The team and I at Ventana Research through development of new research agendas for 2009 have identified business and technology thematic topics that will be critical to all organizations. These topics will be critical for business and IT to be more educated and savvy on how to leverage them for their organizations. These are our assertions and not just predictions for success in this year and we remain optimistic that business can drive significant change in how they use information and technology to advance their processes and people who operate them along with management who need better tools for being effective in their decisions.

Financial Performance Management
Financial Performance Management (FPM) is a collection of processes that help ensure that the finance department of a corporation achieves optimal efficiency while maximizing the effectiveness and performance of the entire organization. FPM addresses the often overlapping issues that affect how well finance departments bolster the strategic objectives of their company, support the business activities of the rest of the organization and manage their own operations. FPM deals with the full cycle of the finance department’s activities, including corporate and strategic finance, planning, budgeting, forecasting, accounting, analysis, closing and reporting. Managing the time spent on these activities to achieve the proper balance as well as reviewing and improving these processes is an ongoing challenge to senior finance executives. How well the finance department achieves this balance and executes its tasks affects not only its own performance but also how well company operates and achieves its objectives.

At the start of 2009, many CFOs find themselves caught in a bind. They need to improve the effectiveness of their organization: for example, providing more insightful performance assessments, controlling spending strategically, getting information to executives sooner and increasing the agility of corporate planning. Yet, they also must adapt to tougher economic conditions by reducing headcount and expenses. Better software (or better use of existing software) is a critical component enabling finance departments to enhance effectiveness and increase efficiency. Finance executives should focus on improving the performance of their organization with at least three of the following initiatives this year:

• Faster closing using consolidation systems and relying less on desktop spreadsheets
• Deploying spend management/travel and entertainment (T&E) software for more effective control of expenses
• Tax software either for more accurate and less burdensome sales and use tax management or minimizing income tax expense and increasing tax exposure visibility
• If lease expense is greater than 5% of operating costs, using software for managing your real estate exposure
• For public companies in the US, automating more of the close-to-report cycle and the creation of XBRL-tagged documents to comply with the new SEC mandate
• Using health care expense management software to substantially reduce the impact of inaccurate billing for self-insured companies
• Automating the remaining governance and compliance efforts that are still handled manually

Many finance departments can get themselves out their bind simply by using existing software more effectively and using desktop spreadsheets less. Others will find they need new software to support their business initiative. In a restrained capital spending environment, options exist for using software-as-a-service providers. Now is not the time for CFOs to sit on their hands, hoping to ride out the economic storm. Now is the time to prepare the finance department to play a more effective and more efficient role as business improves.

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Regards,

Mark Smith
CEO & EVP Research