Financial intelligence
Your article on accounting transparency (Global visibility, Information Age, August 2002) was great, but it fails to consider a fundamental issue: Typically, data used for financial reporting purposes does not come directly from the ERP [enterprise resource planning] system that generates it.
In essence, ERP companies have left the financial reporting function to third parties such as business intelligence software vendors, concentrating on business processes rather than a key application – the general ledger (GL). The problem is that the technology that is required in management information and reporting is totally different to the technology that underpins ERP; namely it requires OLAP [online analytical processing] software rather than the relational database technology that ERP solutions have been built around for many years.
Relational database technology is designed to handle large volumes of transactional data, but is lacking when it comes to the aggregation and analysis of data.
ERP vendors have tried to link their core applications databases directly with related OLAP databases but have largely failed to deliver.
The concern at present is that the security that is employed in the GL system is not reflected in today’s OLAP databases. The process that most organisations go through to transfer their data into an OLAP database is simply to copy the balances and/ or transactions out of their secure GL system and paste them into an OLAP system.
When evaluating an ERP system, organisations often spend days ensuring that the security in the GL system is adequate. There is company-level security, business unit security, account security and even period-level security. Setting up this all-encompassing security can take months, and it ensures that no account containing transactional data can be changed unless there is an authorised GL entry and audit trail.
Why is it then that when the data is transferred into a so-called business intelligence [BI] system, this same security is not retained? Actual data [within the OLAP system] can be changed, information can be manipulated to create allocations that are not posted in the GL, and all the budgeting information is stored outside the secure GL system. Would a CFO be willing to bet his life that the figures in the BI system are actually the ones stored in the GL? I think not.
Companies need a new type of management information system; software that runs directly from the GL transactional database with no movement of data.
Only then can the CFO begin to feel confident of the underlying analysis. If the market still demands the movement of data, then OLAP databases have to inherit the GL security together with the ability to drill back to the transactions in the ERP system.
Nick Gomersall
Sales and marketing director
DecisionWorks Software
Let’s get visible
Having read the article ‘Global visibility’ (Information Age, August 2002) I agree that many senior executives don’t have access to unified and consistent company information.
The Institute of Directors recently published a fact sheet stating that “a staggering 90% of boardroom decisions are still made without reference to data that exists within the company’s information systems”. Little wonder that the recent accounting ‘overstatements’ remained undiscovered for such a long time. The debacles at Enron and Worldcom offer further proof that organisations need to ensure greater and tighter financial transparency, and that senior managers must have an up-to-date and holistic view of the business. Without this it is impossible to identify issues before they become crises.
As the UK finance director of a multinational software company, I believe that one of the best ways to reduce the risk of mistakes and fraudulent accounting is to automate it as much as possible. While no IT system alone can stop fraud, by automating the process you reduce the risk of human error and human interference.
With the right computer systems in place, it is now possible to conduct a daily review of financial and business data, from the overall corporate level down to a specific country or even a specific office. We deploy such a system today both internally and for our customers. Our daily business systems access live data feeds, avoiding the need to replicate data and the risk of ending up with ‘different versions of the truth’. It means key decisions can be based on real-time data, as well as past trends and forecasts. It also highlights inconsistencies very early on.
The CEOs and CFOs of all public companies need to take a personal interest in the technology in which they have invested and make sure it is being used to deliver critical information to them as and when they need it.
99.9% of CEOs and chief financial officers are not out to defraud or mislead their investors and customers. Perhaps by automating their financial accounting processes they will be able to start regaining public confidence.
Norman Green
Finance Director
Oracle UK
Portal pressures
I read with interest your article on portals (‘Portal payback’, Information Age, August 2002). The point raised that the cost of portal technology can be minimal in comparison to necessary subsequent integration costs is a serious one. Instead of viewing integration costs as a necessary surplus, this should be the first consideration.
Organisations embarking on portal projects without giving the issue of integration due consideration are not only liable to incur unexpected additional costs but are also at risk of overlooking one of the greatest benefits offered by portal technology.
As highlighted by your article, portal technology has progressed far beyond simple information-only web interfaces, providing opportunities for fully integrated application interaction.
Portal technologies that address integration issues at both the application and atthe process level offer robust, long-term solutions, which can evolve as the organisation itself evolves.
Consequently, organisations would be wise to view the enterprise portal as a business integration framework, providing a single point of access to information, applications and business processes.
It is better to invest in basic portal technology that integrates with all existing IT systems and offers specific cost-saving or knowledge management benefits, than to purchase an all-singing, all-dancing portal that the IT department finds difficult to integrate and manage.
Mike Lucas
Technology Manager
Compuware
CRM analysis
I’d like to pick up on your observations in the Editor’s letter (Information Age, July 2002) regarding CRM software.
According to your letter, the Global CIO at investment bank Dresdner Kleinwort Wasserstein stated, “CRM is the biggest load of hype I have ever seen. The bulk of implementations say they are focusing on the customer. Rubbish. They are all organisations still very much focused on the product.”
It’s true that CRM, in the first instance, failed to live up to its promise. In some cases it delivered improved call centre efficiency, provided a greater variety of communication channels and generated massive amounts of data on customer behaviour.
But in most cases, without intelligent use of these systems, organisations created more harm than good.
In response to that CIO’s comments, it is interesting to note that a recent report showed that more than 60% of investment banks had not invested in making their CRM solutions ‘intelligent’.
As CEO of a CRM analytics solution provider that has doubled its revenues for the third consecutive year, has a growing blue chip customer list, a healthy pipeline and numerous return on investment testimonials from customers, I feel it is crucial that data analytics does not get tarred with the same brush as CRM.
CRM can deliver ROI, but you have to use operational CRM systems efficiently – not simply implement them. Previously, operational CRM has focused on data collection, but the lack of analytical capability within these systems means many companies have not seen the returns they were hoping for.
Customer analytics is more than passive data collection and reporting – it is actionable analysis, and delivers upon the value promised by CRM.
David Eldridge
Group CEO
Alterian plc
Correction
In the July 2002 issue of Information Age, the article ‘Help is at Hand’ incorrectly identified Colin Boag as an employee of JDS. Mr Boag is in fact MD of business systems supplier JBS Computer Services. We would like to apologise for any confusion.
