Martin Richmond-Coggan is vice-president at Applix
Does information technology make you glaze over? Performance management solutions can help anyone – with little, or no financial background – analyse their company's financial position and avoid nasty surprises. Martin Richmond-Coggan explains how
Aw shucks! What do I know about corporate finance – I'm just the CEO. If only we could all blame our financial indiscretions on a lack of financial knowledge. After all, that's what finance is there for, isn't it?
You wouldn't drive your car with a blindfold on – would you? So why did CEOs in some of the world's largest companies think they could get away with claiming that was the way they ran their business? After the collapse of Enron, Parmalat and the recent high profile demise of WorldCom's former CEO, Bernie Ebbers, the message is clear: ignorance is no longer an excuse.
Aside from the lack of business agility that comes from an absence of financial and operational information, new corporate governance and financial reporting regulations mean a failure to know a business inside, could spell trouble. A business running the risk of failure could be the least of your worries if you are a chief executive.
Many chief executives and managing directors can empathise with Ebbers' claims that he was just the driver of the car guiding it safely from A to B, not the mechanic tinkering under the bonnet counting the spark plugs and polishing the fuel injectors. However, not being a numbers person doesn't mean you can't understand the finances of a business.
Using the latest Business Intelligence (BI) and BPM enterprise software anyone from the tea boy to the chief executive can see how a business is performing and run 'what if' scenarios to see what impact remedial action would have on the business. Ah, but I've mentioned the two words that strike fear into the hearts of most CEOs – enterprise software. The traditional view of so-called enterprise software has been one of multi-million pound budgets, teams of consultants and a project time that is measured in years rather than weeks.
The mid-size company market for enterprise software is now one of the fastest growing and most fervent of any at the present time. The new maturity came from a double realisation. Software vendors realised that there are only so many multi-billion pound companies that they could sell to, and businesses focused on software that enabled them to achieve smaller, bite-size business objectives.
Fed up with lengthy and complex IT implementations businesses are turning to point solutions that can be implemented at designated timeframes. Point BI and BPM solutions achieve the most critical issue – understanding where the business is, where it is going, and how it can be fine-tuned to optimise performance. These solutions enable business professionals to understand the financial mechanics of a business.
One specific area where BPM and BI come into their own, especially for growing businesses is during mergers and acquisitions. Bringing two organisations together, with different cultures, practices and protocols can be a real headache. Not only does BPM and BI software make it easy for managers to foresee the impact of a merger, but it enables them to run scenarios to find the best and least disruptive way to do it.
BPM and BI solutions like Applix TM1 are able to draw data from different legacy systems such as Enterprise Resource Planning and other financial packages that enable what-if analysis to be set up and used straight away, long before full physical integration of businesses. For TM1 customers like Virgin Atlantic and Littlewoods, BPM software has provided a way for senior management to manage the performance of both the established business and the newcomer to ensure any negative impact from the merger is minimised.
So when you hear the words 'business intelligence' and 'business performance management', rather than thinking of a multi-million pound investment, consultant overload and long, dark tunnels with no sign of light, stop and think about what you would like to know about your business. Whether it's how you can save more money on operational costs or what part of your organisation is operating at only 70%, I might be able to help you find the answer.