If you want to see dysfunctional global-finance departments in action, look no further than the subprime-mortgage meltdown. More than a year after the crisis hit, its effects are still rippling through the banking world. As audits give rise to write-offs and restatements, it becomes painfully clear just how often the right hand at headquarters failed to understand what the left hand in the regional office was doing.
Keeping the finance departments of global organizations running smoothly is difficult enough. Managing a far-flung empire to a centralized standard is very difficult. "Companies don't have the same standards and processes worldwide," says Cal Braunstein, chairman and CEO of Robert Frances Group, an analyst and consulting firm. "That means there area lot of errors occurring, a lot of redundancy, and there's a lot of cost that can be taken out."
Enter IBM, with software that attempts to normalize and standardize the complex process of developing consistent business practices across a finance organization and provide relevant benchmarks. The Finance Transformation Workbench, as it's known, is an assessment tool based on IBM's view of best practices.
The tool, which is meant to be used in conjunction with IBM consulting services (and which can cut the cost of an engagement by up to one-third), starts with a high-level view of all of the department's activities, such as budgeting, reporting, and closing. It then breaks down each one into tasks that can be benchmarked against best practices. Then the hard work begins: improving things. Braunstein warns that some changes can take years to effect. But, he says, "as a CFO, knowing that I had put in best practices...would help me sleep better."
Yasmin Ghahremani writes about business and technology from New York.