single unified view with the promise of a report writer to automate the financial schedules.

In search of the truth: Bill Fuessler & Steve Rogers, IBM (February 2008)

Globalisation opens up significant opportunities for companies, but also exposes more risks. And a surprising number of enterprises are not well-prepared to handle the impact of a major risk event to their organisation, according to a recently published IBM study. This is a major concern to chief financial officers (CFOs) who, the study finds, are increasingly viewing themselves as the ‘owners’ of risk management within their enterprise. The IBM Global CFO Study, of over 1,200 CFOs and senior finance executives from 79 countries, reveals that over the past three years, 62% of enterprises with over $5 billion in revenue have encountered a major risk event. But when a major event did occur – such as strategic, operational or geopolitical risk – 42% of these enterprises were not well-prepared for the event. The situation at smaller enterprises was better, but not much. Of enterprises with revenues under $5 billion, 46% experienced a major risk event and 39% were not well-prepared.

MiFID: surviving or thriving?: Dillow/Leggett/Smith/Sodhi, Atos (January 2008)

The Markets in Financial Instruments Directive (MiFID) sets the stage to make Europe a more attractive market for investors. Change is underway, even though parts of Europe are still running late in amending national laws to incorporate MiFID. New trading venues, such as Chi-X, are emerging to create more competition. Trade volumes are increasing while the trade size is decreasing. Research by Atos Consulting on how prepared financial organisations were before MiFID came into effect last November revealed a prevailing ‘wait and see’ attitude. But to thrive now MiFID is in force, organisations need to differentiate their execution policies and demonstrate ‘best execution’ through publication of trade statistics. They also need to maximise order flow volume and reduce marginal transaction costs to ensure competitive advantage. This article looks at what financial firms can still do to gain and retain competitive advantage and so become one of the winners in the new market that is now emerging.

Rise and rise of XBRL: Masatomo Goto, Fujitsu (December 2007)

XBRL – the international standard for computerising financial reporting information – is being increasingly adopted across Europe, North America and Asia-Pacific. XBRL dates back to 1999, when the specification for producing financial statements in XML was first published. Shortly after, XBRL International was founded and certified public accountants, users and software vendors joined the consortium. Development and application of the specification is ongoing. A key technical feature of XBRL is to have a set of data definitions called a taxonomy. By using a taxonomy, companies can customise the required items of financial statements – such as the accounting subjects, display order or item names – even though they differ by country, by region, by accounting rule or by company. As the adoption and application of XBRL spreads, so users have requested more convenient features within it. To satisfy these requests, standardisation is currently going on for three new specifications – Formula, Versioning and Rendering. But what will these developments bring to accounting systems users?

United front: Robin Hollington, Peapod Consulting (November 2007)

The cost and impact of regulatory compliance is rising. Even conservative estimates predict that compliance expenditure will rise by 22% year-on-year for the next five years. Faced with this, it is not surprising that some organisations have reported failures in meeting their projected financial targets due to the impact of compliance, both on expenditure and the unhealthy inward focus. The scale of the problem requires finance and other managers to take a fresh look at how they address and measure compliance: a unified approach is the only way ahead. Many companies do treat compliance very seriously but, in the main, their laudable efforts are conducted in silos of activity – leading to different approaches, disjointed activities and, at times, conflicting data capture. As they address different compliance activities, there is much repetition and little co-ordinated visibility across the organisation. In order to achieve unified governance, companies have to take an holistic approach to the challenge.

Counting on the costs: Alan Haines, Crystal Consulting (October 2007)

Experience of activity based cost management (ABCM) projects has shown that this approach to costing and profitability analysis attracts a wide spectrum of opinion. This ranges from whole-hearted support for something that will add value to the decision-making process, to dismissal of ABCM as a costly, time-consuming and unnecessary additional expense. The ABCM approach consists of identifying the cause-and-effect relationships between an organisation’s cost base (resources), the procedures performed by staff and/or machinery (activities), and the products or services sold to customers (cost objects). These relationships are then used to calculate the costs of the organisation’s products or services based on how much they utilise the resources of the organisation. The aim is a simple one, and difficult to argue against. The counter-argument would presumably be that an organisation wouldn’t want (or need) to understand what it is spending its money on. But do such organisations exist? And if they do, for how much longer?

Snapshot of IFRS: Ian Dilks, PwC (September 2007)

The adoption of International Financial Reporting Standards (IFRS) by European companies was a major development in corporate history. Now elsewhere around the world, more countries are also showing support for IFRS, with Korea a recent example. The Securities and Exchange Commission also appears to be warming to the international standards. There is some way to go before US domestic registrants might be allowed to use IFRS, but this is no longer a fantasy. The removal of the IFRS-US Generally Accepted Accounting Principles (GAAP) reconciliation requirement would be a step on the way and give the International Accounting Standards Board a further boost.

Hidden gem: Keith Rodgers, Webster Buchanan Research (July/August 2007)

How strategic can you really get about expense management? Frequently seen as something of a tactical side issue, it’s usually viewed as an administrative and compliance matter – a fairly simple end-to-end process that starts with the submission of a claim and ends with the preparation of payroll data. As far as financial activities go, it’s not exactly one of the most complicated – and it’s certainly not the first thing organisations think about automating. That common perception, however, ignores a bigger picture. Manual expense management systems tend to be both fallible and wasteful – they eat up administrative resource when spreadsheet data has to be re-keyed into financial systems, and they rely too heavily on overworked line managers to monitor them. As a result, errors – deliberate or otherwise – tend to get missed, and the audit trail can be hard to follow.

Getting the most out of outsourcing: Bloch/Narayanan/Seth, McKinsey (June 2007)

The quality of offshore finance & accounting service providers has never been higher. Many have made significant investments in the control and monitoring mechanisms needed for high-end functions, regulatory requirements, and complex finance processes such as valuation reviews, legal-entity control and tax preparation. Some have even hired risk-and-control officers to deal with Sarbanes-Oxley, Basel II and SEC reporting. More sophisticated vendors enable companies to cut their labour costs by as much as 30-70% for offshored functions, to raise productivity by at least 5% a year, and to improve their control and risk management. What’s more, these vendors offer people-constrained finance operations flexibility – the ability to meet proliferating business needs quickly by tapping into a highly skilled workforce.

Conformance vs performance: Jon Fuller, Centrix (May 2007)

Probably the most common complaint in business today is that the burden of conforming with a raft of related corporate governance directives – Sarbanes-Oxley/SAS99, Basel II and The Freedom of Information Act – distracts management from dealing with real business matters. However, while regulation and compliance may feel like a burden to some, it is designed to protect all stakeholders and reduce risk. The proof is in the long-term success of those organisations that work hardest at compliance. Everyone needs good governance but in a fast-moving world, senior executives need to strike the right balance between conformance and performance. In order to do this, CEOs need to take a more sophisticated approach to managing risks in their operations and focus their attention on areas of the business where they may have previously abdicated responsibility, such as their financial & accounting technology.

How not to do it: Mark Cracknell, Emcee Consultancy (April 2007)

Something has finally driven you over the edge and you’ve decided that it is time to change your finance system. But is this really the answer or a mistaken diagnosis? And, even if your diagnosis is correct, what mistakes are made during the process of selection and implementation of the new system? Emcee has seen errors committed during both stages of the process that have cost the organisations concerned significant time and money. To help you avoid making these mistakes, here are our Top 10.

Becoming an ideal partner: David Ketchin, Parson Consulting (March 2007)

At many companies, the finance function is constantly challenging itself to enhance the value it can add to the business. At the same time, however, finance often finds itself stretched thin in diligently performing its routine activities, reducing its ability to focus on ‘value add’ or strategic work. This article highlights finance business partnering and how it can be implemented effectively in any business. A number of organisations are choosing to adopt a specialised operating model for finance. This model separates roles that have traditionally worked within a single structure and with somewhat blurred responsibilities. The aim is to reduce duplication and cut the cost of operations while allowing those working in commercial roles to remain focused on what really matters. Business partnering means bringing insights, challenges and analysis from a finance perspective into the business decision-making process.

The ABC of shared services: Mark Hixon, CAW (February 2007)

During the late 80s and early 90s, businesses tended to focus on re-engineering their core business processes such as ‘developing new products and services’ or ‘providing customer service’. However, many have re-engineered these processes past the point of diminishing returns. This has involved eliminating non-value adding activities, using new technology to get customers to undertake more of the processes and designing products and services to pre-defined cost targets. Companies have therefore returned to the old chestnut of how to reduce costs and improve service within the more traditional ‘overhead’ functions and processes such as finance, information systems, compliance and HR. As part of this process, organisations are taking a more radical look at how these areas operate and how they can be measured.

Playing by the rules?: Cliff Mills, PMP Research (January 2007)

In November 2005, Chancellor Gordon Brown announced the abolition of the Operating and Financial Review (OFR) reporting requirements for listed companies. Many companies heaved a sigh of relief – however, the move did not eliminate the need for them to produce additional information on their company’s performance. The OFR was a specific implementation of the European Union Accounts Modernisation Directive (EU AMD) which requires directors to produce an enhanced directors’ report incorporating a ‘Business Review’. The new Companies Act 2006 (formerly the Company Law Reform Bill) has consolidated existing company legislation and encompasses the requirements of the EU AMD.

Green guidelines: Simon Thomas, Trucost (January 2007)

The UK Companies Act 2006 has entered the statute books and what all company directors should be clear on is that they will face increased environmental management obligations. The DTI has warned directors that it will not be sufficient to pay lip service to such obligations, and in many cases they will need to take action to comply. In fact, the Companies Act 2006 requirements are an extension of the wider EU Accounts Modernisation Directive (EU AMD) and the UK Government has developed guidelines to help companies meet these obligations. There is considerable confusion surrounding the reporting requirements of environmental issues, particularly after the abolition of the Operating and Financial Review (OFR) by Gordon Brown in November 2005.

Cutting the red tape?: Martin Webster, Pinsent Masons (January 2007)

After eight years of commissions, consultations and compromise, the UK Parliament finally produced in November 2006 a new Companies Act. With over 1,200 sections this is reputedly the largest piece of legislation ever put through Parliament, in the UK or indeed anywhere in the world. The Act represents a major reform of UK corporate law, scrapping many fundamental concepts and introducing just a few new ones. A good starting point to grasping the significance of the Act is to understand some of the motives behind these changes. Chancellor Gordon Brown has been keen to champion the UK as the jurisdiction of choice for entrepreneurs looking to locate in a business-friendly environment. So a strong deregulatory push does away with unnecessary obstacles to business.

SOX is good!: Phil Toohey, Adventus (November 2006)

The Sarbanes-Oxley Act (SOX), introduced in the US in 2002, is constantly being described as expensive to comply with whilst delivering zero benefits or value. It is very easy to support this view and produce a multitude of facts and figures on the costs and effort expended by companies in achieving compliance. It’s been done many times already. Perhaps it is inevitable that as memories fade of how appalling corporate financial practice was, how widespread it was, and how outraged were investors, some companies and pundits see the costs and burdens and ignore the benefits… In March 2006 General Motors (GM) announced it would be delaying its SEC filings due to an accounting error and that its losses were $2 billion more than estimated for 2005. GM is not alone. US analyst Glass Lewis & Co reported that 1,295 companies – that’s 8.4% of all SEC registered firms – had to restate their accounts in 2005. Without SOX, says the company, investors would “still be relying on false financial statements”.

A new frame of mind: Peter Moller, Deloitte (October 2006)

There’s no doubting the current war for talent. Demand for skilled, qualified accountants is high. To recruit and retain the best you must offer an exciting career proposition. In part, this means reforming your finance function into an effective team that combines four core elements – strategist (helping to develop the business), custodian (taking care of corporate governance and risk management), operations chief (ensuring streamlined transactions processing and production of reports and accounts) and catalyst (leading from the front in ensuring that any stewardship, operations or strategic activity is executed effectively and delivered on time). This model requires the streamlining of back-office activities and the creation of shared service centres, giving central finance and the FD time to concentrate on higher-level strategic issues, in particular how to increase shareholder value.

Not so simple: Yvette Lamidey, Paris&Parks Consulting (September 2006)

Many companies run sophisticated financial and accounting systems with complicated and/or multiple payrolls, and virtually all organisations will be old hands at end-of-year returns. Yet, despite this, HM Revenues & Customs (HMRC) has found deficiencies in the systems being used for online accounts filing by even large and/or experienced employers. Part of the problem may be that companies have operated these processes for many years and haven’t been challenged on them, even though they do not meet all of the legislative requirements. If your organisation uses a bureau or payroll agent, or your payroll has been fully outsourced, you may feel the guidelines in this article will not be relevant to you. But don’t completely switch off – make a note to check with the third party to ensure each side is clear about who is doing what and when. And if you have changed payroll provider or moved to a new bureau/outsourcer during this tax year, it is even more important that you check who is doing what for this year end.

Transforming your finances: Simon Tennant, PA Consulting (August 2006)

Business complexity is increasing. This is driven by a range of factors including greater governance, regulation and intensifying competition brought about by globalisation and emerging technologies. Chief executives feeling the pressure to deliver are looking towards their CFOs to enable their organisation to succeed. As a result, today’s financial management is much more than a series of transactional processes. The finance function is an integral part of any organisation’s decision making, as it plays a central role in positioning the organisation to deliver its strategy. CFOs have begun to restructure their operations and capability by reducing the administrative burden, driving out cost through standardisation and introducing integrated systems. However, it is clear that no one solution fits all. To become a true business partner finance must implement the correct balance of interrelated sourcing options, processes, capabilities and technology in line with the organisation’s goals.

Taking on the world: Sean Murphy, Xansa (July 2006)

Every finance department is under pressure to reduce its costs and continuously enhance the service it delivers to the business. The agenda is driven, as ever, by competitive pressures but also by the fact that the potential for making efficiency gains so clearly exists in the finance function. With IT-based financial processes advancing, and geographical constraints dissolving, the finance function of the future will be characterised by: fewer, more highly qualified staff taking on business advisory roles; increased automation of routine transaction processing; service level agreements (SLAs) between finance and its customers, with clear transaction-based pricing; a greater focus on financial control and risk management; and a virtual finance organisation using outsourcing to provide flexibility of resource.

Making compliance 'business as usual': Liz Gower, Atos Consulting (June 2006)

The majority of companies affected by Sarbanes-Oxley have achieved SOX compliance. Yet regulation continues to represent a challenge for the finance function, both in terms of spiralling costs and increased workloads – leaving CFOs with less time to focus on the important ‘value-added’ aspect of their roles. In fact, a recent survey by Atos Consulting found that even in the areas of corporate governance and risk reduction, the regulatory burden is not helping seven out of eight European CFOs increase the strategic value that they add to their companies.

At the sharp end: Steve Chandler, Cornwell Management Consultants (May 2006)

So, you think you need a new general ledger system? Are you sure? If so then read on and learn about some of the major pitfalls that await you on your journey. Cornwell’s own journey began at the end of 2004 when we decided that we needed a new general ledger and job costing system. We were having difficulties with the speed of the billing process and in extracting useful management information on which to base business decisions. Surely a new system would solve all our problems at a stroke; or so we thought. Unfortunately, the reality is that there is a lot of hard work involved in moving to a new system and a lot of issues to be resolved along the way. Sharing some of the issues we encountered with you will hopefully help you plan for them before you start your own implementation.

Sending the finance function offshore: LogicaCMG (February 2006)

In an increasingly competitive market, CEOs and CFOs are looking for ways to minimise cost and maximise competitive advantage. Many have identified inefficient working practices within their finance functions and have explored options to increase productivity. These include the creation of a finance shared service centre (FSSC), which is increasingly seen as an effective way of addressing the inefficiencies and freeing up valuable management time to focus on core functions. Within this, a recent phenomenon has been a drive among companies to move their FSSCs offshore – which has been growing by 74% a year, according to NelsonHall. The driver behind this has been increased competition: the requirement to reduce headcount, salary and location costs further, as well as to improve competitive advantage. Certainly, moving the transactional elements of the accounts payable department offshore has been particularly successful with, in some cases, headcount and location-related cost reductions of up to 30% compared to onshore costs.

The case for new financials: Mike Holmes (January 2006)

A business case can be defined as a structured proposal used to justify commitment of resources to a project. It is a working document prepared in order to convey, to the senior management decision makers, the proposed project’s costs, risks and benefits, so they can decide whether to approve funding for the project. In essence, when it comes to selecting new financial and accounting software – and other systems – the business case should contain sufficient information to enable the organisation’s decision makers to support the go-ahead of the project. It will form the framework for decision making.

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