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Finance as a community is underserved by the analytic application arena and IT in general. While applications such as budgeting, planning and forecasting exist, there are few true analytic applications for the office of the CFO. It is not a foregone conclusion that everyone needs to do planning, forecasting and budgeting in the same manner or in the same order. In fact the art of business intelligence and analytics has yet to move out of infancy and into maturity in finance. Through this blog, I hope to enlighten and challenge business intelligence users who try to maintain their leadership through analytics and financial performance management.



Finally, someone has started down the right path to converge Human Capital Performance Management and Corporate Performance Management under a government mandate using Business Intelligence as the driver. William Laurent's column in "Information Management" addresses the gap between responsible management execution and forced government oversight.  http://bit.ly/cM2PjU

While we assume that BI techniques are the underlying technology for Performance Management, the truth of the matter is that there has always been a glass ceiling where management maintained an academic interest instead of a true actionable deployment.  If every layer of an organization were run on the basic tenets of Business Intelligence there would be a bi-directional alignment of revenues, costs and operational initiatives.  Does it take TARP to finally instigate a change?  Starting with the Finance community isn't a bad thing, but it needs to be a broader trend.

Accountability, which is the foundation of Governance Risk and Compliance, has been largely absent in the executive offices of not only the finance community, but businesses in general.  Sarbanes-Oxley was a step to gain oversight from a finance perspective, but the operations of the business largely remained unchanged and unaffected.  By holding senior executives accountable and targeting short-term expenses and long-term investments as William Laurent suggests, management will be able to better deliver value and foster innovation. Our economic crisis has shortened time horizons to weeks and quarters from months and years.   In an effort to have very exact forecasts, we are now forecasting within the foreseeable future.  Innovation and long-term projects are being halted and shelved in favor of lower costs and time horizons that require no prediction or trending.  Stifling growth means that there is no way forward for economic expansion.  That puts the economy in a spiral (or keeps it there as the case may be.)

Starting with the TARP recipients and extending to other businesses outside of the Finance community there should be a mandate to fully utilize Business Intelligence and strict cost controls that include executive compensation using defined performance metrics and key leading indicators.  This can then cascade down throughout the organization with departmental goals and objectives consistently reflecting those same operational performance metrics and revenue goals.  In the absence of these initiatives we are actually creating an underclass who is bearing the brunt of the economic downturn with no ability to drive profitable growth of their segment of the business.  The key is tying performance directly to effort and to the ability to deliver on an objective or finite goal.  Collective effort means that everyone has a hand on the oars and they are all pulling together.  No one at the helm is exempt.

Posted February 3, 2010 11:46 PM
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1 Comment


Thanks for the mention. Its good to see you blogging about this. Far too often knowledge leadership on TARP (and Sox) is myopic and fails to recognize a convergence--as you pointed out--with Human Capital Management.

Best of Regards,
William Laurent

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