Out of Sight, Out of Mind?
Not any more with 20/20 foresight!
By Guy Haddleton
Chief Executive Officer, Adaytum
In the wake of accounting irregularities and in the aftermath of the
high-profile bankruptcies of several major companies, financial
professionals understand that the rules of fiduciary duty, disclosure, and
communication will undergo a significant – if not radical – transformation.
What happens in the boardroom and in the general ledger can no longer be a
case of "out of sight, out of mind."
Recent events are driving discussions on a wide range of issues such as
conflicts of interest between the consulting and accounting arms of the Big
Five, clarity and detail in financial reporting, and ethical and forthright
behavior by corporate executives.
Perhaps the most important issue to address is the resulting distrust and
lack of confidence that increasingly characterize relations between
shareholders and corporate officers. No longer can executives claim they
were unaware of material issues facing their company. They will either be
deemed dishonest or incompetent by one of the most critical stakeholders.
How can corporate executives establish – or re-establish – a trusting
relationship with the investment community? The same way a trusting
relationship is achieved – it must be earned, over time. By maintaining
ongoing communications, clearly outlining expectations for performance, and
continually meeting those goals, executives can reaffirm the shareholder's
trust in both the corporation and its stewards.
Conveying expectations – and meeting them – is no small effort, of course.
It is a significant challenge from both tactical and strategic perspectives
– but one on which the future success of the corporation depends. This
challenge is magnified for global enterprises that battle distributed
operations, time zones and language barriers in the quest for meeting
To meet the challenge, companies must automate their planning processes,
much like the ERP, supply-chain management, and instant communication
solutions of the previous decade, which brought unprecedented speed,
flexibility, and intelligence to those processes. The fact is,
organizations have spent trillions of dollars on enterprise platforms for
managing transactions and analyzing results, but still use antiquated means
for a crucial business process: planning.
Executives must implement processes and solutions that demonstrate to
investors they are accurately conveying corporate performance – not playing
a high-stakes "shell-game." However, the significant obstacle to
communicating ongoing and accurate performance, or taking internal action to
stay on course, is that current business planning tools are unable to
facilitate the "real-time enterprise."
Like the adding machine and calculator before it, the spreadsheet is being
eclipsed as the corporation's preferred planning tool. In its place,
real-time enterprise business planning (EBP) has emerged as the solution
that will best enable companies to present current performance and forecasts
on a real-time basis to inspire public and shareholder confidence.
EBP expands beyond financial planning to encompass all areas of the
corporation in function, process, and strategy, including human resources,
sales, marketing, and manufacturing. In adopting this broader vision,
companies will achieve the benefits of enterprise business planning by fully
aligning their goals and operations, gaining a much clearer picture on
Planning is also a numbers game. It should no longer be "planning by the
few for the masses." Instead, real-time EBP means planning by the masses
for the few. Participation in the planning process must extend deeper into
the organization, to the people at the front lines of the business. By
putting the plan in the hands of those who are closest to it, planners
achieve greater granularity (hence, accuracy) and speed.
This has an additional benefit – it creates confidence in the numbers for
the executives who are monitoring performance. A key element in maintaining
ongoing communication with shareholders is the executive's own "comfort
zone" with the data. In this era of increased scrutiny, EBP provides a
valuable offensive against missed targets and flawed forecasts.
Finally, companies must constantly refresh plans. As we all know well,
business cycles are not always predictable. Unexpected changes in the
business environment require the ability to change plans quickly. This
requires real-time information for frequent analysis and adjustment.
It is the combination of all of these factors – the triangulation of
historical data, top-down financial plans and continual bottom-up signals
from the field, and real-time data – that will enable companies to monitor
performance, take appropriate action, and convey realistic performance
expectations to their shareholders.
A system and a process that can ensure a consistent track record inspires
confidence by ruling out the potential for misleading accounting measures
and enables the executive team to speak candidly and regularly about the
state of their business.
No longer does corporate America have the luxury of obscuring the details in
the name of competitive considerations or confidentiality. Instead,
investors are seeking transparent access to a broader and deeper set of
guidance. Real-time business planning and forecasting now operate in the
light of day. Recent events have forced corporations to make it simple and
to avoid needlessly complex – and tardy – disclosures and restatements. The
only question is whether your company will start inspiring confidence now,
or if it will wait for a journalist to do it for you.
Guy Haddleton is the founder of Adaytum. He authored the original Adaytum product, MBA Business Plan, and is widely regarded as an expert in planning, budgeting, and forecasting.
Before establishing Adaytum in 1990, Haddleton was managing director of TV Direct, a pan-European supplier of satellite television marketing services funded by Mitsui, Philips, and W.H. Smith. He has also held senior management positions in distribution and financial consulting.
Haddleton earned a Master of Business Administration degree from the
University of Otago in his native New Zealand, with prior studies at King's College, Auckland University, and the Officer Cadet School in Portsea, Australia.
Adaytum e.Planning integrates business planning
processes and operational data from across the enterprise into a single, seamless planning platform. Adaytum e.Planning delivers collaborative
planning capabilities using a robust architecture optimized around best
planning practices and scalable for thousands of users. Headquarters:
2051 Killebrew Drive, Suite 400,
Minneapolis, Minnesota 55425 USA,
Tel: 1 952-858-8585
Amy Pavel, Lois Paul & Partners, LLC, a Fleishman-Hillard Company, provided permission to publish and store this article at DSSResources.COM on Thursday, June 27, 2002. This article was posted at DSSResources.COM on June 28, 2002.
Haddleton, G., "Out of Sight, Out of Mind? Not any more with 20/20 foresight!", DSSResources.COM, 06/28/2002.