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‟The world is changing very

fast. Big will not beat small


anymore. It will be the fast
beating the slow. „

(Rupert Murdoch)
FINANCIAL STUDY

Content

I. Background ................................................................................................................ 3
II. Trends in the financial function ................................................................................... 3
III. Corporate Information: quality and quantity ............................................................ 4
IV. The Financial-IT Alliance ........................................................................................ 4
V. Finances and Business Intelligence tools ................................................................... 5
VI. Conclusions ............................................................................................................ 6

2 May
2011
FINANCIAL STUDY

I. Background

Traditionally, non-financers thought about finance as something related almost exclusively to


numbers, balances, control and projections. But the financial function of companies goes way
further and benefits much more from technology and more specifically from Business Intelligence
tools than it seems.

Strategic alignment, operational control, measurement of business indicators, the quality of the
information used to make decision, are all concerns and priorities that have emerged in discussions
with the CFOs interviewed for this small study. The importance of their role in the always changing
market, is the subject of this study, which analyses trends in the financial department.

II. Trends in the financial function

CFOs always talk about how quickly their roles and responsibilities within organizations are
transforming, and about the continuous challenges they must face. In the last years, in addition to
traditional operational management, strategic functions have become more relevant for the CFO,
gaining more control over the improvement of the services, and also acting as a catalyst and
facilitator of business goals.

The graph shows the evolution of this trend in


the last years: assuming functions as a catalyst
and facilitator of business goals and participating
in the process of improving management and
service orientation are gaining more prominence.
Contributing more to strategic decisions is
unquestionable.

Yet, most of the professionals consulted believe


that there is still much to do, that organizations
must work more to achieve full maturity in the
financial function, and this must be leaded by
technology.

Francesc Alcaraz, Founder and Director of FeedBackGround, Economist and Blogger, when asked
about the role of the finance function in the coming years told us: "On one hand, I believe in the
Business Partnership functions, plus strategic planning and business performance management,
etc. On the other hand, I think assisting and providing support and information for the decision-
making, with an optimum budget management, cash-flow management, analytical reporting and
aligned with the strategy is going to be more and more important. And finally, we have to tend to
spend less time on manual, time-consuming tasks that could be easily automated and should be".

This change in the financial role is already taking place: being closer to the business, higher
responsibility and vision, adding value to other areas of the company, understanding of financial
and nonfinancial indicators, which will generate a unified vision of objectives and strategies,
provide and interpret information easily for the rest of the organization. All these aspects of the
financial role will have a higher relevance in the coming years.

3 May
2011
FINANCIAL STUDY

III. Corporate Information: quality and quantity

According to a recent study about the financial function


carried out by Deloitte, we can classify corporate
information in three types.

 Strategic: Related to the decision-making

 Operational: Related to the periodic monitoring


and control

 Analytical: Used to analyze and explain results


and deviations

When asked about the importance that each of the different types of information have for a
company (Strategic, Analytic and Operational), financiers answered that all of them are important
but pointed out that the strategic information is the most critical.

The key point is finding equilibrium, not just the amount of information itself, but the quality of it.
The lack of quality can end up distorting the decision-making. We must take into account that
information is not only used throughout the organization, but in many cases is also transmitted to
the market.

Therefore, one of the barriers in the companies, according to financiers, is the problem of
dispersed and low quality information. This, combined with the exponential growth of management
information, requires a successful and lasting partnership between the IT and Financial areas. This
requires a business vision in both areas.

IV. The Financial-IT Alliance

With an increasing market pressure, the change of organizational models, the flexibility of the
markets and the regulatory and economic environments constantly changing, financial boards must
have a higher ability to adapt, and at the same time, better, affordable and measurable information
and business indicators to suit the needs of the market.

Francisco tells us "I really appreciate a good BI tool that provides the strategic and operational
indicators (KPIs), as well as being able to control to the maximum level of detail (...) and I can
appreciate as an added bonus, tools that allow making predictions, forecasts, etc. in order to
anticipate information for the decision making."

In this scenario, for the coming years it is unthinkable that organizations adopt a strategy without
considering value creation as a key element, and profitability, supported by tools that make
measurable the increasingly numerous and demanding business metrics.

The importance given to technological tools in companies depends of several factors and varies
over time, but as pointed out in the chart, there is a positioning of all tools that allow analyzing and
measuring all business metrics in an easy and reliable way.

For many of the financial executives asked, corporate information is difficult to obtain, analyze,
simplify and share with other areas. It’s the CFO’s responsibility to provide information to senior
management and boards for the decision making, with quality, reliability and in an efficient way.
When this consolidated information doesn’t exist, it is usually necessary to invest a significant

4 May
2011
FINANCIAL STUDY

amount of time and effort in obtaining this data, which


means lots of resources that could be employed in
more value-added tasks.

That is why financial management considers systems


that improve the analysis of information, Business
Intelligence systems, as a very interesting investment,
with significant impact on the improvement of
decision-making processes, and able to save a lot of
time for the department, helping to make the
organization more competitive and improving the
results.

V. Finances and Business Intelligence tools

One of the bottlenecks in every organization, periodically, is the reporting system. The large
amount of resources devoted to build, distribute and filter the reports is much more useful and
efficient when there is an integrated system that allows easier access to the requires information.
This is usually a source of inefficiency, with an accumulation of resources in low-value tasks, which
ultimately affects negatively on the costs. As resources are finite, this implies that these resources
are not being devoted to other more valuable tasks.

From all conversations with financiers, we conclude that the high number and complexity of
spreadsheets used by organizations, theoretically shared, generates indecision, doubt,
inefficiencies, and wasting time and money checking redundant or low-quality information. Some of
the financiers speak of it as a “spreadsheet-hell”. Others suffer silently, believing that accessing a
Business Intelligence system is something unattainable because of the cost and complexity they
traditionally had.

However, reality says that it is possible to access business intelligence systems at an affordable
cost. Most CFOs are clear about what they need to measure to maintain the strength of their
businesses and, increasingly in collaboration with CEOs, meet the business goals that they help to
establish. They are also clear about what they must require from the technology to align all these
objectives.

In this regard, most of the financiers interviewed, agreed that increasing the quality of the
information available and the efficiency in managing this information allow saving large amounts of
time and money. And this is more or less independent of the company’s size. Nowadays it is
possible to deploy Cloud Computing systems, saving money by avoiding investments and
maintenance.

According to Teresa Perez, CFO at ASPA Consultants, “Business Intelligence tools in SMEs are
very important, sometimes even more than in large companies”. Similarly, we are told that "a
balanced scorecard is a control tool necessary for strategic management, if supported and
encouraged by senior management, in addition to a rigorous supervision”.

Increasingly, the financial and senior management require better access to financial and
nonfinancial information to make decisions. The combination of these elements allows them, from a
single and integrated perspective, to optimize their performance by providing a common model,
integrated throughout the organization.

The Balanced Scorecard (BSC) is the space where strategic vision and business control meet. For
the financiers consulted, the BSC is a critical tool that should be constantly monitored from senior
management.

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2011
FINANCIAL STUDY

When aligning the financial function and the goals of


the Business, it is important to focus on acceptable
and measurable objectives, which produce
measurable improvements on business and a clear
ROI. It is the financial management who, once the
goals are settled, helps spread to the rest of the
organization a culture of metric-driven decision-
making and business control, based on business
intelligence tools, which helps the entire company to
achieve strategic objectives and increase value
creation.

VI. Conclusions

Technology has been, is, and will continue to be in the coming years, one of the biggest allies of
the financial areas. The investment in technology is being reduced and allows the financial area to
obtain better results: increases efficiency and decreases costs. Following this trend, CFOs are
focusing more and more on rationalizing investment, defining clear and measurable business
requirements, and increasingly, rely on Business Intelligence solutions built to be agile, functional
and with a clear ROI, focusing less on more traditional tools.

About LITEBI:

LITEBI is leading the next generation of Business Intelligence with its Cloud Computing platform. It
offers advanced analytics, dashboards, data integration, alarms, and scorecards for companies of
any size or industry, through a pay-as-you-go model. LITEBI is an easy, powerful and affordable BI
solution.

6 May
2011