Eliminate Administrivia in Finance
March 08, 2010

I hate administrivia.

Which is why I’m so fond of IT – it has the ability to cut down the amount of silly, needless work that people have to do in an organization. It automates manual processes so that no one has to do them. Potentially, you have the ability to enter data once and only once. Constant, tedious reviewing and micromanagement can be replaced by exception monitoring.

Paperwork is an area which can be time-consuming and tedious unless you get rid of it. Once upon a time I had dozens of file drawers. Now I have a hard drive and desktop search. Once you had to laboriously sift through 10-Ks and S-1s to find a nugget of company data. Now you have CTRL+F. ERP and other systems have eliminated considerable amounts of paperwork by automating record keeping. Vendors have spent time trying to develop systems that make the process as painless and efficient as possible. Yet there are many gaps left to fill in finance departments.

One of the least understandable failures to apply simple innovations to ERP systems [http://www.ventanaresearch.com/blog/commentblog.aspx?id=3002] is the reluctance of some companies to use electronic- or scanned documents in such areas as the payables and receivables functions. This is one area where about half of all companies with 1,000 or more employees lack this capability, even though it is well established and not at all expensive. For those of us who travel, software that automates the submission and processing of expenses is a boon – and it reduces the amount to time wasted by accounts payables clerks and managers.

One area still very ripe for innovation is the adoption of document management in finance departments for routine, repetitive document creation – reports to third parties, filings and other documents that use financial and other numerical data in combination with text. One area that is gaining increasing attention is the creation of financial statement filings for the SEC because the imposition of the XBRL tagging mandate is increasing the workload that must be handled in a relatively short time – in the period between the close of a fiscal period and the filing deadline. However, this is just one area.

Given the broad array of statutory and regulatory requirements that involve the combination of enterprise data and text – with the numbers interspersed in boilerplate and often used more than once (contained in a table and cited in the text) – I had long thought that document management was an IT category that was a natural for finance departments. I had thought that the value was obvious because typically highly-paid individuals have to comb through these documents, ensuring that the numbers are correct, there is agreement between tabular data and what’s contained in the verbiage and that the text is the most up-to-date version. I thought wrong.

Yet this might be changing. Vendors such as Clarity, soon-to-be-joined-by Oracle and others are gaining ground in selling the idea of automating the close-to-report cycle. If these vendors are smart they will use the inventiveness of their customers to demonstrate a multitude of ways that finance departments can use document management to automate tasks that are needlessly time consuming. Oracle has its own document management code base (it acquired Stellent – once called IntraNet Solutions – in 2009) while Clarity has built its applications on a Microsoft platform. IBM also could be a player here drawing on its Cognos/FileNet roots.

Typically the CFO also carries the title Senior- or simply Vice-President for Finance and Administration. CFOs have spent years focusing on increasing the efficiency without tackling the latter by savagely cutting administrivia in their corporations.

Let me know your thoughts or come and collaborate with me on Facebook,  LinkedIn and Twitter. 

Regards,
 

Robert D. Kugel CFA - SVP Research


 

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