Whitepaper BI and Financial Dept

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‟The world is changing very fast. Big will not beat small

anymore. It will be the fast beating the slow. „

(Rupert Murdoch)



FINANCIAL STUDY

2 May2011

Content

I. Background ................................................................................................................ 3

II. Trends in the financial function ................................................................................... 3

III. Corporate Information: quality and quantity ............................................................ 4

IV. The Financial-IT Alliance ........................................................................................ 4

V. Finances and Business Intelligence tools ................................................................... 5

VI. Conclusions ............................................................................................................ 6



FINANCIAL STUDY

3 May2011

I. Background

Traditionally, non-financers thought about finance as something related almost exclusively tonumbers, balances, control and projections. But the financial function of companies goes wayfurther and benefits much more from technology and more specifically from Business Intelligencetools than it seems.

Strategic alignment, operational control, measurement of business indicators, the quality of theinformation used to make decision, are all concerns and priorities that have emerged in discussionswith the CFOs interviewed for this small study. The importance of their role in the always changingmarket, is the subject of this study, which analyses trends in the financial department.

II. Trends in the financial function

CFOs always talk about how quickly their roles and responsibilities within organizations aretransforming, and about the continuous challenges they must face. In the last years, in addition totraditional operational management, strategic functions have become more relevant for the CFO,gaining more control over the improvement of the services, and also acting as a catalyst andfacilitator of business goals.

The graph shows the evolution of this trend inthe last years: assuming functions as a catalystand facilitator of business goals and participatingin the process of improving management andservice orientation are gaining more prominence.Contributing more to strategic decisions is

unquestionable.

Yet, most of the professionals consulted believethat there is still much to do, that organizationsmust work more to achieve full maturity in thefinancial function, and this must be leaded bytechnology.

Francesc Alcaraz, Founder and Director of FeedBackGround, Economist and Blogger, when askedabout the role of the finance function in the coming years told us: "On one hand, I believe in the Business Partnership functions, plus strategic planning and business performance management,etc. On the other hand, I think assisting and providing support and information for the decision- making, with an optimum budget management, cash-flow management, analytical reporting and

aligned with the strategy is going to be more and more important. And finally, we have to tend to spend less time on manual, time-consuming tasks that could be easily automated and should be".

This change in the financial role is already taking place: being closer to the business, higherresponsibility and vision, adding value to other areas of the company, understanding of financialand nonfinancial indicators, which will generate a unified vision of objectives and strategies,provide and interpret information easily for the rest of the organization. All these aspects of thefinancial role will have a higher relevance in the coming years.



FINANCIAL STUDY

4 May2011

III. Corporate Information: quality and quantity

According to a recent study about the financial functioncarried out by Deloitte, we can classify corporateinformation in three types.

Strategic: Related to the decision-making

Operational: Related to the periodic monitoring

and control

Analytical: Used to analyze and explain results

and deviations

When asked about the importance that each of the different types of information have for acompany (Strategic, Analytic and Operational), financiers answered that all of them are importantbut pointed out that the strategic information is the most critical.

The key point is finding equilibrium, not just the amount of information itself, but the quality of it.The lack of quality can end up distorting the decision-making. We must take into account thatinformation is not only used throughout the organization, but in many cases is also transmitted tothe market.

Therefore, one of the barriers in the companies, according to financiers, is the problem ofdispersed and low quality information. This, combined with the exponential growth of managementinformation, requires a successful and lasting partnership between the IT and Financial areas. This

requires a business vision in both areas.

IV. The Financial-IT Alliance

With an increasing market pressure, the change of organizational models, the flexibility of themarkets and the regulatory and economic environments constantly changing, financial boards musthave a higher ability to adapt, and at the same time, better, affordable and measurable informationand business indicators to suit the needs of the market.

Francisco tells us "I really appreciate a good BI tool that provides the strategic and operational indicators (KPIs), as well as being able to control to the maximum level of detail (...) and I can

appreciate as an added bonus, tools that allow making predictions, forecasts, etc. in order to anticipate information for the decision making."

In this scenario, for the coming years it is unthinkable that organizations adopt a strategy withoutconsidering value creation as a key element, and profitability, supported by tools that makemeasurable the increasingly numerous and demanding business metrics.

The importance given to technological tools in companies depends of several factors and variesover time, but as pointed out in the chart, there is a positioning of all tools that allow analyzing andmeasuring all business metrics in an easy and reliable way.

For many of the financial executives asked, corporate information is difficult to obtain, analyze,simplify and share with other areas. It’s the CFO’s responsibility to provide information to senior

management and boards for the decision making, with quality, reliability and in an efficient way.When this consolidated information doesn’t exist, it is usually necessary to invest a significant



FINANCIAL STUDY

5 May2011

amount of time and effort in obtaining this data, whichmeans lots of resources that could be employed inmore value-added tasks.

That is why financial management considers systemsthat improve the analysis of information, Business

Intelligence systems, as a very interesting investment,with significant impact on the improvement ofdecision-making processes, and able to save a lot oftime for the department, helping to make theorganization more competitive and improving theresults.

V.Finances and Business Intelligence tools

One of the bottlenecks in every organization, periodically, is the reporting system. The largeamount of resources devoted to build, distribute and filter the reports is much more useful andefficient when there is an integrated system that allows easier access to the requires information.This is usually a source of inefficiency, with an accumulation of resources in low-value tasks, whichultimately affects negatively on the costs. As resources are finite, this implies that these resourcesare not being devoted to other more valuable tasks.

From all conversations with financiers, we conclude that the high number and complexity ofspreadsheets used by organizations, theoretically shared, generates indecision, doubt,inefficiencies, and wasting time and money checking redundant or low-quality information. Some ofthe financiers speak of it as a “spreadsheet-hell”. Others suffer silently, believing that accessing aBusiness Intelligence system is something unattainable because of the cost and complexity theytraditionally had.

However, reality says that it is possible to access business intelligence systems at an affordablecost. Most CFOs are clear about what they need to measure to maintain the strength of theirbusinesses and, increasingly in collaboration with CEOs, meet the business goals that they help toestablish. They are also clear about what they must require from the technology to align all theseobjectives.

In this regard, most of the financiers interviewed, agreed that increasing the quality of theinformation available and the efficiency in managing this information allow saving large amounts oftime and money. And this is more or less independent of the company’s size. Nowadays it ispossible to deploy Cloud Computing systems, saving money by avoiding investments andmaintenance.

According to Teresa Perez, CFO at ASPA Consultants, “Business Intelligence tools in SMEs arevery important, sometimes even more than in large companies”. Similarly, we are told that "a balanced scorecard is a control tool necessary for strategic management, if supported and encouraged by senior management, in addition to a rigorous supervision ”.

Increasingly, the financial and senior management require better access to financial andnonfinancial information to make decisions. The combination of these elements allows them, from asingle and integrated perspective, to optimize their performance by providing a common model,integrated throughout the organization.

The Balanced Scorecard (BSC) is the space where strategic vision and business control meet. Forthe financiers consulted, the BSC is a critical tool that should be constantly monitored from seniormanagement.



FINANCIAL STUDY

6 May2011

When aligning the financial function and the goals ofthe Business, it is important to focus on acceptableand measurable objectives, which producemeasurable improvements on business and a clearROI. It is the financial management who, once the

goals are settled, helps spread to the rest of theorganization a culture of metric-driven decision-making and business control, based on businessintelligence tools, which helps the entire company toachieve strategic objectives and increase valuecreation.

VI. Conclusions

Technology has been, is, and will continue to be in the coming years, one of the biggest allies ofthe financial areas. The investment in technology is being reduced and allows the financial area toobtain better results: increases efficiency and decreases costs. Following this trend, CFOs arefocusing more and more on rationalizing investment, defining clear and measurable businessrequirements, and increasingly, rely on Business Intelligence solutions built to be agile, functionaland with a clear ROI, focusing less on more traditional tools.

About LITEBI:

LITEBI is leading the next generation of Business Intelligence with its Cloud Computing platform. It offers advanced analytics, dashboards, data integration, alarms, and scorecards for companies of any size or industry, through a pay-as-you-go model. LITEBI is an easy, powerful and affordable BI solution.

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Whitepaper BI and Financial Dept