IT Best Practices for Financial Managers E-Book

Janice M. Roehl-Anderson

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 361

Veröffentlichungsjahr: 2010

Beschreibung

Praise for IT Best Practices "The work of the financial manager revolves around a company's financial systems. Ms. Roehl-Anderson's latest offering addresses the two key aspects of these systems--how to buy and install them. The book covers every conceivable aspect of these systems, including ERP, software as a service, shared services, and supporting controls. As a bonus, the book contains substantial coverage of information technology considerations in an acquisition. This is a definitive desk reference." --Steve Bragg, CFO, XeDAR Corporation, and author of Accounting Best Practices "Sage advice from one of the most adept project managers in the industry! Jan and team have delivered a practical, yet comprehensive guidebook for software selection, implementation, rollout, and ongoing updates. This guidebook will become a valuable reference for every financial manager and IT project manager undertaking ERP implementation."--Valerie Borthwick, former senior vice president, Oracle Consulting "Written by one of the best in the IT business, this book is a must-read for all CFOs and controllers. In one volume, it addresses everything a financial executive needs to know about IT and its impact on the financial function, while also featuring practical guidelines, current hot topics, and IT best practices. This book covers it all."--Jo Marie Dancik, Regional Managing Partner (Retired), Ernst & Young

Leseprobe

Table of Contents

Title Page

Copyright Page

Preface

Acknowledgements

About the Contributors

PART I - The Basics

CHAPTER 1 - The Information Technology Planning Process

Finance and Information Systems

Information Technology Planning Process

The Role of Finance in the Systems Planning Process

Conclusion

CHAPTER 2 - ERP Software Selection

Project Preparation, Scope Definition, and Approach

Vendor Candidate Identification and Short-Listing

Request for Information/Request for Proposal Analysis, Vendor Demonstrations, ...

Preliminary Vendor Recommendation and Negotiations

Final Vendor Decision and Procurement

Conclusion

CHAPTER 3 - The Software Implementation Process

Key Implementation Concepts

The Implementation Phases in Detail

Common Risks and Mitigation Strategies

Areas that Require Special Attention from the CFO

Conclusion

CHAPTER 4 - Critical Success Factors for IT Implementations

Provide Effective Sponsorship

Select a Dedicated and Experienced Project Team

Establish Project Infrastructure

Utilize a Well-Established Approach

Address People Issues

Communicate

Manage Scope

Establish a Supportive Culture

Conduct Periodic Quality Assurance Reviews

Provide a Stable Technical Environment

Conclusion

CHAPTER 5 - Steering Clear of a “Crisis in Confidence” and Other People Pitfalls

Phase 1: Before the Project

Phase 2: During the Project

Phase 3: After the Project

Conclusion

CHAPTER 6 - Objectives and Scope of Implementing Automated Financial Systems

Objectives

Core (First-Tier) App lications

Second-Tier Applications

Third-Tier Applications and Beyond

Conclusion

PART II - IT Hot Topics

CHAPTER 7 - Shared Services and Financial Systems

Creating Value through Financial Systems-Enabled Shared Services

Financial Systems as a Foundation for Shared Services Benefits Realization

SSC and Financial Systems Implementation Considerations

Financial Executive’s Role in Shared ServicesImplementations

Conclusion

CHAPTER 8 - Globalization Trends in Offshore Information Technology

How Is Global IT Different from Offshore IT?

How Globalization of Business Has Influenced Global IT

How Pervasive IT Influenced Global IT

How Global IT Continues to Drive Changes in Globalized Business

Conclusion

CHAPTER 9 - Security, Controls, and Privacy

Impact of Sarbanes-Oxley on Financial SystemsImplementations

Financial Executive’s Role in the Security, Controls, and Privacy Area

Security, Control, and Privacy Safeguard Design

Controls Automation

Ways to Test Controls

Conclusion

CHAPTER 10 - What Is IFRS and Why Is It Relevant to the CFO Now?

History and Specifics of IFRS

Some Key Differences between IFRS and U.S. GAAP

Potential Benefits of Reporting under IFRS

Potential Costs or Cons of Reporting under IFRS

The Decision to Move to IFRS

IFRS Conversion Project Approach

Conclusion

Notes

CHAPTER 11 - The Phenomenon of Software as a Service

Background: What Is SaaS?

The Value Proposition of SaaS

Making the Right Decision: Is SaaS Right for Me?

Implications for IT Organizations

Conclusion

CHAPTER 12 - Investing in Product Information Management

Overview

PIM Adaptation Catalysts

PIM Implementation Considerations

PIM Return on Investment

Conclusion

Note

CHAPTER 13 - E-Commerce

E-Commerce Defined

E-Commerce Today

Increasing Shareholder Value

Justifying the Investment

Implementing Financial Controls for E-Commerce

Conclusion

CHAPTER 14 - ERP: An Evolving Process

Getting Started

You Have Identified the Problem; Now You Need to Define the Solution

Conclusion

PART III - Mergers, Acquisitions, Divestitures, and IT

CHAPTER 15 - Key IT-Related Questions Every Financial Executive Should ...

Before a Transaction Is Identified

After a Transaction Is Identified

Conclusion

Notes

CHAPTER 16 - The Importance of IT Due Diligence during a Merger or Acquisition

Why Bother with IT Due Diligence?

Role of the Chief Information Officer

Looking under the Hood: Your IT Due Diligence Checklist

How to Get the Data

Beyond Cost Reduction: Identifying IT Synergies

Accelerating Merger Integration Planning through Due Diligence

Due Diligence after the Close

Conclusion

CHAPTER 17 - Ways to Enhance IT-Related Synergy Capture during a Merger, ...

Sources of IT Synergies

Benchmarks to Establish IT Synergy Targets

Begin Early and Build Momentum

Conclusion

CHAPTER 18 - Ways to Reduce IT-Related Costs during a Merger, Acquisition, or Divestiture

Approach

Cost Reduction during Merger or Acquisition

Cost Reduction during Divesture

Conclusion

CHAPTER 19 - Effective Approaches for Managing IT during a Merger, ...

New Terminology

Faster Pace

New Challenges for IT

Conclusion

CHAPTER 20 - Ways to Use Mergers, Acquisitions, or Divestitures to Build ...

Conclusion

CHAPTER 21 - Time-Tested Approaches to Maintaining Data Integrity during a ...

Potential Impacts of Poor-Quality Data

Time-Tested Approaches to Help Maintain the Integrity of the Data

Conclusion

Glossary

About the Author

Index

Copyright © 2010 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Roehl-Anderson, Janice M.

IT best practices for financial managers/Janice Roehl-Anderson.

p. cm.

Includes bibliographical references and index.

eISBN : 978-0-470-58507-8

1. Information technology-Management. 2. Business enterprises-Finance. 3. Finance. I. Title.

HD30.2.R643 2010

658.150285-dc22

2009035914

Preface

One of the most important aspects of a financial executive’s job is helping to ensure that financially related systems are implemented on time and on budget and that the systems are secure and reliable. Additionally, the financial executive needs to be aware of other key system-related topics, including the systems planning and software selection processes, ways to effectively implement systems using a well-established methodology, ways shared service centers can enhance the investments in systems, the impact of International Financial Reporting Standards (IFRS) on systems projects, trends related to e-commerce and software as a service (SaaS), and the impact mergers, acquisitions, and divestitures can have on the finance area.

There has been a tremendous amount of change in the systems world over the past several years. As a result, it is very hard to stay abreast of the latest system trends and best practicesa for finance. This book is focused on providing the financial executive with an understanding of some of the most important system-related areas that can impact the finance function. It also contains best practices for selecting, implementing, and maintaining systems.

The book is divided into three parts:

• Part I: The Basics (Chapters 1 through 6). Many organizations fail to effectively implement and manage their financial systems. This part includes a detailed discussion of the strategic systems planning and software selection process and the best practices associated with them. It also contains a detailed overview of an approach to successfully implementing financial systems, ways to address the “people aspects” ofimplementations, and an overview of key financial applications. Part I concludes with a detailed overview of shared services and best practices associated with them, some of the trends related to outsourcing that financial executives need to understand, and the next wave for financial systems.

• Part II: IT Hot Topics (Chapters 7 through 14). Since the passage of the Sarbanes-Oxley Act, the importance of strong security and controls has risen dramatically. Part II discusses some of the best practices associated with automated security and controls and provides an overview of system privacy and why the financial executive needs to be aware of this aspect of systemimplementations. This part of the text also contains a detailed discussion of IFRS, one of the hottest topics in the financial and systems world. International Financial Reporting Standards are a single set of accounting principles that are rapidly gaining acceptance by the financial reporting bodies of countries around the world, including the United States. IFRS is focused on the objectives of transparency, reduced complexity, and market-versus-accrual valuation. Part II describes the impact of IFRS on financial organizations and contains a best practices-based approach to implementing IFRS-based systems.

The only thing constant about information technology is that it is constantly changing. This part of the book also discusses some of the latest trends and related best practices that are impacting the marketplace and financial organizations, including software as a service (SaaS), e-commerce and the impact it is having on financial systems, and the importance of managing product information.

• Part III: Mergers, Acquisitions, Divestitures, and IT (Chapters 15 through 21). Over the past several years, a significant number of companies have been involved in mergers, acquisitions, and/or divestitures (MA&D). As a result, it is imperative for financial executives to understand the systems-related aspects of these deals, whether they are the buyer or the seller. This part of the book contains overviews of and best practices related to the following aspects of these deals: key questions financial executives should ask during a deal, ways to conduct IT due diligence prior to closing a deal, methods for capturing IT-related synergies and reducing IT costs, ways an MA&D event can be used to build value, approaches to managing the IT function during a deal, and ways of facilitating data integrity during a deal.

This book is designed to be a practical guide to IT for the financial executive. It is written in nontechnical terms and is focused on helping you add value to your organization via the IT function. In short, it is a guide to IT best practices for the financial executive.

Acknowledgments

Information technology is constantly changing. Therefore, it was essential for the material in this book to be timely, accurate, and relevant. Accordingly, I selected contributing authors known for their expertise and hands-on knowledge of information technology and how it impacts the finance function. Listed below, in alphabetical order, are these authors. They all have done a superb job of developing a book that is practical and informative.

• Ajay Bhatia

• Peter Blatman

• Colleen Chan

• David Deckter

• Robert Fabiszak

• Sheri Fedokovitz

• Nancie Fernandez

• Jeff Fisher

• Indira Gillingham

• Jessica Golden

• Brenda Haroian

• Colin Hartnett

• Susan Hogan

• Hilary Horn

• Ryan Jones

• Varun Joshi

• Joseph Joy

• Pavel Krumkachev

• Anna Lea Doyle

• Angela Mattix

• Jason McClain

• Deborah Metzger

• Krista Mondschein

• Shalva Nolen

• Brandon Patterson

• Sharon Piech

• Johannes Raedeker

• Asish Ramchandran

• Karl Rupilius

• Kalyana Sundaram

• James J. (Jeff) Taylor II

• Michael Vowles

• Franscisca Wahjudi

• Mark Walsh

• Amy Wolbeck

Additionally, I would like to thank the following individuals from John Wiley & Sons who made this book possible:

• Sheck Cho, Executive Editor

• Helen Cho, Senior Editorial Assistant

• Stacey Rivera, Development Editor

• Lisa Vuoncino, Production Editor

• Todd Tedesco, Senior Production Editor

Dave Lewis and Jen Webster of Deloitte should also be acknowledged for their outstanding editorial skills. Their expertise was greatly appreciated.

I’d also like to thank my husband, Fritz Anderson, for his unending patience and support as I worked on this book over weekends and during vacations.

Finally, I’d like to thank my Lord and Savior, Jesus Christ, for making this all possible and for His unending blessings.

Janice M. Roehl-Anderson Cherry Hills Village, Colorado

About the Contributors

Ajay Bhatia is a senior manager in Deloitte’s Enterprise Application practice. He joined Deloitte after spending time at KPMG, Andersen Consulting, and Oracle Corporation focusing on high-technology, manufacturing, automotive, consumer business, and public sector organizations. His consulting experience includes strategic assessments, service delivery models, business transformation, supply chain optimization, and enterprise system implementation management. Additionally, he has a wide breadth of experience with business and IT strategy alignment, business process reengineering, program management, and change management. Ajay received his MBA from Ashland University in Ohio and a master’s degree in Information Systems from Eastern Michigan University.

Peter J. Blatman, MS, Computer Science, and MBA, is a senior partner and leads Deloitte’s National Technology Strategy practice, which focuses on driving business performance through effective use of information and enabling technologies. With more than 28 years of experience, Peter has consulted nationally andinternationally at major corporate financial services, retail, healthcare, high-tech, energy, transportation, and telecommunications industry clients regarding the application of advanced technology to business systems development and business transformation. Peter’s focus in his consulting practice is the intersection of business strategy, information, and technology—particularly the shaping/enabling impact of new and emerging technologies on business strategy. He has deep experience in IT strategy development, IT governance, IT organization design, pre-merger IT due diligence, and post-merger IT integration.

Colleen Chan is a senior manager with Deloitte Consulting LLP, with over 15 years of consulting experience. She specializes in large-scale system implementation and pre-deal planning for merger and acquisition-related IT activities as well as customer relationship management system design and implementation. She has served some of the largest Fortune 500 companies in high-tech manufacturing and life sciences. Colleen received her MBA in Information Systems and MS in Industrial Engineering from Rensselaer Polytechnic Institute, and a BS in Computer Science from the University of Wisconsin.

David Deckter, CISSP and ISSMP, is a senior manager with Deloitte & Touche LLP with over 11 years of extensive international experience helping clients solve business problems as they relate to risk management, privacy, and security. His hands-on experience developing integrated risk and compliance programs and implementing large-scale security and privacy solutions across industries allows him to quickly roll out practical solutions tailored for his clients. He received his Bachelor of Science in Economics from Purdue University, located in West Lafayette, Indiana. He has contributed to numerous papers, presentations, and publications, including the Information Security Management Handbook, Volume 4, edited by Harold F. Tipton and Micki Krause.

Robert F. Fabiszak, MBA, is a director with Deloitte Consulting LLP, with over 10 years of consulting experience. He specializes in helping companies transform their finance functions, particularly with respect to performance management processes and technology. Prior to joining Deloitte, Robert held several roles in the Finance group at Alexander and Alexander, and he began his consulting career with PeopleSoft. He received his MBA from the University of North Carolina at Chapel Hill, and he also has a degree in Economics from Loyola College and a degree in English from Towson University.

Sheri Fedokovitz is a partner within Deloitte & Touche LLP’s Audit and Enterprise Risk Services practice, where she specializes in data analysis, statistical analysis, continuous monitoring /auditing and data quality and integrity techniques and solutions. She has over 19 years of experience and is the firm’s national leader of the Data Quality and Integrity service line. Sheri graduated from Eastern Michigan University with a BBA in Accounting Information Systems. She is a Certified Public Accountant and a Certified Information Systems Auditor.

Nancie W. Fernandez is a principal with Deloitte Consulting LLP, with over 20 years of business and consulting experience. Nancie has extensive experience managing the people-related issues on large-scale, complex projects, including large technology implementations, merger integration, divestiture, HR, shared services, and organizational transformation engagements. Prior to joining Deloitte in 1997, Nancie worked for 15 years in the insurance industry, where her focus was primarily on IT and business process reengineering.

Jeffrey Fisher is a senior manager with Deloitte & Touche LLP. He has been with the firm for over 11 years and serves as the project manager and technical quality assurance role for one of Deloitte’s largest clients. Jeff specializes in helping companies assess and improve their processes designed to mitigate financial statement, business, and technology risk. He has assisted several Deloitte’s clients in preparing for and successfully implementing Sarbanes-Oxley assessment processes on a global basis. Jeff received his Bachelor of Science in Accounting and Computer Information Systems from Ferris State University. He is a Certified Information Systems Security Professional (CISSP) and a Certified Information Systems Auditor (CISA). Jeff served as a contributing editor for the Institute of Internal Auditors’s Global Technology Audit Guide on Management of IT Auditing and has presented at several audit conferences and association meetings on technology- and controls-related topics.

Indira Gillingham is a senior manager in Deloitte Consulting LLP’s Technology Integration practice, focusing in technology strategy and M&A services. She has ten years of professional consulting experience servicing a variety of clients in the technology, media, andtelecommunications industries. Her specialty is in helping clients with strategy and execution of large complex business transformation initiatives across all phases, including planning, development, and implementation of technology solutions. She is also experienced in complex merger integration and divestitures, including planning, blueprinting, and post-merger integration execution. Indira has a bachelor’s degree in Business Administration (BBA), concentrating on information systems, from the University of Washington.

Jessica Golden, a principal at Deloitte Consulting LLP, specializes in performance improvement and cost reduction strategies through global shared services and technologyimplementations. Jessica’s experience includes optimization strategies for finance and accounting, information technology, and human resources at Fortune 500 companies in consumer business, life sciences, high-technology and media, and financial services industry verticals. She also is actively involved in merger-and-acquisition back-office synergy strategies for public companies and private equity. Jessica is a frequent speaker at industry conferences and author of shared services publications.

Brenda S. Haroian, MBA, is a manager with Deloitte Consulting LLP, with over nine years of consulting experience. She specializes in the design, planning, and implementation of financial systems for global organizations and for merger and divestitureimplementations. Brenda received her MBA with concentrations in information management and operations from the University of Texas at Austin, McCombs School of Business, and received a BA in Business Administration/Accounting from Washington State University.

Colin M. Hartnett is a principal with Deloitte Consulting LLP. He has 24 years of experience focusing on finance transformation design as well as systems design and implementation of global financial and ERP systems for Fortune 500 clients. He received a Bachelor of Science in Computer and Information Science from Ohio State University. Colin has led several global implementations of multi-GAAP and IFRS reporting financial systems.

Susan C. Hogan, MBA, is a principal with Deloitte Consulting LLP and has over 15 years of consulting experience at Deloitte Consulting and 5 years of manufacturing and retail experience. Susan, who leads Deloitte’s U.S. Infrastructure Operations and Comprehensive Shared Services Practices, specializes in leading organizations through the shared services journey from the initial strategy, through the design, implementation, and optimization of their service centers. Susan earned her MBA from Harvard Business School and her BS in Industrial Engineering from North Carolina State University. She frequently speaks at conferences regarding the latest shared services trends and leads Deloitte’s biennial global studies of shared services operations.

Hilary Horn is a senior manager in Deloitte’s Human Capital, Organization and Talent practice. She has experience leading and driving change and learning programs for Fortune 500 clients undergoing large-scale technology and change transformation efforts. Hilary’s areas of experience include: global strategic change leadership programs, technology adoption, communication strategies, program/project leadership, executive leadership development, organization transformation, and learning programs. Hilary has consulted with a number of Silicon Valley’s software and hardware technology companies as well as financial services and oil and gas companies.

Ryan C. Jones, MBA, is a principal with Deloitte Consulting LLP with over 12 years of consulting experience. He specializes in e-commerce strategy, implementation, and customer and channel transformation initiatives. He received his MBA and BS from Bradley University, and attended the MS program at the University of Chicago. Ryan has served as the chief editor and contributing author for the Deloitte Consulting Web Channel Solutions Journal, and has spoken at several conferences on the topic of e-commerce.

Varun Joshi, MBA, is a manager with Deloitte Consulting LLP with over 11 years of consulting experience. He specializes in mergers, acquisitions and divestitures with a focus on IT strategy, IT governance, IT demand and portfolio management, and M&A technology. Varun received his MBA in Finance and Information Systems from the Indian Institute of Management, Ahmadabad (India), and a BS in Electrical Engineering from Delhi College of Engineering, University of Delhi (India).

Joseph Joy, MS Computer Science, is a specialist leader with Deloitte Consulting LLP, with over 16 years of consulting experience. He has extensive experience in IT strategy development, pre-merger IT due diligence, and post-merger IT integration. Joseph focuses on risk analysis, planning, quality control, developing frameworks, methodologies, data center strategy, and best practices. Joseph has consulted nationally andinternationally at major financial services, retail, high-tech, energy, andtelecommunications corporations. Joseph’s experience also includes implementing OLTP, ERP, CRM, and package-based applications, high-availability infrastructure, and architecture design.

Pavel Krumkachev is a principal with Deloitte Consulting LLP with over 14 years of consulting experience. He specializes in enterprise application architecture, application integration, and merger and acquisition-related IT integration. Pavel received a BA in Business Administration from Lewis & Clark College. He has published a number of whitepapers and delivered presentations on the topics of M&A, service-oriented architecture, and enterprise application implementation.

Anna Y. Lea Doyle is a principal at Deloitte Consulting LLP focusing on mergers, acquisitions, and divestitures. She has led more than 15 integration and carve-out engagements. Her expertise is in the areas of program management, MA&D capability development, integration diagnostics, Day 1 planning and readiness assessment, IT synergy, IT blueprinting and implementation, and large ERP selection and business case initiatives.

Angela Mattix, CPA, PMP, MBA, is currently a senior manager with Deloitte Consulting LLP, with over 13 years of consulting experience. Prior to joining Deloitte, she was a senior manager with Cap Gemini-Ernst & Young. She specializes in project management, system analysis, design, and implementation for enterprise resource planning packages. Prior to consulting, she spent 10 years working in finance departments of various industries. She received her Certified Public Accountant of Texas license in 1997 and her Project Management Professional certification in 2006. She received her MBA at Webster University and a BBA in Accounting from Midwestern State University.

Jason McClain is a senior manager within Deloitte & Touche LLP’s Audit and Enterprise Risk Services practice, with over 12 years of consulting experience. He specializes in assisting organizations with improving the quality of their data through the use of data analysis and process improvement techniques. Jason graduated from Baldwin-Wallace College with a BA in Business Administration. He is a Certified Information Systems Auditor.

Deborah Metzger is a senior manager with Deloitte Consulting LLP. She specializes in ERP system design and implementation, including master data management and overall system solution design. Deborah has worked in information technology consulting for the past 13 years. Prior to becoming a consultant, Deborah worked in the manufacturing and defense industries. She has an MS in Software Engineering and a BA in Quantitative Methods from the University of St. Thomas in Minnesota.

Krista D. Mondschein, MPP, a senior manager at Deloitte Consulting LLP with close to ten years of consulting experience, earned her MPP from the University of Chicago. Krista has worked across the public and private sectors, maintaining a focus on performance and process improvement, especially as related to shared services in finance, human resources, and technology.

Shalva Nolen is a senior consultant with Deloitte Consulting LLP with over five years of consulting experience. She specializes in advising companies on their next-generation data center and IT-related merger, acquisition, and divestiture projects. She attended Harvard University, where she received an AB in History and Science, and the University of Notre Dame, where she received her PhD in Physics. She has co-authored several papers in scientific journals and trade publications.

Brandon P. Patterson is a manager with Deloitte Consulting LLP and has over 14 years of consulting experience. He specializes in technical strategy, planning, and implementation for ERP applications and merger and acquisition-related IT integration. Brandon was a manager with KPMG Consulting’s Information, Communication and Entertainment practice prior to joining Deloitte Consulting LLP. He received his BS in Computer Engineering from Case Western Reserve University and an AAS in Computer Systems Electronics Technology from West-moreland CC. Brandon has successfully completed his Oracle Database Administration Master’s Certification and presented twice at the North Central Oracle Applications Users Group Conference.

Sharon F. Piech, MBA, is a senior manager with Deloitte Consulting LLP with over 10 years of consulting experience. She specializes in building communication between different groups, such as bridging the communication barriers between business and technology users or U.S. and global users. She has also worked in the nonprofit industry and enjoys volunteering on nonprofit boards and events. She received her MBA from Duke University and her BS in Computer Science from the University of Notre Dame.

Johannes Raedeker, MBA, is a senior manager with Deloitte Consulting LLP with over 15 years of consulting experience. He specializes in ERP strategic planning, business cases, and software selection and has led a number of large-scale ERP implementations. He received an MBA from the University of California at Berkeley (Haas School of Business) with emphasis in high-tech marketing and management of technology, and a master’s degree in Computer Science and Organizational Behavior from the University of Mannheim, Germany.

Asish Ramchandran, MBA, is a principal with Deloitte Consulting LLP with over 10 years of consulting experience. He specializes in merger, acquisition, and divestiture- related transactions, spanning extensive cost transformation, integration, divestiture, carve-out, restructuring, and cost realignment leadership experience. Asish has provided senior advisory services to drive the planning and realization of over $1B in synergy-related savings and participated in IT portfolio realignment of application suites at clients ranging from $150 million to over $30 billion. He has written articles on various topics, including “A CIO’s Look in the Rearview Mirror,” “Managing Integrated Data in a Diverging Environment,” and “A House Begins with a Blueprint.”

Karl Rupilius is a senior manager with Deloitte Consulting LLP with over 13 years of experience in implementation of ERP solutions. Karl has a comprehensive background in the full implementation lifecycle, including delivery and support of complex information systems. Throughout his consulting career, Karl has successfully implemented business solutions across North America, Latin America, and Europe. Karl holds a Master of Sciences degree from the University of Mannheim, Germany.

Kalyana Sundaram, MBA, is a director with Deloitte Consulting LLP with over 20 years of consulting experience. He specializes in supply chain and implementation of enterprise applications with a focus on distributed delivery. He is currently focused on building and deploying intellectual capital for the firm to facilitate global delivery. Kal’s prior experience includes consulting work in three other countries and operations manager in the high-tech manufacturing industry. He received his MBA in Marketing and Information Systems from the Indian Institute of Management and a Bachelor of Engineering in Mechanical Engineering. Kal has contributed to The Controller’s Function: The Work of the Managerial Accountant.

James J. (Jeff) Taylor II is a senior manager with Deloitte Consulting LLP with over 18 years of combined industry and consulting experience. He specializes in enterprise resource planning systems with a focus on financial accounting system design and implementation. Jeff has designed and implemented more than 13 full lifecycleimplementations during his career, including solutions for multi-GAAP and IFRS-based systems in Canada, Serbia, and Slovakia. He received his BSBA in Accounting from Ohio State University.

Michael S. Vowles, MA, is a senior manager with Deloitte Consulting LLP with over 15 years of consulting experience. Michael specializes in financial accounting system analysis, design, and implementation. He completed his master’s degree in Public Administration and BA in Political Science and Economics at Carleton University in Ottawa, Canada. Michael was a manager in the Federal Government of Canada in Ottawa prior to joining Deloitte Consulting.

Franscisca Wahjudi, BA, English, is a manager within the Technology practice of Deloitte Consulting LLP with over 13 years of consulting experience. Prior to joining the U.S. firm, Franscisca worked for the Deloitte Australia practice and for a large New Zealand energy company. She specializes in customer relationship management process design and implementation with a focus on software as a service. Franscisca is able to complement her technical background with her business expertise in leading different phases of the implementation lifecycle.

Mark Walsh is a principal in Deloitte Consulting’s Mergers & Acquisitions Practice. He is the national lead for Deloitte’s M&A IT Practice and has over 20 years of professional experience leading due diligence, divestiture, carve-out, integration, joint venture, and portfolio swap engagements in the consumer business, manufacturing, high-technology, and healthcare industries. He has written several articles on various merger IT topics, including “The Missing Piece of the M&A Puzzle,” “Walking the M&A Tightrope (with a Safety Net),” “Simple Ideas to Determine Your M&A IT Intelligence Quotient (Your M&A IT IQ),” and “Virtual M&A: Event Driven IT Transformation.” Mark has a BS in Electrical Engineering from Northeastern University, a CSS from Harvard Extension School, and an MBA from Columbia University.

Amy Wolbeck is a principal with Deloitte Consulting LLP with over 13 years of system implementation experience. She specializes in finance transformation and large-scale finance ERP systemimplementations. She received her bachelor’s degree in Business Administration from North Dakota State University.

PART I

The Basics

CHAPTER 1

The Information Technology Planning Process

Robert Fabiszak

Accurate and timely financial information is essential to managing a modern corporation. Investors and regulators require periodic disclosures, while managers and executives rely on financial data for decision making and strategy. Businesses have no shortage of such information—in fact, the very volume and complexity of their financial data often presents a significant challenge to their ability to use it wisely. This financial data is maintained in a wide variety of information systems, ranging from sophisticated enterprise resource planning (ERP) systems, to single-purpose tools such as financial consolidation systems, to the individual database on someone’s personal computer that generates an important journal entry each quarter.

In most companies, this array of financial systems and databases has been built up over time, sometimes with great foresight and planning and other times as an expedient reaction to a specific business need. As a business grows and becomes more complex, the difficulty in managing its financial information can also grow, oftendisproportionately. It can become more difficult to provide appropriate financial controls as transactions become more complex and new business models evolve. Duplicate systems can arise due to mergers, which often leads to inefficient operations and inconsistent data between systems. Responding to management requests for information can become more difficult as reporting databases and spreadsheets proliferate.

The task of managing these complexities largely falls on the information technology (IT) department. However, the chief financial officer (CFO) and the Finance function also play an important role in this process. They are not just passive users and producers of financial information. They must also be actively involved in financial system planning and decisions. This chapter will discuss some of Finance’s roles andresponsibilities with respect to information systems—in particular its role in information technology planning.

Finance and Information Systems

The role of the CFO and the Finance function has evolved over time. From mere bookkeepers who played a purely supporting role, Finance has evolved to become an integral part of the strategy and management of most companies. Regulations adopted in the shadow of Enron’s collapse, such as Sarbanes-Oxley, require CFOs to exert more control over financial data and to take responsibility for its accuracy. In order to assume that responsibility, which includes personally attesting to the accuracy of publicly reported financial results, CFOs have realized that they cannot simply accept financial data that they do not control. As a result, CFOs generally “own” their companies’ numbers: They have the primary responsibility for the data in financial systems, if not responsibility for the financial systems themselves. More important, Finance has become a strategic player in most companies, requiring it to analyze and understand the financial data to provide insights and strategic recommendations. This, of course, means that the appropriate data must be available, accurate, and accessible.

Every part of a company’s business processes ultimately impacts Finance. Certain processes, such as order-to-cash and procure-to-pay, are primarily the domain of Finance. But other processes, like procurement, customer management, manufacturing, and so on, also impact Finance, because it either uses or generates financial data. Thus, the systems that these processes use are at least indirectly financial systems as well. As the primary stewards and important consumers of the company’s numbers, the CFO and the Finance function are key stakeholders in the vast majority of a company’s information systems.

To better understand the linkages between Finance and information systems, it is useful to look at a conceptual model of a company’s systems and information environment. In this way, we can examine the role that Finance plays as both steward and consumer of information. Figure 1.1 shows a simple systems and information model.

FIGURE 1.1 Systems and Information Model

In this model, information takes its rightful place as the central focus. This collection of financial data consists of three major components:

1. Master data. This is the set of codes and structures that identify and organize the data. Data elements such as customer codes, customer names, general ledger account numbers, employee IDs, and business unit codes and names are part of master data. All transactions and other business processes use this master data to identify the business entities impacted by the transactions. Most transactions use several different master data elements. For example, taking an order from a customer will involve (or create) such master data elements as customer number, address, order number, stock-keeping unit, salesperson ID, and so on. Master data elements can be arranged into hierarchies, such as a legal entity structure showing the ownership of each legal entity within a corporation, which is used for financial consolidation and external reporting.

2. Transactional data. This is the set of records of individual business activities or events. Transactions are associated with specific business entities (defined by the master data) and record the economic impact or value of the activity. A single activity may create a number of transactions or accounting records. Continuing the customer order example, taking an order will generate records in the order system and, upon shipment, will record revenue and a receivable as well. This transactional data is the heart of any financial system, and maintaining its accuracy and timeliness is a key Finance responsibility.

3. Reporting and analytical data. While the transactional data contains all of the financial records of a company, it is often difficult to use that data for reporting. A large company may have millions of transactions, which could make filtering and aggregating the data very time-consuming (not to mention slowing down the transactional systems). In addition, some reports or analyses will likely require data from multiple systems, which often have differing sets of master data, making it difficult to link data from one system to another. As a result, most companies have a data warehouse, or possibly a series of data marts, or some other type of reporting database to facilitate reporting and analysis. These reporting databases extract and, in some cases, transform data from the source (transactional) systems, and store it in a way that permits easier reporting. Data in these reporting systems can be aggregated using master data hierarchies to allow reports on rollup data to process more quickly. In addition, these databases can further support reporting and analysis by calculating and storing key performance indicators or other metrics, as well as by aggregating the data across a variety of dimensions, or slices of data (e.g., by legal entity, business unit, and geography).

In this model, the term information is preferred to data, because in addition to the transactional data, the model allows for the reporting and analytical data, to which some degree of financial intelligence and business rules have been applied. Just as Finance is the main steward of transactional data, it is a major consumer of financial data as well, and much of the value it adds to the strategic and management functions of the business derives from its ability to use this reporting and analytical data transformed into information.

All of this financial information is maintained and managed by a variety of systems. The systems and applications layer of the model includes all of the hardware, software, and network infrastructure that support business operations. The primary financial systems are generally part of an ERP system, and would include the general ledger, the receivables and payables modules, procurement, order entry, payroll, and others. However, most companies have other financial systems beyond their primary ERP, such as legacy systems from acquired companies and homegrown systems written to support specialized business situations. In addition, most companies have best-of-breed applications to support specific business processes, such as financial consolidation, budgeting and planning, reporting and analysis, and treasury management. Finally, in an uncomfortably large number of cases, companies maintain important financial information in desktop databases and spreadsheets. In fact, it is likely that most companies use spreadsheets to perform at least part of some key business processes, such as budgeting and planning.

The systems and applications are used to define and implement a number of important elements that go into maintaining financial information. These foundational elements are shown in the bottom row of Figure 1.1 and include:

• Data management. This represents the maintenance and management of master data, including the definition of links between systems. Master data management has become an area of emphasis for IT departments in recent years, and it is particularly valuable in environments with multiple interrelated systems. It also includes the mappings and interface rules required for one system to feed data to another or to a reporting database or data warehouse.

• Business requirements. This represents the rules implemented within the financial systems to process transactions and implement business logic. Business requirements can include implementation of accounting rules (such as elimination of intercompany transactions at the lowest common parent), definitions of business processes (such as the approval routing before a payment is issued), and specifications for outputs (such as regulatory or management reports). These business requirements are implemented through the configuration of the ERP or other financial system and through system and database code.

• Governance and controls. With the increased scrutiny of financial results and the need for greater transparency and governance in the wake of Sarbanes-Oxley, companies have built more automated controls into their financial processes. In some cases, these controls are implemented within the financial systems, such as requiring different individuals to enter and approve journal vouchers. Financial system governance and controls are an important part of a company’s larger risk management efforts.

• Data definitions and standards. As noted earlier, despite their best efforts, most companies have a somewhat fragmented financial system environment, due to legacy systems from mergers, one-off solutions, and desktop applications. In order to effectively manage and use financial information, consistent data definitions and data standards are required. This is particularly an issue with desktop reporting and analysis, where it is not uncommon for two analysts to walk into a meeting with two completely different sets of numbers for what is supposed to be the same report. Similarly, financial systems in separate divisions or business units may have been implemented differently, leading toinconsistencies in transaction processing and reporting. For example, one large payment-processing company conducted a worldwide ERP implementation with minimal corporate guidelines for data definitions and standards. As a result, it ended up with different and irreconcilable charts of accounts in each business unit, requiring a costly and time-consuming process to map business unit data to another, separate consolidating instance of the general ledger. More explicit and well-enforced data standards would have eliminated the need for this effort.

These foundational elements, along with the system and application environment and the information that they support, must serve the broader business needs and objectives. Many executives complain that despite an array of financial and business systems, they do not have the information they need to run their businesses. Well-managed enterprises, however, generally have a system environment that can support their strategic and operational objectives.

To further the objective of developing financial systems that provide timely and accurate information to support the business, most companies periodically develop an information systems strategy. This strategy then supports an Information Technology Plan that guides the company along the path of developing the appropriate system environment. The sections that follow describe the information technology planning process and Finance’s role in that process.

Information Technology Planning Process

Despite the best efforts of information technology departments, most companies’ information system environments are anything but stable and predictable. Business needs change. New companies are acquired and integrated. Laws and regulations change. Disruptive technologies (such as the Internet) or external forces (such as the “Year 2000” problem) mandate changes. Through it all, the need for business and financial data remains unchanged—or grows.

Managing this complex environment and trying to accommodate future needs is an ongoing process. Each technology decision, whether it is a new system, an upgrade, or a change in the hardware environment, is made with an eye toward compatibility with the existing environment, meeting business needs, and providing a path for future growth. Unfortunately, a series of such decisions made individually and in isolation will rarely result in an optimal technology environment, just as a series of isolated business decisions related to pricing, markets, product development, and acquisitions cannot be expected to maximize the value of the business. Executives generally rely on a strategic planning process to set a direction for the company and to coordinate tactical business decisions and investments. In much the same way, a strategic Information Technology Plan can be used to establish a technology vision for a company and to coordinate system development efforts and investments. Developing an IT plan is one way to break down the various silos and provide a more coordinated approach to information systems. More important, it provides an opportunity to engage the business side, to make sure that the key business needs can be met, and to gain consensus for the systems approach across the organization.