New Business Performance Management

About Ventana Research

About Ventana Research 
Ventana Research is the leading Performance Management research and advisory 
services firm. By providing expert insight and detailed guidance, Ventana Research 
helps clients operate their companies more efficiently and effectively. Ventana 
Research delivers these business improvements through a top-down approach that 
connects people, processes, information and technology. What makes Ventana 
Research different from other analyst firms is a focus on Performance Management 
for Finance, operations and IT. This focus, plus research as a foundation and reach 
into a community of more than 2 million corporate executives through extensive 
media partnerships, allows Ventana Research to deliver a high-value, low-risk 
method for achieving optimal business performance. To learn how Ventana 
Research’s Performance Management workshops, assessments and advisory services 
can impact your bottom line, <a href="http://www.ventanaresearch.com./">visit </a>

About Ventana Research

About Ventana Research Ventana Research is the leading Performance Management research and advisory services firm. By providing expert insight and detailed guidance, Ventana Research helps clients operate their companies more efficiently and effectively. Ventana Research delivers these business impr…

18Jul2013

Enhancing Financial Performance Management

Enhancing Financial Performance Management 
To help their companies compete successfully, finance executives must improve their 
own abilities to execute and manage to corporate strategy. More than ever, they 
need to focus on improving the effectiveness of the whole finance organization rather 
than trying to eke out small improvements in efficiency. Our benchmark research 
shows there is important information that people could receive – or already do 
receive – that would improve their performance and help align their actions to 
strategy. Information deficits combined with poorly designed processes can limit 
severely how well all departments, including Finance, do their jobs. 
If there was a single “silver bullet” that would address the issues listed above, 
companies probably would have used it by now. Lacking that, we recommend CFOs 
and senior finance department executives focus on these three areas: 
• Push the envelope when it comes to management reporting. To improve 
performance, companies must link more operational and financial data, make 
information available sooner and provide a richer set of data including leading 
indicators for the business unit and relevant information about competitors, 
suppliers and factors that drive demand for the company’s products or 
services. 
• Have a disciplined, sustained process in place to address information 
technology barriers, especially infrastructure complexity, and to enhance the 
use of ERP systems. Typically these are the root causes of issues preventing 
Finance organizations from improving process execution and preventing the 
disconnects that obstruct better alignment of strategy and execution. 
• Assess where there are shortfalls in the people, process, information and 
technology dimensions of key financial functions, then define a plan with 
specific objectives and timetables that addresses these shortfalls. 
Solutions to challenges confronting businesses almost always require addressing a 
combination of people, process, information and technology issues. We often find, 
however, that people who have financial or line-of-business responsibilities are not 
as aware of the impacts of shortfalls in the last two of these areas. Moreover, we find 
that all too often they are not sufficiently knowledgeable about the range of 
technology and information system offerings available to them. 
Of course, the best information is never a complete substitute for good judgment. 
Thus, one key purpose of ensuring that decision-makers have what they need is to 
help those with good judgment make better decisions more consistently. Having the 
right information infrastructure is critical to providing executives and managers with 
the right information at the right time and in the right context. 
The results of the research we conducted confirmed that complexity is a barrier to 
the proper flow of information to decision-makers. One important approach to 
dealing with the almost inevitable complexity in any large company’s IT environment 
is establishing a data warehouse that makes a wide range of information available to 
finance and business users from one centralized, consistent, and automatically 
validated source. 
To determine if there are gaps between your company’s existing IT environment and 
what it needs to address its 21st century information requirements, you should ask 
the following questions about your information systems: 
• Do users have a ready-to-use full view of the business? Is it one that 
eliminates the impact of information silos (such as ERP, CRM and distribution 
systems) and integrates accounting, customer and operational data in a 
consistent and accessible fashion? 
• Is it possible to create direct links between business drivers and financial 
results? Are these links that will give executives and managers insight into 
the key performance levers or provide leading indicators that will enable them 
to anticipate changes? Are they ones that will promote agility and the ability 
to plan ahead of the competition? 
• How much would performance improve if managers had their information one 
day sooner? Three days sooner? 
• If your IT department sent an email message to all executives and managers 
asking them if there was information they could use that they are not getting 
now, would it have the flexibility to be able to act on all of the responses? Or 
does a heavy reliance on using the ERP and other transaction processing 
systems as a reporting platform get in the way of providing them with needed 
data? 
• How much of an issue is information quality? Information may not be 
“wrong,” but may well be inconsistent, reflecting data assembled haphazardly 
for each report or analysis, leaving managers wondering what the right 
number really is. 
• In the same vein, are people spending too much time making sure the 
numbers are correct and consistent? These, we find, often are invisible time 
sinks preventing productive and well-trained individuals from using their time 
more effectively. 
Addressing these gaps – that is, addressing the information management 
requirements of an organization – ought not be thought of as a single “big-bang” 
effort. Rather, it should involve a disciplined series of steps, each building on the 
previous one. We advise developing and then executing a plan consisting of the 
steps needed to develop the right information and technology infrastructure. What’s 
the right one? It’s one that when combined with people and process changes will 
elevate your organization to the next level of effectiveness.

Enhancing Financial Performance Management

Enhancing Financial Performance Management To help their companies compete successfully, finance executives must improve their own abilities to execute and manage to corporate strategy. More than ever, they need to focus on improving the effectiveness of the whole finance organization rather than tr…

18Jul2013

Improving Use of IT Systems

Processes, information and technology play important roles in improving corporate 
effectiveness, but companies must not overlook the “people” dimension in 
addressing financial performance management issues. This point is underscored by 
our finding that lack of training is an important (and in our experience, frequently 
overlooked) issue. 
When it comes to information and analytical tools, our research shows that 
companies are not getting the full value of their investments in this area. We asked 
participants about the degree to which people use such tools to do their jobs. Only 
one in eight (13 percent) said that most people use them all of the time to do their 
jobs. One-half (48 percent) said that while some people use them all the time, the 
rest use the tools and information occasionally or not at all. Another 18 percent said 
most use them occasionally to do their jobs, and 17 percent said few people use 
them. 
We followed up this question by asking why people use the tools occasionally or not 
at all. The largest percentage of responses (41 percent of the total) was that people 
are not trained well in how to use them. This response is understandable when we 
reflect on how information systems are used and, from a business standpoint, 
managed. We find training is at best an afterthought. Among executives and 
certainly within IT, there is a tendency to assume that people will find it easy to get 
the information they are receiving and to understand its context, or that people will 
figure these systems out with minimal training. In practice, that feeling is seldom 
justified. Compounding the problem is the reluctance many people have to be trained 
in using these systems. They almost always are so pressed for time to do their jobs 
that learning how to use these systems seems to take time they cannot spare. 
While we do not see a quick or universal solution to the issue of how to train people 
better to integrate information and analytical systems into their day-to-day work, we 
believe that the first step is to recognize the problem, and the second is to initiate a 
company-wide campaign to deal with it. Such a campaign would at least attempt to 
quantify areas where better training would have the greatest positive impact and to 
develop a realistic implementation plan for improving training.

Improving Use of IT Systems

Processes, information and technology play important roles in improving corporate effectiveness, but companies must not overlook the “people” dimension in addressing financial performance management issues. This point is underscored by our finding that lack of training is an important (and in our ex…

18Jul2013

Connecting Strategy to Execution

Connecting Strategy to Execution 
Our focus thus far has been on tactical and operational issues, because frequently 
they are the critical ingredients that allow a corporation to achieve its strategic aims. 
Senior executives spend time crafting and refining a strategy, but ultimately what 
matters is how well it is implemented. Most (81 percent) of our participants said 
their company’s senior management has a well-defined strategy, but relatively few 
(14 percent) said they manage to it well. Why is there a disconnect between 
corporate strategizing and day-to-day execution? A clear statement of strategic 
objectives is necessary, of course, but translating it into objectives for business units 
and individuals is another matter. 
Typically, executives use a combination of methods that may seem effective but in 
reality fall short. The most common approach is to set specific, measurable 
objectives for each business unit. But often these objectives focus too much on 
financial measures and do not include nonfinancial objectives critical to achieving the 
corporate goals. Fewer than half (45 percent) of companies lay out formal, strategydriven 
objectives in a scorecard. Only one in five companies communicates those 
objectives to individual managers. 
Another aspect of knowing how to manage to the company strategy is understanding 
how the objectives and actions of one part of the business affect the others. Since 
most companies do not operate in a rigid command-and-control environment, it is 
important for managers in one area of the business to be able to anticipate how their 
shifts will affect other parts. An important goal of performance management in any 
corporation is to ensure that strategy and objectives are aligned across departments 
and business units. Yet only one-fourth of our participants said they have a clear 
understanding of the specific goals of other parts of the business, such as sales 
quotas, production targets or profitability, and how these affect their own area. This 
finding helps explain other findings described above, such as why so few companies 
react to changes in their overall business in a well-coordinated fashion – and why it 
is so common for the left hand not to know what the right is doing. 
Since in business the only constant is change, it is important for companies to ensure 
that they maintain strategic alignment when managing that change. This often is a 
challenge. Only 6 percent said that when things change, it is easy for their company 
to adapt its plans. Many more said it’s neither easy nor hard or that it’s difficult (31 
percent and 29 percent, respectively). 
Not only does the overall business climate change, but often things change in one 
part of the business that will impact the rest, such as when a new product release is 
delayed, sales quotas are adjusted or new facilities come on line sooner than 
planned. When this happens, a major challenge for large companies is to coordinate 
actions across the enterprise. Often, it’s a case of the left hand not knowing what the 
right hand is doing.More than one-third (37 percent) of participants told us that their company reacts to 
change in an uncoordinated fashion; only 9 percent said they do so in a very well 
coordinated fashion; half chose the middling response “somewhat coordinated.” 
Improving coordination is an area where better communication across a company 
and a clearer view of operations are likely to improve performance in a sustainable 
fashion. Issues of coordination generally arise from a lack of communication or 
information availability, both of which reflect what information a company gathers 
and how it makes it accessible. When the problem is an inability to coordinate 
actions, the underlying issue usually is an inability to share information easily. Here 
again, having the means to bring together information from multiple data sources 
can make it feasible to increase the visibility of actions and status across functional 
silos.

Connecting Strategy to Execution

Connecting Strategy to Execution Our focus thus far has been on tactical and operational issues, because frequently they are the critical ingredients that allow a corporation to achieve its strategic aims. Senior executives spend time crafting and refining a strategy, but ultimately what matters is …

18Jul2013

Dealing with Information Technology’s Complexity

Anyone who has used a desktop computer for more than a few years knows how 
tremendously both processing power and storage capabilities have increased, while 
their cost has plummeted. Yet raw power alone does not solve many of the more 
intractable business problems people confront when they want to make better use of 
the systems they have. 
ERP has enabled richer, more centralized record-keeping and facilitated consistent 
management of financial and other processes. These systems can collect not just 
accounting data but a range of information 
about orders, payments, inventories, fixed 
assets and the like. They allow companies 
to manage once-fragmented processes in 
an end-to-end fashion. Yet ERP systems still 
have significant shortcomings, inflexibility 
being one of the most prominent. 
Executives from a majority of participating 
companies (58 percent) said that changing 
their ERP system to adapt to new business 
information needs is difficult or very difficult 
(see Figure 6). These needs include new 
kinds of information for reports, new types 
of analysis or changes in the organizational 
structure. But because making changes is 
difficult is not an excuse for leaving things 
as they are, especially when we note that 
on average companies keep ERP systems in 
place for about seven years. 
While corporations have reaped many benefits from various kinds of IT systems, the 
accumulation has created complex infrastructures, especially in larger companies. 
Diagrams that track data flows required to complete processes can look like plates of 
spaghetti. More than half of participants agreed or strongly agreed that in their 
company, the complexity of the IT environment is a barrier to their ability to access 
timely data, ensure data consistency or enable collaboration. Our research shows a 
correlation between such complexity and being able to get to the information that, 
for example, determines the factors behind a variance. Among those who said they 
find IT complexity a barrier to accessing information, two-thirds said it is difficult or 
very difficult to drill down to underlying data (compared to just 20 percent who find 
it easy or very easy), and 74 percent of this group also said their revenue forecasting 
process is inaccurate or very inaccurate. Similarly, half said it is difficult or very 
difficult to determine the “what, why and how” about important numbers – the 
numbers behind the numbers that would deepen insight into the context of the 
information and its consequences. Finding ways to simplify systems is an ongoing 
and unavoidable task. 
We advise larger organizations to take a two-pronged approach to IT complexity: 
manage the IT infrastructure continuously to limit or reduce complexity, and apply 
technology effectively to adapt to the complexity. Understanding that these issues 
are root causes of ineffective performance and taking steps to overcome them are 
important first steps in elevating a company’s overall performance.

Dealing with Information Technology’s Complexity

Anyone who has used a desktop computer for more than a few years knows how tremendously both processing power and storage capabilities have increased, while their cost has plummeted. Yet raw power alone does not solve many of the more intractable business problems people confront when they want to m…

18Jul2013

Managing Information for Financial Processes

Finance organizations perform many repetitive functions. When introduced, ERP and 
business intelligence (BI) software enabled them to make major improvements in the 
efficiency with which they execute those 
tasks. During the 1990s the average cost of 
operating a finance department, measured 
as a percentage of company revenue, was 
cut in half – largely, in our view, by these IT 
investments. However, over the past five 
years, companies have made little further 
progress. There are likely several factors at 
work, but we think the main one is that a 
majority of companies have extracted most 
of the readily available efficiencies from 
these systems. We recommend that they 
now take steps that will make processes 
more effective.For example, accelerating the accounting close has received increasing attention in 
finance organizations. Our research finds that most companies that take more than a 
business week to complete their monthly or quarterly close view shortening it as 
desirable and important. In part, this is because doing so enables companies to 
provide executives and managers with more timely information for making decisions 
and planning. Our research shows that shortening the closing and post-closing 
activities requires solving a combination of process and data issues. 
We asked research participants to select all of the factors that make the close take 
longer than it should (see Figure 4). Processes that are not optimized to speed the 
close are the most common culprit, cited by half of the participants. In this and other 
research we have done on the closing process, we find that not one significant 
process issue but a myriad of little ones, with steps performed by various people in 
an often intricate process, is what ultimately delays the close. 
Not far behind as a source of delays were IT systems and data elements: The three 
issues participants noted next-most often were the need to gather information from 
too many systems (selected by 42 percent), too much time required to validate data 
(39 percent) and the related problem of using too many spreadsheets in the closing 
process (37 percent). Errors are rife when companies use desktop spreadsheets in 
recurring enterprise processes such as the accounting close. In other benchmark 
research, we have found that companies that use desktop spreadsheets heavily in 
the accounting close experience more issues regarding data quality in preparing their 
financial statements and take longer to complete the close than those that limit the 
use of spreadsheets. Some use is unavoidable, but centralizing the collection of 
corporate financial information into a single data store and automating more of the 
process can reduce the need for spreadsheets. 
Implementing changes to the closing process and the IT systems that support it can 
have profound results: One-third of participants estimated that if the factors 
mentioned above were addressed, they could save two days in their close, and 
another one-third said they could save more than three days. Finance departments 
could use this time to provide accurate information sooner. 
Revenue forecasting is another business process in which Finance plays an important 
role in most companies. When it comes to their forecasts, a majority of participants 
said they are satisfied with them; half called them accurate or very accurate. (People 
with finance titles were generally happier with forecast accuracy than those outside 
the department.) 
Figure 5 
Factors That Would Improve Accuracy of Revenue 
Forecast 
55% 
40% 
33% 
32% 
Better 
understanding 
of market 
trends 
Better 
software to 
support the 
process 
Better 
understanding 
of competitors' 
offerings 
Better 
understanding 
of competitors' 
strategy 
Source: Ventana Research 
When asked to choose the factors that 
would make forecasts more accurate, 
three of the four most important factors 
cited echoed the need – also evident in 
responses to the question about 
information adequacy – to provide people 
with more information about the world 
outside the company (see Figure 5). By 
far the most often cited requirement was 
to understand market trends better, which 
more than half of participants selected. 
Better software to manage the process 
was the second-most important factor (40 
percent mentioned it), followed by better understanding of competitors’ offerings and 
of competitors’ strategies (each selected by one-third). This type of information is 
especially important when the market environment shifts because of moves by key 
competitors.

Managing Information for Financial Processes

Finance organizations perform many repetitive functions. When introduced, ERP and business intelligence (BI) software enabled them to make major improvements in the efficiency with which they execute those tasks. During the 1990s the average cost of operating a finance department, measured as a perc…

18Jul2013

Accuracy, Timeliness and Context

Do you want it done fast, or do you want it done right? When it comes to providing 
management and financial information, the answer, of course, is both. Information 
that is wrong is worse than useless but so, too, is information that comes too late to 
act on. There will always be trade-offs between the two, but advances in information 
technology now make it possible to have accurate, relevant facts faster and in the 
right context. 
Our research shows that while most people 
are happy with the accuracy of the 
information they get, they want it sooner. A 
majority of the executives participating in 
our research expressed satisfaction with the 
availability of standard financial and highlevel 
operating information. Two-thirds said 
they have confidence in the information 
they receive from their IT systems, and 73 
percent said it generally agrees with what 
they know to be true. Yet a majority (59 
percent) think timeliness of the information 
is an issue. Beyond the issue of the timeliness and relevance of the data is the question of 
context. Even when people do receive accurate, up-to-the minute information about 
their business, a majority (51 percent) of our research participants find it difficult or 
very difficult to determine the “what, why and how” about important numbers (see 
Figure 3). Only one in five finds that easy or very easy to do. Knowing the numbers 
behind the numbers often is critical to gaining timely insight and therefore knowing 
what the next steps should be. 
One of the most important advances IT systems have provided over the past decade 
is the ability to access detailed information on an exception basis. IT systems are 
able to collect vast quantities of granular data. In the past, people received reams of 
paper-based reports with almost every possible number they could want. For most, 
though, the important facts were buried in a mountain of data that made it nearly 
impossible to understand their context or to see which of many factors were driving 
the results. This sort of feature will help users sort according to targeted criteria. 
Our research outside this study finds two recurring themes that apply to delays in 
providing important information to executives and managers as well as trouble in 
understanding the “what, why and how” behind the numbers. The first is that the 
data is difficult to access, usually because it must be pulled from disparate systems. 
Establishing a single data source (such as a data warehouse) that brings all this 
enterprise data together is a productive means to address this. The second issue is 
people’s reliance on spreadsheets to collect information and analyze it on a recurring 
basis. Rather than establishing an automated system for collecting, analyzing and 
disseminating recurring information, most companies rely on a largely manual 
process. Data moves from individual systems into spreadsheets where users combine 
and analyze them. (In some cases the collection point is a desktop database. While 
this is a better approach, it still falls short when used by large corporations.) Not 
only are the steps needed to assemble the data time-consuming, there are delays 
caused by error-checking and correction. A third reason, discussed at greater length 
below, is excessively long intervals in completing the accounting close

Accuracy, Timeliness and Context

Do you want it done fast, or do you want it done right? When it comes to providing management and financial information, the answer, of course, is both. Information that is wrong is worse than useless but so, too, is information that comes too late to act on. There will always be trade-offs between …

18Jul2013

New Business Performance Management

About Me

About Ventana Research

Enhancing Financial Performance Management

Improving Use of IT Systems

Connecting Strategy to Execution

Dealing with Information Technology’s Complexity

Managing Information for Financial Processes

Accuracy, Timeliness and Context

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