IBM Global Business Services
Financial Management
Financial Management Consulting Services
Confronting globalization, complexity and risk Chief financial officers (CFOs) are in a highly visible, highly
and siloed information. The difficulty in aggregating data and
influential position. They’re not just keeping the books —
leveraging it successfully, in turn, inhibits CFOs from adequately
they’re architecting change, influencing strategy and driving
estimating strategic and operational risks, leaving many unpre-
business value for the larger enterprise. CFOs have always
pared to address rapidly changing regulatory, geopolitical and
been the stewards of financial and business data for the
economic factors. In addition to fragmentation-related chal-
enterprise, but now they’ve got to do more — they must
lenges, CFOs also struggle to find and retain professionals who
leverage this critical data to deliver insight into business
have a balance of the advanced business and technical skills
performance, risk and growth. And it’s not easy.
(transactional knowledge and the ability to drive efficiency) as well as soft skills (critical thinking skills for driving growth, for
Organizations are increasingly complex, with different geog-
example) that today’s finance organizations demand.
raphies, technologies and lines of business to navigate. And fragmented processes, systems and data make it difficult to
Plus, CFOs have to balance newer demands with their more
gather the business information that CFOs are tasked with
traditional responsibilities. Most finance organizations still need
delivering. Many of the challenges stem from business changes,
to devote almost half of their time to transaction processing.
such as inadequately integrated acquisitions, rapid expan-
And the continued focus on regulatory issues requires the
sion into new marketplaces and business model innovation,
investment of significant resources to remain compliant.
that leave companies with disjointed, localized processes
2
The IBM finance organization transformation success
It’s no wonder that the majority of finance organizations haven’t been able to successfully transform from a transactionally focused model to a strategic model that is globally integrated
In 1994, the IBM finance organization, which consisted of a decentralized structure with individual offices using disparate financial systems, was inefficient and not seen as a significant source of value to the company. But by transforming into an IFO over the years, the organization has realized incremental quantitative and qualitative results:
and capable of flexing based on changing business drivers. According to the IBM Global CFO Study 2008, today’s most successful finance organizations have an enterprisewide common data definition, a standard chart of accounts (COA), standard common processes and globally mandated standards. In fact, finance organizations built around these four criteria typically experience revenue growth rates double those of
• Consolidated from 67 to 6 data centers
industry peers.1
• Reduced the number of key applications from 145 to 44
By adopting enterprisewide process and data standards, finance organizations can begin to simplify enabling systems
• Cut the days for accounting to close by 62 percent
and delivery models, and establish governance to create an
• Established a common chart of accounts
integrated finance organization (IFO) for greater efficiency. An IFO, equipped with the right enabling technologies and
• Increased data consistency, integrity and reliability
delivery models, can deploy and execute finance activities
• Improved ability to accommodate changes through greater business flexibility
more quickly. Moreover, enhanced flexibility makes it easier to adjust the business to marketplace drivers.2
• Gained the ability to provide data more quickly to those who need it
“When everything is connected … work flows to the places where it can be done best.”3
• Enabled finance to focus on analysis and business issues by integrating financial and nonfinancial data
— Sam Palmisano, CEO, IBM Corporation The IBM Global CFO Study 2008 reveals that moving toward the development of an IFO is a critical step for companies that want to transform passive data into business insight that can be used to respond quickly to business needs. To create highly effective IFOs, organizations need to start by establishing global standards through process ownership and by simplifying enabling systems and organizational structures to facilitate faster deployment and execution of financial activities.
3
Financial management consulting from IBM It’s a tall order. CFOs have to drive efficiency and effectiveness
a valued business partner within the enterprise. The specific
in delivering insight while maintaining regulatory compliance and
services IBM offers include finance function and blueprint,
remaining as stringent as ever in their traditional bookkeeping
finance diagnostic, strategic profit improvement/cost effective-
activities. But they don’t have to struggle to do so alone. IBM
ness and rationalization, and finance process benchmarking/
offers comprehensive financial consulting services to help CFOs
APQC alliance.
face these challenges and deliver business value. A trusted ally
Finance operations improvement services — Designed to
to CFOs worldwide, IBM has the capabilities needed to trans-
help finance organizations execute their strategic plans. IBM
form fragmented finance organizations into flexible, agile IFOs
can help redesign key business and financial processes,
that are better prepared for helping businesses thrive in the
restructure organizations to improve overall efficiency and
unpredictable global marketplace. IBM delivers comprehensive
responsiveness, and more efficiently manage tasks that don’t
solutions— including strategy, process, applications, infrastruc-
add value through outsourcing and shared services. Some of
ture and technology — through its offerings in critical financial
the services offered include finance process design and reen-
management focus areas. Solutions that help CFOs address
gineering, finance organization design, skills and competency
new risks and challenges, drive enterprisewide profit improve-
rationalization, shared services design and implementation,
ment and increase shareholder value.
and financial process outsourcing implementation.
Finance transformation
Business performance management
In addition to managing risks, increasing organizational agility,
Our business performance management services are focused
and tackling organizational skill and leadership deficiencies,
on helping finance organizations leverage their information
CFOs must focus on cost cutting and profit improvement.
assets to support and enhance business planning and per-
Finance transformation services, which include finance strategy
formance. IBM can help CFOs unleash the power of their
and finance operations improvement, are at the core of the IBM
financial and enterprise information and business intelligence
financial management solution set. These services combine
by implementing the processes and systems needed to inte-
expertise, process transformation approaches and technology
grate information across the entire value chain.
innovation to help hasten the journey to becoming an IFO, while
Using our holistic strategy for design and implementation
delivering cost savings and helping to reduce risks.
that encompasses people, process, information content and
Finance strategy services — Designed to help develop a
technology transformation, IBM can help link performance
vision, strategy and blueprint to support the changing busi-
measures with strategy and apply these measures in a timely,
ness needs of the enterprise. Using diagnostic and strategic
cost-effective manner, while delivering role-based intelligence
tools, IBM can identify process gaps versus leading industry
to executives, managers and information consumers. For
practices. We can then readily identify business components
example, IBM can implement business performance manage-
that can be standardized, centralized or even outsourced. Our
ment solutions that provide access to real-time information
approach helps CFOs define the optimum finance operating
to improve decision making. We can also help organizations
model and identify potential improvement. Drawing upon its
integrate information to gain further insight into operational
financial management expertise, industry-specific knowledge
profitability and return on capital based on product, customer
and practical implementation know-how, IBM can help trans-
and region. And IBM can leverage tools and applications to
form a finance organization’s capabilities so that it becomes
perform a “what if” analysis and scenario planning to derive forward-looking information to support plans and forecasts.
4
Business risk management
risk management; Sarbanes-Oxley process design and tools;
IBM can help CFOs identify, assess, manage and optimize
Basel II gap analysis and enablement; governance, risk and compliance (GRC); enterprise risk management strategy
business risks, taking a comprehensive approach that integrates risk and compliance management into the overall
execution; and risk-driven performance management.
business strategy and execution. Our framework is designed
Finance enterprise applications
to help finance organizations evolve from baseline compliance
Our finance enterprise applications services are designed to
to an optimized risk management model in which the value of
help finance organizations design, architect, select, imple-
risk management far outweighs the costs. Effective risk man-
ment, integrate, manage and realize the benefits of technology
agement leads to numerous benefits, including lower cost of
solutions across the enterprise. IBM maintains strong vendor
compliance, improved stakeholder confidence, lower cost of
relationships — in fact, we’re a repeated recipient of the SAP
capital and loss avoidance. Plus, optimized risk management
Award of Excellence and the Oracle Partner Award. Working
provides increased transparency into business operations,
closely with alliance partners, IBM can meet an organization’s
which can result in enhanced decision-making capabilities
core financial systems needs, including the implementation of
and proactive risk mitigation; faster, more robust processes;
new enterprise resource planning (ERP) applications as well
and streamlined reporting.
as shared services and outsourcing solutions to improve the
IBM offers comprehensive services across the risk manage-
effectiveness and lower the cost of operations.
ment maturity continuum. Services include marketplace risk analysis and modeling; credit risk management; operational
5
Client success stories Large equipment manufacturer A leading manufacturer of construction equipment was struggling with an inefficient supply chain. Costs were increasing as fast as revenues, limiting business growth. The company was running multiple financial reporting systems that required the administration of more than 11,000 controls companywide. The chances of miscalculations were high, and the existing approach created significant hurdles for managing GRC. The company sought a way to improve supply chain processes and reduce risks. It created a long-term vision for its finance department with critical success factors that included faster, more accurate reporting. IBM Global Business Services used a combination of IBM solutions and methods, including the IBM AscendantŽ methodology, to implement SAP applications, including the SAP solution for GRC. To ensure that the company’s Six Sigma methodology was aligned with the Ascendant methodology, IBM conducted several workshops. The project involved a combination of onshore and offshore resources. With IBM’s help, the company reduced its number of general ledger systems from more than 30 to just one and reduced 300 feeder systems to approximately 50. It also expects to lessen the number of controls to approximately 500. Now the company can obtain a single version of the truth for both internal and external reporting. The ability to forecast more accurately resulted in less product allocation, and the company has achieved significant cost savings through greater process efficiencies.
6
Aerospace company
Financial institution
A leading aerospace company had a vision to make finance
Wrestling with poor overall bank efficiency and a high cost
and accounting a true partner in the business by shifting focus
of finance, a North American financial institution needed to
to value-added activities. Recognizing that existing financial
transform its finance organization. The institution used applica-
processes and systems did not support the strategic objectives,
tions from multiple vendors, and report production required
the company turned to IBM for help with the transformation.
labor-intensive manual processing and restatement processing. Overall, the company’s approach and inefficient systems
IBM worked with the company to identify the strategic capabili-
architecture inhibited it from adapting to changing market-
ties of its finance organization and examined how to streamline,
place drivers quickly and provided multiple versions of the
simplify or standardize supporting processes for key capabili-
“financial truth.”
ties. IBM compared the company’s practices and capabilities with best practices in accounting, transaction processing, close
IBM Global Business Services used the IBM finance transfor-
and consolidation, reporting and analytics, and other key areas.
mation strategy methodology and finance component business
Based on the results, IBM identified and prioritized improve-
modeling techniques to develop a vision for a first-class finance
ment opportunities and developed a business case for moving
organization with a flexible architecture, efficient processes
forward. It also guided the development and implementation
and strong governance. IBM provided the institution with a
of new processes and systems to reduce the time and risk
three-year roadmap to achieve an enterprisewide target-state
involved in solution deployment. Overall, the company simpli-
financial system architecture, as well as a business case sup-
fied and standardized six work streams, making it easier to
porting roadmap investments with detailed cost and resource
partner with the business:
estimates. The project identified millions of dollars in potential finance savings.
• Rationalized its chart of accounts, reducing it from more than 15,000 to less than 1,000
Major United States government department Lacking a centralized financial system, a large U.S. govern-
• Moved from five consolidation systems to a single level
ment department was relying on disparate legacy solutions
of consolidation
to manage, process and track more than 150 programs and
• Reduced close time from 12 days to 5 by standardizing
100,000 individual grants. As the systems became increas-
and monitoring compliance and close procedures
ingly difficult and costly to maintain, the department sought an updated and integrated solution.
• Reduced the use of spreadsheets for statutory data gathering by 75 percent by implementing common tools for data capture • Consolidated more than 30 discrete general ledgers into one across the enterprise
7
IBM Global Business Services integrated virtually all administrative and program processes and systems within the department, implementing a new financial management systems software (FMSS) Oracle Financials solution to provide centralized management of all programs and grants. Over the course of the project, the IBM team provided project management, process analysis, fit-gap analysis, application configuration, interface design and development, data cleanup, data conversion, testing, training, cutover planning and postimplementation support. The IBM solution has enabled the client to significantly reduce its maintenance and operational costs, leverage timely and more accurate financial information, and enhance its data collection and reporting capabilities. Plus, the integrated solution strengthens and enforces the department’s internal controls and policies for administering billions of dollars in government funds.
Why IBM? Whether a finance organization needs guidance in planning its business strategy, acquiring the tools to measure performance more accurately or becoming an IFO to transform its operations, IBM can help. IBM Global Business Services is one of the world’s largest consulting services organizations, with expertise spanning a full range
© Copyright IBM Corporation 2008 IBM Global Services Route 100 Somers, NY 10589 U.S.A. Produced in the United States of America June 2008 All Rights Reserved IBM, the IBM logo, and ibm.com are trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol (® or ™), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml Other company, product, or service names may be trademarks or service marks of others. References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates.
of key business issues in virtually every country. And with more than 4,100 financial management resources located around the globe, IBM has a strong record of serving as a trusted adviser to CFOs and finance leaders. Our financial management services experience is vast. But our approach truly sets us apart. IBM has a real commitment to collaborating closely with CFOs to help them manage complexity, balance risk and drive profitable growth. We bring custom-tailored multidisciplinary teams to each engagement, offering a future-oriented perspective
1, 2 Balancing Risk and Performance with an Integrated Finance Organization: The Global CFO Study 2008, IBM Global Business Services, October 2007. 3 Palmisano, Samuel J., “Leadership, Trust and the Globally Integrated Enterprise,” Executives’ Club of Chicago, April 12, 2007, http://www.ibm.com/ibm/ sjp/04_12_2007.html.
combined with here-and-now practicality. When it comes to unlocking value across the enterprise, we’re the experts.
For more information To learn more about IBM Global Business Services financial management consulting, contact your IBM representative or visit: ibm.com/gbs/finmgmt
GBB03022-USEN-01