FT SPECIAL REPORT The Connected Business

Wednesday March 27 2013 www.ft.com/reports | twitter.com/ftreports

New IT tools Inside » Analytics Cash savings are to be found hiding deep down aid evolution in the Page 2

Transforming of finance the high street Mobile use can achieve ‘holy grail’ of growth chief’s role Page 3 Management Leaders turn to metrics to gauge business performance The job of minder of the company books is Page 3 changing to a more strategic one and fresh

analytics software can help, reports Paul Taylor ILLUSTRATIONS: ØIVIND HOVLAND

raditionally, the role of a financial officers describe a greater over IT investment had increased Steve O’Neill, chief financial officer implementing a particular IT strategy, chief financial officer has involvement in supporting and even since 2010. of northern European operations at he says: “ would challenge a chief been to look after the com- developing strategy, guiding key busi- “The chief financial officer’s EMC, an IT services company, says: financial officer to have at least a pany books using spread- ness initiatives.” growing role in IT decision making is “As the individuals who are most working knowledge of IT to enable sheets and finance modules Rado Kotorov, chief innovation not primarily around cost manage- often tasked with the stewardship of them to make informed investment Tbuilt into enterprise resource plan- officer for Information Builders, a ment; rather, it’s related to making our own corporations, it is incumbent decisions for their business and to ning (ERP) suites from the likes of business intelligence provider, says: sure it’s a key strategic enabler, and upon us to ensure that we keep weigh the pros and cons and risks On FT.com » SAP, Oracle, NetSuite and others. “The role is changing due to the grow- ensuring that IT is in step with other abreast of this fast-moving environ- and rewards of chosen IT strategies. But that role is changing and ing importance of data assets in the efforts,” said Gartner. ment to maximise the benefits and “Understanding the [overall] picture often includes helping to define corpo- process of revenue and profit genera- minimise the potential risks. will enable you to make much more rate strategy and oversee the transfer tion . . . Keeping tabs on information “We can no longer absolve our- informed business and investment of business to digital platforms. is no longer enough. To be successful selves from engaging in this techno- decisions and leverage new opportuni- ● The best kit for “Based on our research, it is clear in today’s economy, organisations ‘I would challenge a logical revolution and assume others ties, while minimising your exposure finance directors the chief financial officer role at need to treat their enterprise data as chief financial officer to within IT, legal or management have to previously unaccounted-for busi- today’s leading companies is evolv- an investment.” covered all the bases from an opera- ness risk.” ● Kimal’s ing,” said a study by Ernst & Young Significantly, when asked by have at least a working tional risk and reward perspective.” Forward-looking finance chiefs Tony Wilson published last year. “Alongside their Gartner and Financial Executives While he admits it is not necessary argue that while they need IT tools to traditional mandate to provide finan- International, 44 per cent of chief knowledge of IT’ for every corporate finance chief monitor and run the finance function, ft.com/podcast cial insights and analysis, chief financial officers said their influence to understand the intricacies of Continued on Page 2 Better accounting systems offer richer forecasting resources

ist business intelligence market share ahead of prof- such as in-memory data- Information services tool, either for their own itability. Using business bases speeding up analytics. use or so a business intelli- intelligence to give more Finance directors might The need to share gence specialist can carry people in the business not always need real-time data is one factor out the analysis. Larger access to finance-based data information but quicker firms continue to invest in can only help. reporting and the ability to driving the use of these specialists, sometimes Mr Baer says chief finan- run multiple “what if” more analytics, says setting up a business intelli- cial officers remain heavily scenarios, without heavy gence competency centre, to involved in decisions about investment in IT, is improv- Stephen Pritchard meet the board’s need for where a company should ing decision making. Analy- more accurate and timely invest and finance teams sis tools are also becoming analysis and forecasting. need to look at wider easier to use, with the When businesses first “Chief financial officers ranges of data. He says: growth of visual analytics started to invest in - had large amounts of infor- “Chief finance officers are and applications designed tion technology in the 1950s mation in ERP systems, but widening their view point, for tablet computers in and 1960s, the finance because of their complexity particular making it easier director was usually in the it wasn’t accessible to the for senior managers to view driving seat. The early com- business,” says Peter reports and drill down into puter systems were Lumley, a business intelli- ‘Chief financial the data. installed to carry out tasks gence expert at PA Consult- officers had large But some barriers remain. such as accounting or run- ing. “There is a need to Variable data quality, and ning the payroll. But the visualise what the data are amounts of data in the difficulties of creating a chief financial officer is no telling them.” single master data record, longer the main user, let The need to share more systems, but it can hamper the finance alone the sole custodian, of key business data with the wasn’t accessible’ director’s ability to use a business data. wider business is one of the wider range of data. “When businesses first drivers for finance depart- Finance analysts are started putting in [manual] ments to make more use of trained to deal with highly control systems 100 or so analytics. The chief finan- looking at macro trends and accurate data from systems years ago, they measured cial officer should be pro- looking for signals.” of records. Making use of the flow of goods, then viding a “sanity check” for Investment decisions will new data sources and big cash, then information,” the wider business, accord- be made in light of financial data can mean dealing with says Frank Buytendijk, a ing to Tony Baer, a princi- data, but also customer and incomplete or less accurate research vice-president at pal analyst at Ovum. supplier information, even figures. This requires industry analysts Gartner. Often other business third-party data sources or finance directors to change “Even over the past 20 units’ forecasts or analysis data from social networks. their approach. years, the chief financial are not cross checked Fortunately, industry According to Leo Sadovy, officer owned the manage- against the company’s analysts point out that the a former vice-president of ment information systems. financial records, nor any range and quality of busi- finance who runs the per- But now it’s marketing decisions tested for their ness intelligence and ana- formance management divi- driving a lot of innovation.” impact on the cash position. lytics tools is improving, sion of SAS, an analytics The finance function, Mr The subprime mortgage with more sophisticated software vendor, just about Buytendijk suggests, is crisis in the US is an exam- algorithms, more powerful 15 per cent of companies moving from its role as ple of the risks of putting computers and techniques are carrying out “transfor- owner or controller of data mational work” with busi- to a consumer of informa- ness intelligence. In a large tion. But, he points out, number of finance depart- finance and accounting ments they are still trying systems now offer richer to improve their ability to tools for forecasting, analys- handle the basics, such as ing and reporting data, with management reporting. finance teams able to do Businesses, he says, are more of their daily forecast- also held back by a lack of ing and planning without statistical knowledge, as exiting their finance or well as by issues of data enterprise resource plan- integrity. Paul Dennis, an ning [ERP] software. adviser at the Corporate Companies such as Oracle Executive Board, a member- and SAP have invested based body, says the ques- heavily in business intelli- tion of skills becomes even gence applications, in part more acute as finance to boost those capabilities. teams start to use more And it is becoming easier to powerful tools to draw on a export data from financial wider range of data. systems, either to a cloud- Improved analysis tools and based application, or even better visualisation are just to look at the numbers important, he says, but so in Microsoft Excel. are the people. But for larger, and more “If you are going to invest complex businesses, most to make more of data, it finance directors will need makes sense to have the to bring data into a special- Good old days: a typical office computer circa 1954 Getty expertise in place,” he says. 2 ★ WEDNESDAY MARCH 27 2013 The Connected Business Biggest challenge is not to stifle legitimate goals Cloud helps to

compliance and risk man- Recent events in the UK, If a regulation is pub- lack of automation, or too as Basel II and III. Often the make most of Regulation and risk agement. where several multinational lished you need to abide by much focus on the minutiae only practical short-term John Smart, head of the companies came under it, but the effect on the of regulations, with execu- solution is to throw people Stephen Pritchard fraud investigation and dis- scrutiny for their tax prac- business might be minor, tives losing sight of the big at the problem. finds new rules can putes services team at tices, show a business can says Loren Padelford, exec- picture. But finance directors do heavy weather Ernst & Young, says: be legally compliant but act utive vice-president at “We coach clients to take not always go back later to lead to conflicts “Questions about risk are in a way that creates real Active Risk, a risk manage- a broader, risk-based see if tasks can be auto- coming from two directions: reputational risk. Busi- ment tools supplier. approach,” says John mated. Also, some compli- external environments and nesses are also looking at “The emphasis is shifting Wheeler, a research director ance measures, whether Case study Risk management and com- internal audit committees.” non-financial risks, espe- from risk management and at industry analyst Gartner. automated or manual, can pliance are growing bur- This, he says, means com- cially in the supply chain. compliance to understand- “You have to have a single stifle legitimate activities. Gritit dens. According to one panies are spending more The chief financial officer governance, risk and com- “Compliance can over- industry statistic, a new time and money on compli- will usually have to take pliance system and a single control,” says Richard Clear financials are regulation is published ance. And, even where responsibility for the com- system of record. Once they Hunt, managing director of every 22 days. firms have good systems in pany’s overall approach to ‘Teams are not have that [companies] can Turnkey Consulting, which key to banks’ For businesses trying to place, compliance can pull risk, even if the risks them- spending enough better understand their risk specialises in risk manage- support, says operate globally while in the opposite direction to selves are managed by profile [and] make sure ment based on technology streamlining their systems good business practice. other business units. time improving they operate within their from the company SAP. Michael Dempsey and improving efficiency, “You can end up with a “The chief finance officer risk appetite.” “You can put your busi- this can amount to a signifi- conflict between the opera- is the originator of report- visibility of risk Bob Stark, vice-president ness operations at risk by cant challenge. The need to tional part and risk man- ing and management infor- exposure’ for strategy at Kyriba, adding unnecessary compli- When the credit crunch comply with myriad and agement part of the busi- mation,” says Tim Thomp- which supplies treasury ance activity. But, [in] a lot first bit in the UK in 2007 sometimes widely differing ness,” says Mr Smart. son, a partner in risk and services and technology, of cases, there is now an small businesses felt the laws and financial regula- Avoiding these conse- regulatory analytics at ing what the real risk is.” says: “Teams are spending automatic control option pain and, despite much tions can go against effi- quences means the chief Deloitte. “It is the finance This shift also needs to be too much time on manual that there wasn’t [before].” political pressure, banks ciency measures, such as an financial officer not only director who is telling the made with care. Mr Smart tasks and not enough time The good news is more of remain stubbornly cautious integrated supply chain or has to run a tight ship – board what has happened.” says that, in some recent improving visibility of risk these tools are available when it comes to even a single financial with automated risk man- The finance or risk man- cases, businesses actually exposure.” within, or as add-ons, to companies with irregular record system. agement tools playing an agement department will identified the risks cor- This is understandable as large enterprise resource turnover. Since the financial crisis, increasingly important role need to pick through rules rectly but failed to act to businesses have faced a planning and financial soft- Gritit, a winter however, companies have – but he or she has to take and regulations to establish prevent the damage. wave of regulation, includ- ware applications, and they contingencies company also increased their a wider view of risk than what is likely to affect the Sometimes this is a result ing Sarbanes-Oxley, Dodd- have matured during the that has grown rapidly own scrutiny of financial financial compliance. business. of a lack of resources, a Frank and measures such past few years. since it opened in 2005, has Matt Benham: ‘200 vehicles to contend with the on the road in winter’ vagaries of British weather on top of expanding and contracting its workforce invoices, nearly half of its to meet seasonal demand. annual total, in just one Matt Benham, finance month. Cash flow can be director of the Uxbridge- critical in a severe winter, Cash savings based business, says it with a welcome demand pays to produce reports for its services your bank manager can counterbalanced by grasp instantly. payments for salt and fuel. He says: “Banks are This lean operation requiring reporting from depends on Xero being are to be found small businesses that goes fully integrated with its far beyond what many of front-office software, them are capable of Microsoft Dynamics, which delivering. Your bank is also accessed via the manager is not necessarily internet. In the frantic hiding among an accountant, but you winter period, clients must need to have a reporting be billed immediately to product that can give them prevent costs mounting up, an instant picture of where so front and back office your numbers are have to work as one. the big data heading.” Cash management is key Gritit has bolted two to Gritit’s success, its rise cheap, effective cloud to a turnover of £8.6m products together to create mirroring close control of management accounts outgoings. “We have 200 packs so its bank can vehicles on the road in digest with ease. winter and I can see their Xero, a popular cloud fuel costs at any time and financials package from run reports,” says Mr Analysis strategy Finance officers find fresh New Zealand, is at the Benham. of Mr Benham’s daily His one regret at being ways to extract more information out of their work. Another product, in the cloud is that the Spotlight Reporting, takes customised adjustments a company accounts, reports Maija Palmer reporting data from Xero client can request from a and presents it in a fiscally large enterprise resource friendly way that avoids planning software provider o far, big data has mainly Because the company had already spreadsheets, which do not are not available. been a toy for the chief mar- invested in some big data applications suit everyone and can be He says: “With the cloud keting officer to play with. for analysing its clients, it decided to changed by third parties. Companies are using tools use these also for financial reporting. This is a new cloud for analysing large volumes Using high-speed tools for handling phenomenon, with Sof data to refine their product offer- data, it was able to take samples of companies in the software- ‘Banks are ings, their marketing message or even various business metrics from across as-a-service sector, which requiring reporting the positioning of their goods on the its operations, and run checks to see host services on the web, shop shelf. The chief finance officer’s if these were in line with historical spotting a market for that goes beyond involvement, in general, has been to performance and what was expected utilities written to ride on approve the spending on such of that unit. Any anomalies could be the back of products from what most SMEs projects, which can cost from $200,000 spotted and corrected more quickly. other players. can deliver’ to tens of millions. , chief executive of Spotlight Reporting costs But chief finance officers too are MooD International, which provides Gritit £30 a month, says starting to see big data technologies management software for companies, , Middle East and Africa opera- into the system for analysis is what Dashboard dream: Mr Benham, while he pays you get what they give as something they could use to get a says big data tools can help chief tions, relates the example of one cus- many executives are finding helpful modern software £50 a month for Xero. He you, you can’t go into the better handle on company accounts, finance officers to have fewer sur- tomer, a large European telecoms about big data. Søren Staun makes it easier for admits to initial fears system and tweak it.” manage regulatory reporting require- prises in financial reports. “We can operator, which was looking for ways Biangslev, chief technology officer at companies to about the quality of such Gritit is a business that ments and identify cost savings. model in real time the impact of the to reduce the number of customers PFA Pension, the Danish pension compare data low-priced software, but highlights why cloud “We have not seen chief finance decisions they are making,” he says. leaving the network, known in the fund, used big data analysis tools from a variety of relied on the experience of financials suit any concern officers getting a lot of limelight in “It’s not just understanding the industry as “churn”. Even a 1 per cent when he was looking for ways to sources Dreamstime other financial directors where human resources big data yet. We have been seeing the finances of the past or guessing at the increase in churn would translate to a streamline the company’s IT systems. who had switched to Xero. are limited. The Xero- chief marketing officers getting into future, but looking at real impact. Put 5 per cent reduction in the company’s “It’s against my nature to look at Mr Benham has been Spotlight Reporting action, and a lot of activity coming together orders, revenue, operating profitability, so it was crucial to find subjective answers . . . But we started down the route of using combination has allowed from the chief information officer,” profit and put in your forecast based ways to reduce this. asking people what they thought companies such as SAP Mr Benham to keep says Narayan Sivaram, global client on what you can achieve. What if I Historically the company had about the computer systems and when implementing large technology under control partner at Infosys, the IT consultancy, put more people in, can I drive up looked at call details and network per- putting that into the analysis too.” systems with other while addressing the which advises clients on big data revenue? It is possible to do a review formance figures but it was not get- Mr Biangslev and his team might employers, and says they critical question of cash technologies. “But chief finance offic- at any point of what is going on.” ting accurate predictions of customers have once puzzled over sheets of A3 to can change the entire way management. ers are starting to be interested. A This should mean an end to the at risk of leaving. Using big data tech- work out usage patterns but the data people work. But this was Gritit has passed a series third class of project is emerging sudden profits warning, because the nology, the company started to also tool, provided by MooD, gave an not appropriate for Gritit, of milestones as turnover around regulatory reporting.” outcome of any change can be see far analyse the audio files of complaints instant visual analysis and surprising which has 35 full-time staff exceeded the £1m, £3m and One large financial services com- in advance, Mr Davies says. made to its call centres. Cross refer- answers. The oldest technologies were but expands to 300 in the £7.5m marks. Being able to pany that Infosys worked with, for Chief financial officers can also use encing those with other factors, it was best liked, still worked well and were winter months, when it present these figures in a example, was collating financial data data analysis to identify ways to able to predict with 75 per cent accu- cheapest to run, so PFA shed some of keeps forecourts and way that explained how from operations in 120 countries. Not reduce costs. Mike Connaughton, racy if a customer was about to leave. its little-used newer software. The pavements clear for profits are gathered in just only was this creating huge costs director of big data for Oracle’s “It seems obvious but they had not exercise shaved about 20 per cent off commercial clients and half a year was crucial. because the company needed vast been able to cross reference the audio the IT budget. public bodies. The turnover thresholds data warehouses to store the informa- with data sets before,” Mr Con- Mr Sivaram of Infosys says there is Mr Benham has a credit all required external tion but they were worried about naughton says. The call-centre staff a potential for a 60 per cent reduction controller and a part-time investment, and Gritit has whether the data were accurate ‘The oldest technologies dealing with the complaints had, in data handling costs when adopting accounts payable worker. used a selection of cloud enough. With ever stricter require- were best liked, still without the cross referencing, only big data technologies. Whether they This team of two and a technologies to illustrate ments to calculate exposure to risk, picked up on 20 per cent of customers have discovered big data yet or not, half has to be able to how and why a rather the financial services company feared worked well and were at risk of leaving. these are the sort of numbers chief master astonishing peaks unusual business has been that even a small amount of incorrect Being able to put often subjective, financial officers might start to take and troughs. This January worth the support of the data could be damaging. cheapest to run’ disparate data, such as audio files, an interest in. Gritit sent out 2,000 banks. Improved IT tools aid evolution of finance chief’s role

Continued from Page 1 number of candidates have Fortunately for execu- who have turned the new be processed more quickly erative’s retail division has backgrounds in consultancy tives, not only have the breed of tools to their by those needing it. kept revenue of seasonal manage risks, ensure data and MBAs. This shift is also main vendors of ERP tools advantage can be found in Pandora is now integrat- products constant while are secure and assist them reflected in the IT tools rapidly expanded their many different sectors. ing the system across the carrying 31 per cent less in their role as strategic they use. finance offerings to meet Jared Waterman, director company via tools such as stock. That translates to a advisers, they also need a Although many still such requirements, but a of financial planning at dashboards and pushing the $20m change in stock levels, basic understanding of IT prefer to use simple spread- variety of relatively young Pandora Media, the internet data across other depart- and allows more working trends such as cloud com- sheets to pose “what if’” specialised software and radio company, faced a ments. to be freed up to puting, data sets so large questions, many now also services companies, many problem because of the “Anaplan allows us to develop other projects and they can become impossible use more sophisticated soft- of them cloud based, have growth of the business. work with most of the flexi- products that will improve to manage (big data) and ware and cloud-based tools also developed products tar- “One of the biggest chal- bility that Excel allows but revenues and aid growth. the influence of mobile including business analyt- geting treasury and finance lenges was bringing struc- in a structured manner so Mr Kotorov of Informa- devices. This will enable ics, demand forecasting and departments. ture, infrastructure and we can collaborate on a tion Builders says: “Data them to work with IT lead- big data. For example, SAP has analysis to key areas of the model in real-time,” says are a company’s greatest ers to use technology to the Miss Butler says: “The launched a fraud manage- business,” he says. Mr Waterman. asset, and often the most best effect use of data and analytics at ment package built on its To accomplish this, Pan- Meanwhile Fred Jezouit, underutilised. Big data in Kate Butler of Russell a corporate planning level Hana platform designed to dora built its entire finan- vice-president of finance particular holds vital power Reynolds, an executive is straining big organisa- let enterprises in industries cial system, including long- and treasurer for US-based for the chief financial recruitment firm, says: “We tions. Where chief financial such as insurance, banking, range planning, current Southern States Coopera- seasonal changes that “Alteryx gave us insight officer, as it gives new con- have seen a demand trend officers previously had 18-24 healthcare, utilities and in month performance, cash tive, an agricultural supply impact inventory,” he says into seasonality trends for text to financial and opera- for chief financial officers months to build a strategic the public sector detect, flow, headcount and other business, is using big data “The main challenge was each of our stores as well as tional data. who have already led trans- plan, now they have a investigate, analyse and key metrics, using Anaplan. analytics tools offered by identifying the root causes predictive modelling capa- “The latter provide status formation projects.” reduced planning cycle of 4 prevent irregularities or This is a cloud-based model- a company called Alteryx of our slow-moving product, bilities to help ensure we on what has happened, but She says that while a weeks, forcing them to fraud in sectors where the ling and planning platform to drill quickly into com- which was eating up work- had the right amount of big data provides the ‘why’ deep understanding of constantly adjust financial sheer amount of data may that includes an in-memory pany data and extract vital ing capital that could other- product available at the – and this is why it offers finance is usually still a forecasts. That puts a huge allow them to go unnoticed. data processing engine, information. “Our business wise be used for business right time.” such potential for learning requirement, a growing strain on them.” Examples of executives which allows information to is highly dependent on growth. In six months, the co-op- and innovation.” FINANCIAL TIMES WEDNESDAY MARCH 27 2013 ★ 3 The Connected Business

consumers are most likely to use a smartphone when shopping in elec- tronic and appliance stores. Targeted mobile Switched-on retailers can update prices over wireless connections to guarantee they will match online charges, says Mr Qvist. For Pricer, the name of the game is to make consumers feel confident use can achieve about their purchase and not fret about potentially better deals that might be found online. Original approaches to the role of technology can be seen at Hakkasan, ‘holy grail’ of an upmarket Chinese restaurant chain that has opened across the globe from an early start in . Paul Deeming, the group’s interim chief financial officer, faces the profit growth challenge of promoting the brand name as it rolls out across Los Angeles, Shanghai and Dubai without diluting Hakkasan’s hard-won air of exclusivity. Staff use to gather data from Hakkasan’s diners in a way that suits the venue, says Mr Deem- ing. “The iPad looks professional and slick and we can get customer infor- mation on the spot. That is added to Retail Finance directors need to think about our database straightaway via a por- tal on the iPad.” engaging with consumers in store, not turning The email addresses gathered by Hakkasan do not provoke a torrent of outlets into showrooms, says Michael Dempsey money-off deals. Instead, the chain contacts diners with invitations to special events at its venues such as he rise of the online shopper as a result of consumers being guided window that allows consumers to installs digital price displays that can Strategic dining: the Hakkasan music evenings. has hit traditional retailers to a purchase by online information research a brand or compare products change in an instant and respond to a chain has adopted a different Hakkasan’s contacts are only useful hard. But what cheer, if any, delivered to smartphones. “Every and prices with items in other stores customer’s mobile phone via quick ecommerce route to if they are farmed imaginatively and can chief financial officers finance director is looking for one or online. This is not about firing response codes that link to product money-off vouchers Bloomberg Mr Deeming has strong views on the extract from the plethora of thing, the holy grail that is profitable adverts at consumers as they pass a reviews. predictable discounts that character- Ttechnological propositions jostling growth. And this is definitely an area specific location, a tactic Mr Perkins Niclas Qvist, global partner man- ise much of his trade’s marketing against hard-pressed outlets? where mobile technology can deliver a dismisses as “pretty crude”. Smart- ager at Pricer, says: “The idea is to efforts. “You have to add value, give The mobile phone is feted as a per- significant impact. But it’s about phones have to give the consumer a use the electronic display as an inspi- the customer an incentive and make sonal shopping assistant but Deloitte, influence, not about transactions,” sense that their personal queries are ration to the customer to shop in a people feel they are part of a select the management services company, says Mr Perkins. being answered, with highly focused different way. On FT.com » club of like-minded people.” thinks the hype around mobile pay- Across the Atlantic, Deloitte thinks sales promotions replacing blanket “The challenge for the traditional Hakkasan is steering away from the ments, known generically as m-com- mobile influence on store sales in the discount campaigns. store is not to become a showroom scattergun application of technology merce, conceals a far more important US in 2012 hit $159bn. It forecasts a The aim here is to engage with con- where people just look at products that can actually undermine profits. truth. “People look at m-commerce US market for such sales reaching sumers and prevent their business and then go away and order online.” Video Mr Deeming notes that some popu- but not at the way mobiles can be $700bn in 2016, against an expected evaporating into the pure online How much of this threat is recog- lar chains are so associated with used to influence the consumer,” says UK figure of £40bn. world. In Deloitte’s view the mobile nised by the retailers Mr Qvist meets? Technology money-off deals that they have turned Ben Perkins, head of consumer These are numbers that could revi- phone can keep them in-store and He says: “They realise they need to transforms into discount destinations where it research at Deloitte. talise traditional shopping venues but spending as long as the retailers learn change the way they do business in becomes difficult to persuade diners Mr Perkins’ point is that while UK only if the technology is exploited to build messages that appeal to order to survive, especially the elec- high street to pay the full price for any meal. retail sales using the mobile phone as wisely. smartphone-wielding shoppers. tronic retailers in Europe who sit on ft.com/ He says: “This can hit the margins a payment device totalled £1.5bn in In its report, The Dawn of Mobile Swedish company Pricer sees the huge stores that don’t match the of a big chain and it’s hard to turn 2012, this figure is eclipsed by the Influence, Deloitte puts the case for traditional price tag as a vehicle for growth of online sales.” video that around because the deal becomes £15.2bn Deloitte calculates was spent the mobile device as a mini-shop keeping shoppers in stores. Pricer Deloitte’s US research indicates part of the customer expectation.”

Bosses turn to metrics to gauge performance

their salary, or end their need better corporate Management employment if they do not performance management bring in at least two and a tools and the ability to use Programs can aid half times their salary in them effectively. data search, writes revenue. A study in March 2013 In almost any corporate from consulting firm the Jessica Twentyman environment, performance Advanced Performance management tools, based Institute and BI tools sup- on BI technology, are a plier Actuate shows there is Bombast may be par for the must, says Mr Umpelby. much work to be done here. course for interdealer bro- “No chief finance officer The organisations polled kers, the middlemen who I’ve ever heard of is short of business leaders from about match buyers and sellers of data...The difficulty lies 3,100 companies worldwide complex financial products. in getting it all into one about approaches to meas- But at Swiss firm Tradition, place, checking it’s right uring and managing per- Steve Umpelby, chief finan- and presenting it in ways formance and found 5 per cial officer for Europe, Mid- people elsewhere in the cent say they had no or dle East and Africa, prefers business can understand.” very little performance data to rely on robust data Addressing that challenge at their disposal. A rather than boasts to assess will only become more further 15 per cent said the performance of traders. important in the years their approach to managing “They’ll all tell you ahead, says Patrick Fenton, and measuring performance they’re the best thing since a partner at consultancy generated “some facts and sliced bread,” he says. and accounting firm KPMG. data, but the collection and “That’s the industry we’re While the chief financial usage is ad hoc, sporadic in and we operate at a officer has long had the role and uncoordinated”. pretty aggressive end of the This leads the study’s financial services mar- authors to conclude that, 20 ket . . . Part of my job is to years on from the introduc- acknowledge what they say, ‘No chief finance tion of the balanced score- then compare it with fact.” officer that I’ve card approach by renowned In a sector where trading management thinkers Rob- volumes have declined and ever heard of is ert Kaplan and David Nor- the scrutiny of regulators ton, one in five companies has intensified since the short of data’ have not truly benefited 2008 financial crisis, such Steve Umpelby, from the availability of performance management Tradition business performance man- has never been more impor- agement (BPM) tools. tant. At Tradition, salaries However, those that do and bonuses paid to front- of internal “scorekeeper” in use BPM tools rely on them office employees, about 70 many organisations, their to create a broad range of per cent of 2,400 staff, oversight is expanding to key performance indicators, account for some 62 per include non-financial met- dashboards, scorecards and cent of overall revenues, so rics, as well as those relat- benchmarks, with financial the firm has to be certain it ing to outsiders such as cus- performance the most meas- is getting a good return on tomers and suppliers. ured aspect of any business. its investments. “The finance leader will Some 87 per cent of Since last year, Mr need the ability to under- respondents measure this, Umpelby and his team have stand data but more impor- compared with operational been using business intelli- tantly extract intelligence performance (measured by gence (BI) tools from IBM from that data, in a far 75 per cent), customer Cognos to create a profit/ more holistic and simulta- metrics (69 per cent), loss statement for each neously deeper way than employee metrics (68 per trader that enables the most do today,” he says. cent) and sales and market- tracking, on a month-by- KPMG anticipates the ing (53 per cent). month basis, of the reve- emergence of a new breed The finance department nues brought in by that of finance professionals may be ahead of everyone trader and the costs who occupy a strategic else when it comes to per- incurred, from what the chief financial intelligence formance measurement but traders are paid to what officer role. “The chief if chief financial officers are they spend on entertaining financial officer will become to establish true oversight clients. an information broker on of company performance, Most traders, he says, behalf of the business,” they will need better under- have contracts that give the says Mr Fenton. For that to standing of all aspects of company the right to cut happen, finance heads will the business.

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Paul Taylor Adam Jezard All FT Reports are available Editor, The Commissioning Editor on FT.com at ft.com/reports Connected Business Follow us on Twitter at Steven Bird twitter.com/ft.reports Maija Palmer Design Social Media Correspondent Andy Mears All editorial content in this Picture Editor supplement is produced by Charles Batchelor the FT. Jane Bird For advertising details, Michael Dempsey contact: UK James Aylott, Stephen Pritchard +44 (0) 20 7873 3392, Our advertisers have no Jessica Twentyman email: [email protected], or influence over, or prior sight FT Contributors your usual FT representative. of the articles or online material. 4 ★ FINANCIAL TIMES WEDNESDAY MARCH 27 2013 The Connected Business Automation drives treasury efficiencies

Cash management Keeping an eye on how much there is in corporate coffers is becoming easier, writes Jane Bird

reasurers within companies – you might have called five banks for a the centres of financial man- quote and, by the time you got to the agement – are under pres- last, the first could have changed.” sure to keep a firm grip on FXGO simultaneously requests the the corporate purse strings. price from multiple banks and calcu- TThis means avoiding surplus funds lates the cash difference in dollars. sitting in low interest accounts, spot- “At the click of a mouse, you can spot ting overdue payments promptly and the best deal, execute the transaction, minimising transaction costs. and have your positional risk system But downsizing in financial depart- updated,” says Mr Tivnann. ments is making such tasks difficult. By avoiding the need for human Treasury managers are being asked to intervention, automated processing do more with less, says Cindy Murray, reduces error. It also provides an head of global treasury product, plat- audit trail and helps with compliance. forms and e-channels at Bank of “You can prove you went to the America Merrill Lynch (BoAML). market, looked at an appropriate “What they need is more automation number of counterparties and exe- to make their activities more effi- cuted transactions at the best price cient,” she says. instead of going to the same one all Cash management is the key build- the time,” says Mr Tivnann. ing block, says Paul Bramwell, senior Treasury managers need to think vice-president for treasury solutions more strategically than in the past, at Pennsylvania-based SunGard. “The adds Ms Murray. Organisations want aim is to show treasury managers just to look beyond the traditional 30-day how much cash they have in the busi- timescale to plan up to a year ahead. ness and where it is at any time.” “Before the financial crisis, they Some groups want daily or hourly focused more on operational aspects, updates on their financial position. with tools for reconciliation and cash One BoAML client has updates every Global finances: keeping track of what cash companies hold overseas can be made easier with the right software EPA positioning. Now, a lot more forecast- five minutes showing assets and lia- ing is needed.” bilities in all subsidiaries. For organi- BoAML’s CashPro Accelerate can sations with overseas operations, this have their own formats. Others con- a format that complies with the Inter- trading at Bloomberg. The more cur- extrapolate trends based on a com- can include multiple currencies and form to proprietary standards from national Standards Organisation rencies and interest rates you are pany’s historical information. It payment formats. “Many [countries] companies such as SAP and Intuit. guidelines. This enhances the recon- exposed to, the more your risk “locks” the core data so it cannot be expect you to have a local bank BoAML’s Ms Murray says some for- ciliation statements and helps auto- increases because of the price varia- changed or manipulated. This avoids account to pay suppliers or staff, espe- mats only allow 15 to 20 characters to mate processes, improving operational tions. “Treasurers need to understand the common problem of managers cre- cially in emerging countries such as be attached to the data. This can efficiency, says Ms Murray. Automat- the world in which they are trading ating individual spreadsheets based ,” says Mr Bramwell. make it difficult to recognise what ing reconciliation frees treasurers to and what the expectations are.” on inconsistent financial data. Dealing with international curren- data refer to when, for example, spend more time on analysis. Bloomberg’s FXGO service com- More treasurers are likely to keep cies and payments is difficult because matching a payment to an invoice. ‘Treasurers need to Mr Bramwell agrees having data in bines international news analysis financial data in the cloud in an of multiple file formats, such as those “Once it is multiplied by the number understand the world in a standard format is crucial for with the ability to execute transac- accessible form. This would enable provided by Society for Worldwide of transactions in a day, the challenge answering “what if?” questions. tions with more than 300 banks. more people, such a sales or opera- Interbank Financial Telecommunica- is formidable,” says Ms Murray which they are trading and This helps manage risk, which It helps judge the right moment to tions staff, to view it. The result tion (SWIFT) and Bank Administra- BoAML’s automated treasury serv- treasury is increasingly about, says buy or sell currency and to pick the would be a wider, deeper view of an tion Institute (BAI). ice augments payment transactions what the expectations are’ Paul Tivnann, global head of foreign best price from a choice of counterpar- organisation’s cash position, giving Some countries, for example, with data from clients and puts it into exchange and commodity electronic ties, Mr Tivnann says. “In the past, treasurers more control of the coffers. Broader view required on when to outsource

Finance functions Charles Batchelor says companies must look beyond simply cutting costs

While many chief financial officers and finance direc- tors have begun to take a more sophisticated approach to finance functions they still do not get it right every time. Cost overruns and wrangles over the scope of outsourcing deals continue to trap the unwary. “They have got a bit Call centres: many jobs were sent abroad in the 2000s Getty cleverer and can see what bits can be efficiently out- sourced and what cannot,” But unless the scope of subsidiary companies and says Colin Rowland, head the outsourcing deal, and divisions. “The more diffi- of European operations the scale of demand the cult it would be to integrate at Apptio, a supplier of customer expects to put on systems the less you want business management soft- the outsourcing supplier, an outsourcing provider to ware. are precisely calculated be involved because you are “They break the contract additional services may be going to have to pay more down and hand bits out to required. Costs may rise money for the complexity,” the specialists. Desktops and anticipated savings will says Mr Tennant. will go to vendor A and not be made. Finally, any outsourcing business process to vendor “Businesses change and decision needs to have top- B, for example.” that needs to be taken level support to induce a Shamus Rae, head of account of in the contract,” sense of urgency and European shared services Mr Rowland says. “That ensure that targets and and outsourcing at KPMG can lead to incremental timetables are met. Management Consulting, costs that the outsource Outsourcing is not the says: “The generic offshore provider will put on you.” only option for a chief outsourcing players are Simon Tennant, shared financial officer seeking to struggling to maintain services and outsourcing cut costs and improve market share while compa- expert at PA Consulting efficiency. Companies can nies with a strong financial Group, identifies the key achieve both by standardis- capability are winning busi- issues that must be clarified ing business management ness.” before a decision to out- processes across all their Many deals struck in the source is taken. markets and geographical early 2000s were aimed at “You must have a clear areas of activity. Often “labour arbitrage”, for areas of business are left example, relocating jobs to out of such plans because lower cost areas of the they are perceived as world such as India but ‘Finance directors having special characteris- with no strategic aim are creating a vision tics that make them too beyond cutting costs. difficult to integrate. However, says Mr Rae, and then breaking Companies can broaden managers are now taking a the range of activities cov- much broader view of what down what needs ered by shared service cen- finance departments need to be done to tres to include human to deliver. resources or IT alongside “They are creating a support that’ finance, operating with a vision and then breaking single helpdesk, the same down what needs to be done software package and the to support that,” he says. objective. Is it to save costs same procedures for dealing Many multinationals or to achieve an improve- with suppliers. Shared serv- have created shared serv- ment, by, for example, ices centres need not be ices operations that bring providing headroom for located near head office but together financial and people to do what they are could benefit from being sometimes other back office good at rather than filling close to the fastest-growing functions into one centre in expense claims?” markets, often in emerging where they can be more Managers should take countries. efficiently managed. Chief stock of where they are in Common mistakes made financial officers have to terms of the state of their by financial chiefs who sign ask themselves whether management technology up to outsourcing deals outsourcing this operation and the degree to which include failing to measure can put a further squeeze they have already devel- the starting point, failing to on costs as well as improv- oped a shared services plat- benchmark performance ing efficiency or whether form in-house. An outdated and failing to manage board they have gone as far as enterprise resource plan- expectations of what can be they can already. ning system might be delivered. The first step to be taken expensive to upgrade in- “One client told me that is to understand the costs house, for example. the outsourcing players being incurred when a Highly integrated compa- were now delivering what particular function is being nies may find it easier to they had promised five managed in-house, says Mr outsource financial func- years ago,” says Mr Rae. Rowland. “Managers get tions than companies that “So what they are promis- sold on making a massive allow a greater degree of ing now we may see in five return on investment.” operational freedom to years' time.”