On couple of occasions in the past, I spoke on risk management at CFO forums. Debated and discussed the ambit of risk and how risk gets redefined over time. Risk is industry specific and hence there are many views to looking at risk management – however with finance getting more and more interconnected, not only within the company  systems but also with the business ecosystem – there is a unanimous agreement on managing risk across interdependent stakeholders.

Financial institutions that have typically grown as a result of consolidation, diversification, have found that the operational environment has become siloed and characterized by disparate systems. As a result, for credit risk management, too much of manual processes has become dominant. This has created gaps, inconsistencies and duplication of both data and processes, increasing risk administration and having virtually no impact in improvement in risk control.

Liquidity risk management is critical for a bank but my CFO friends  across industry will agree that in every organization sometimes there is a struggle on this front. For Banking and finance organizations  – liquidity risk management is a matter for survival. However challenges pertaining to regulatory compliances and insecurity over assets covering liabilities at all times have not been uncommon.

So some key questions that rise are:

1. What is the true ambit of risk ?
2. What are current best practices prevalent in several types of risk management ?
3. How can risk management be more proactive than reactive ?
4. How do you extend analytics to managing key risks ?

I am happy to say that IBM is organizing an event – ARC2012 Risk 360 on the 8^th and 9^th of May 2012  where you can hear industry experts talk about best practices and industry insights. The plenary session can be joined via livestream and twitter. You may want to join the conversation using twitter  using hash tag #ARCRisk360. You may also want to register here

March 31^st is  Earth Hour. Every year we renew our pledge on our commitment towards sustainability by switching off unwanted lights. This is a valuable gesture. How can we extend this gesture beyond the hour ?  How do we ensure that our personal commitments towards this cause is enhanced ? How can we leverage this cause to enhance value in our organization ?

The projected growth of world-wide energy demand by year 2030 is 36.8% according to International Energy Outlook, 2008. In addition to the population growth, urbanization and improvement in living standards, the new requirements will be from substitution of oil based energy with electric energy.

Sustainability will definitely be an issue  -  if we continue working as per today’s method. There are several notable examples in the world  but one that is an innovative way of managing demand and supply of power   -  is the Eco Island project. This project will turn the Isle of Wight into an eco island with strong communities and the lowest carbon footprint in England by year 2020. The aim is to cut the Isle of Wight’s fuel bills by upto 50%  in addition to ensuring low emissions and wastes.

In India, the situation is perhaps a little different. While the per  capita consumption of electricity is one of the lowest, there is a large anomaly of usage. On one hand there are villages which do not have adequate power and on the other hand there are metros which guzzle power inefficiently. Add to that the transmission and distribution losses  -   it will not be an enviable story. So the question here  for CFOs  are:

1. How do we monitor demand and supply of power within the organization ?
2. How can we lower per employee cost of power?
3. How can we lower the overall cost of power consumption ?
4. How can we translate the savings to reduced carbon footprint?

Initiation is through small steps and initiatives and grow based on innovation and the desire to make it happen.

I am going to switch off  unnecessary power during Earth Hour. How about you ?

It takes  10 litres of water to make one sheet of paper, 70 litres to make one apple, 120 litres to make one glass of wine, 140 litres to make one cup of coffee, 1,300 litres to make 1 Kg of wheat and 10,855 litres of water to make one pair of jeans !

For a professional who has to worry about the economic challenges, market status, competition, driving innovation in finance, ensuring compliance and delivering a healthy P&L with a growth that beats the market expectation, worrying about getting the next glass of clean water may seem like a bit out of place.

In India, our water challenges are many. On one hand we have real issue of unavailability of water in arid regions of  Rajasthan and Gujarat  to  sheer mismanagement in metros – making this commodity unavailable to many.  Similarly, a quarter of India receives so heavy rainfall within a span of a few days that they get flooded and another quarter suffers draught every year. There is obviously no easy solution and hence India suffers in silence every year.

Is water a basic human right or a commodity in need of a market, is highly debatable and politicized.  Many believe that water like food should be controlled by market forces. Others believe that it is like air and should be free for use.  In reality, it is somewhere in between. Since, water is treated as ubiquitous, it is often grossly undervalued. Investments are being made in water  for example -  desalination, rainwater harvest and  industrial reuse are some of the promising areas.  But these are  to increase the supply of water.  However, there is a huge opportunity in  decreasing the demand of water.

How can water channels be made intelligent ?

How can we ensure that only the right quantity of water is released ?

How can we ensure that  leakages are easily detected and repaired?

How can we make water systems smarter ?

Virtually every business has a water imperative. With more efficient usage there is a direct impact on business performance. A wonderful example in this regard is the Coca Cola Company. I read recently that Coke uses 300 billon litres of water a year of which 40% is contained in the beverage. For years Coca Cola has been harvesting rainwater from rooftops for non-potable use. And now the company is implementing the most challenging  issue – managing water throughout its lengthy supply chain. To go further, Coca Cola is working with WWF to reduce the water requirement for inputs – sugar, coffee and citrus. With this expertise, Coca Cola can now perhaps assist other companies to achieve similar goals.

The great dykes of Netherlands are an excellent example of how a country invests to protect citizens from flooding. Not only that – the country today has developed capabilities of habitation along low lying shorelines and can help others develop this capability at a time when sea water in gradually rising in coastal areas.

The drip irrigation of Israel is another great example.  Since year 1964, the population of Israel has tripled, but agricultural produce has increased nine times with just 3% increase in water consumption.  This example is today emulated at several places where agriculture is carried on in arid conditions.

All the three cases are excellent examples of the business of water.  How companies, countries, societies etc. have addressed a big challenge with a solution that is repeatable and has a powerful business proposition.

So on the occasion of the World Water Day on the 22^nd of March 2012, some questions could be important  for a CFO

• How much water is my company consuming in the entire supply chain ?
• How can I monitor and get data pertaining to water usage within my company ?
• How can I ensure a direct co-relation of  efficient water management  to reduced costs in balance sheet ?
• How can I promote and fund best practices of water management in the organization
• How can I ensure business models emerging from the best practices ?

Suggested reading:

1. http://www-935.ibm.com/services/us/gbs/bus/pdf/ibm-water-pains-report-jan09.pdf
2. Some best practices  http://www.fastcompany.com/magazine/154/a-sea-of-dollars.html
3. Smarter water management  http://www.slideshare.net/watersummit/michael-sullivan-ibm-smarter-water-for-smarter-cities

Ref and quotes :  IBM   Global Innovation Outlook Report

Telecom industry has popularized the term – “the last mile”.  How good and efficient you are, is determined from “the last mile”  efficiency. The last mile has often been a bottleneck when it came to desirable level of services. Many finance professionals have similarly felt constrained.

The last 20 years have seen phenomenal transformation in finance – whether it is automation of transaction  and accounting,  creation of shard services, selective outsourcing of non-core processes, integration of disparate data sources through database management systems, data warehousing and ERP and development of globally networked finance organization.  And the results have been very clear -  lower cost, higher productivity and reduced error rates.

Yet for many finance teams, there is still a level of frustration – professional staff still spending too much time on mundane activities – digging manually for data, assuring data quality, maintaining complex spreadsheets, manually assembling management reports and assembling data to meet the ever changing external reporting requirements.  And the current economic scenario exposed that planning processes were unable to cope with changing environment, suboptimal risk management and lack of insightful analytics for decision making.  While the majority of hard work was done in the last 20 years,  these inefficiencies were posing as “the last mile” bottleneck.  So three challenges comes up:

1. Integrating insightful analytics in every aspect of the management process
2. Operationalising  enterprise risk management into a holistic system of prevention, detection and risk mitigation
3. Liberating finance professionals from daily chores

Analytics

When it comes to integrating insightful analytics, forward thinkers are not limiting to only NPV or IRR analysis  – but going beyond that. It is all about deriving insight from data but that is not the end of the process. Analytics is only as good as the decision that is a result out of it. Getting from analysis to decision is as simple as asking:

1. Are the results and conclusions of the analysis material ?   If yes, then :

2. What are the implications ? Once the implications are understood, the final question is:

3. What action should be taken?

Linking results of analytics to decisions are critical to realize the value of an organisation’s investment of resources into analytics. The volume of data that can potentially be analysed be so vast that analysts need to be very selective in chosing what to analyse. Designing analytics capability with a sound understanding of business drivers and key performance measures, provides a solid foundation for organizing analytic work. Big bang, analytics everywhere approach should however be avoided. It is more important to identify pain areas and deploy the right analytics approach to get maximum benefit. And then use that goodwill gained with management to extenf the foundation judiciously.

Risk Management

Today’s risk management is far beyond just financial risk management. One needs to identify the risks to which they are exposed, quantify the materiality and probability of occurance, determine the need for mitigating strategies,  develop appropriate mitigation plans, drive timely decision making and monitor execution and results. The challenge is that much of the information is assembled in an ad-hoc manner and there is no unifying process to provide a complete organizational risk profile.

Establishing a risk based early-warning-system demands that companies look beyond data in their ERP or general ledger systems. In parallel with collating the internal data on opportunities and threats, organizations must look outside, seeking out those trends or events that signal opportunity or threat. Quantitative data are important, but companies must also obtain and synthesize qualitative data. Risk leaders must then ask two questions – Is the risk significant enough to take action ?  What is the most appropriate mitigation strategy ? These questions can best be answered in light of the organisation’s risk taking ability and understanding the impact of the risk thoroughly. Quite often I have heard from my CFO colleagues in India that while the CFOs had advised against a particular decision based on proper risk assessment -  it was the promoters who hurried with expansion plans against the CFO’s advise and eventually landing in expensive errors.

Generally speaking risk mitigation policies fall in five different categories –

1. Avoiding the risk -  by redesigning or eliminating activities that could possibly trigger a particular risk
2. Diversify risk  -   Spread the risk among numerous assets so that the overall risk is reduced. E.g building redundancy in communication network and control systems
3. Control risk – Design activities to prevent, detect or contain adverse events.
4. Share risk – distribute a portion of the risk through a contract through another party. E.g. insurance.
5. Transfer risk – distribute all the risk through a contract with another party – e.g. outsourcing.

Liberating finance professionals

Benchmarks consistently estimate that 60% to 75% of professional staff time is poorly utilized. Today, no finance professionals should be spending time in digging for data, organizing data in spreadsheets, checking numbers for accuracy and dropping the results in neat looking presentation slides. Professional staff time should be spent more on developing insightful analytics and engaging in meaningful discussions with decision makers. So “the last mile” here is empowering finance with time, tools, technologies and capabilities to spend time in decision making. Talented finance professionals are scare and in a world that is getting more interconnected, instrumented and intelligent, it is the fast, smart and timely decisions that is going to make all the difference.

Ref and quotes from – Finance 2011 time to build the last mile. Copyright IBM Corp.

In my previous blogs I had brought out the importance of the CFO-CIO collaboration. We discussed and deliberated on the four mandates of the CIO  -  Leverage, Expand, Transform and Pioneer.

And I won’t be surprised, if CIOs today are implementing a cloud strategy or actively mulling one to leverage all the four mandates to create value for the organization at times when all of us accept that uncertainty is the new norm.

We need to ask a few basic questions  -  especially at a time when cloud computing promises to be a solid strategy for forward thinking companies.

1. How can I enhance market share / consumer experience / demand
2. How can I improve supply chain?
3. How far or how soon can cloud reduce the overall cost – including IT?
4. What are the risks associated with cloud?
5. What if I don’t have a cloud strategy?

While attempting to answer these questions -  I will be guided by two basic assumptions: a. My organization is a large and spread out across the globe  b. My organization has the basic infrastructure and processes in place that are needed for a large organization to operate.

Enhancing market share

• Today 1 billion world population is connected through mobile telephone and the opportunity is to grow to 7 billion. So how does mobile companies, not only enhance connectivity and reach, but also grow different services verticals, targeted at different customer segments ?

• About 4 % of the Indian retail market is organized and  more than 100 million Indians have access to internet according to IAMAI’s report.  This is projected to grow to 175 million internet users by year 2014. This translates to a growing demand of goods and services, which is perhaps not possible to fulfill through traditional channels.

• The Indian automobile industry is growing at an average rate of 30% per annum.  Car sales are expected to reach 5 million by year 2015 and 9 million by year 2020 according to a SIAM report.

So the question here is how will companies address the potential market? Growing systems and processes, organically, may not be a cost effective solution.  The challenge is a. Bringing down cost per transaction   b. Bringing down risk per transaction  c. Enhancing satisfaction per transaction  d. Enhancing and leveraging insights per transaction.  So before jumping onto a cloud model, it is essential to delve deep into these parameters.

Improving supply chain

It is estimated that India loses about $ 65 billion annually in supply chain inefficiencies according to a CII publication of 2010. Among the major bottlenecks – one of the key bottleneck is  low supply chain visibility. In other words, efficient planning and execution of logistics lags because there is limited control of goods between the source and the destination. This includes the storage and warehousing.  With growing demand in the market, the complexity of supply chain also increases. There is hardly any company who would own the entire spectrum of supply chain. At the same time in an uncertain economy, the volatility of supply chain is greatly enhanced.  In this scenario cloud computing can be very helpful  to reduce the costs of planning and forecasting,  warehouse and transport management, reducing sourcing and procurement costs and provide after sales services at reduced costs. The entire spectrum of the supply chain can be accessed in parts by relevant groups  – while the transparency is visible to all the stakeholders in the supply chain.

However, there are several caveats. It is essential for a CFO  to be convinced on the cloud based supply chain strategy and ask oneself  -  What is the permissible level of compromise in a shared environment ? How much of capex can be converted to opex? Is the risk due to liability reduced ? Is there a significant reduction of cost overall?

How far or how soon can cloud reduce overall cost

Let me bring a very simple analogy here.  You travel frequently between two cities A and B.  In the first case, you travel from your house in city A  to the airport in you own car, park the car at the airport,  get onto your private jet, arrive at  city B, your second car picks you up from the airport and transports you to your own second house at  city B.  In another scenario, you travel to the airport in city A by taxi, get onto a commercial jet, arrive at city B and again hail a taxi to a  hotel. The first scenario makes sense, if  in your entire career you travel between the same two cities. There are hardly any risk in time, since you are in control of all the components of your travel and stay.

That is what the nature of business was  till the last decade. Today, uncertainty being the norm, you may not know if  your source or the destination cities remain the same.  Hence, the second scenario makes sense  -  but of course with added risks  of taxi may arrive late or the flight may get delayed or  hotels may be overbooked. The upfront costs here could be the time bound SLAs with your travel agent.  Hence, identifying the risks and preparing what ifs  in the second scenario is important. It is very natural that mistakes cannot be ruled out in a new model and there will be costs associated with mistakes. In the early stage of a learning curve, it would be most appropriate to plan for such mistakes and take learnings from such mistakes.

What are the risks

Most often you may have heard that cloud and risk are the two sides of the same coin. A discussion in cloud is never complete without a prolonged discussion on risks. I would not get into the debate of the technical risks  -   which every CFO would be aware of and to a large extent those risks can be managed well if not eliminated altogether. However, some risks are very clear and present.

1. Risk of an inappropriate cloud partner can perhaps be the biggest risk. Your cloud partner must know your business well and should have the capability to walk with you.
2. An inappropriate cloud strategy can be equally frustrating. What is needed is a strong cloud partner to help you in your business objectives.

What if I don’t have a cloud strategy

With data explosion  and a dire need to integrate several channels of  communication with business stakeholders  -  it is important for  companies to  understand how a cloud can help address challenges in volatile times.  I would recommend a few readings at your convenient time:

1. An HBR article on “What every CEO needs to know about the cloud”  http://hbr.org/2011/11/what-every-ceo-needs-to-know-about-the-cloud/ar/1
2. “Cloud Decision Time for CFOs”   an article by Computerworld http://www.computerworld.com/s/article/9223527/Cloud_Decision_Time_for_CFOs
3. “Overcoming obstacles to cloud computing” http://www-935.ibm.com/services/us/cio/reader/build/media/cloud/overcoming_obstacles_to_cloud_computing.pdf

Imagine a company of 5000 to 7500 employees with revenue of USD $1 billion. Such a company can end up with travel expenses averaging as high as 7% of its total expenses¹. If not managed effectively, this company could experience out of control costs, unapproved expenses and inconsistent travel policy compliance. For a CFO who is committed to strong corporate governance, this is not good news. And yet it doesn’t make sense to arbitrarily restrict company executives from strategic business travel simply because of the cost.

Are we likely to see more companies experiencing this dilemma? With the current prolonged economic turmoil, I strongly predict the answer is YES.

It’s true that the majority of midsize companies have travel and expense policies in place, but control, compliance management and analytics are now emerging as larger issues.

If we look at a typical travel and expense management system, you’ll find there are usually three broad components to it. The first is travel sourcing and management, which encompasses planning and booking travel. Next you have activities related to purchasing travel, including transportation and accommodations. The third component is post-trip activities, such as creating and submitting expense reports, approval and auditing, reimbursing employees, and travel management reports.

So the question then becomes: How can we get better control of expense data? And how can we put the data to work for us? Using a single application that automatically pre-populates information, you ensure the quality of the data from the outset. By taking this expense data and breaking it down into granular pieces, you can obtain detailed information about your users. Better auditing capabilities can help safeguard company assets and revenue. Ideally a provider will have a large client base that enables you to leverage its vendor relationships and negotiate significant discounts. This multilayered approach can typically reduce your operating costs by up to 60% to 75% and deliver significant and ongoing reductions in related spend. Because this kind of expense reporting software can be accessed online and by mobile devices, you also make the process faster and easier for your employees. In the end, not only are they more productive, they’re happier with the overall expense report submission process.

Today’s advanced analytics can play a crucial role in tracking, analyzing and integrating expense data across an organization. The right expense management solution can provide comprehensive analysis that helps identify and rectify gaps in vendor contracts and policies. Access to enterprise-wide spending trends and other types of information along with built-in policies and process drive enhanced business intelligence and increased data visibility. Not only that, with more efficient record management, help desk processing support, and application administration you can better protect your sensitive information, improve business controls, support adherence to compliance requirements, and in many cases, detect and prevent fraudulent expenses from occurring in the first place.

When it comes to global IT solutions most midsize companies need to start small and grow. A provider should have not only the analytics piece of it, but capabilities in place that offer scalable pay-as-you-use cloud and software-as-a-service (SaaS)-based options that are cost efficient. A top-tier provider will also be able to easily integrate a solution across your business and help you meet a wide variety of language, tax and geo-political requirements so your expense management system grows in tandem with your business.

Questions to consider:

1. How do you build scalable expense management system in an organization?
2. How do you integrate a single expense management system across geographic and geo-political boundaries?
3. How do you obtain advanced analytics to help identify behaviors, trends and patterns that can improve your overall expense management process?

¹Aberdeen Group report: “The Mid-Market Expense Management Program,” by Christopher J. Dwyer, Sept 2011, p2

Over the years, Finance organizations have contributed significantly to improve operational performance, drive cost reduction, identify new revenue opportunities and forecast future performance. This has necessitated transformation and in the process the free up of resources from traditional accounting transactions to shoring up resources for decision support systems.

The IBM 2010 Global CFO study with over 1,900 participating CFOs and senior finance professionals, support the fact that by adopting Service Delivery Models (SDMs) we can drive better value, scalability, efficiency and controls. Benchmarking data shows that finance organizations that have adopted SDMs  – meaning shared services, outsourcing or a hybrid combination experienced material improvements in efficiency and reduction of 50% or more in costs associated with performing finance an accounting operations.

Its not that every organization aspires to be “world class”  but for those who do, IBM examined the top quintile performers in SDM peer groups and found that they are 200% more likely to achieve  “world class” performance, compared to those without shared service or outsourcing model.

However, adopting outsourcing or shared services or any sort of hybrid model itself, does not guarantee improvements. SDMs are infact optimized when deployed in conjunction with several other enablers e.g. culture and discipline across organization and common technology platforms.  A service delivery model itself is not the whole solution.

For the benefit of this discussion, let me reveal some interesting facts:

1. The SDM peer group demonstrated an overall 63% decrease in personnel cost. This suggests that broader benefits from standard processes and procedures, data and operating model, do generate tangible efficiency improvements.
2. A long-standing objective of many finance organizations is to reduce the overall accounting period close cycle. The SDM peer group demonstrated, speeding up the annual close by 41%. Examining the overall cycle time from starting the annual close to earnings release, the SDM peer group runs about 28 days as against 47.5 days against non-SDM peer groups.
3. There may be several reasons why an enterprise may want to enhance financial close cycle. One may be to increase time spend on financial review, performance analysis, preparation of management discussions and analysis for earnings release. The other may be to release earnings ahead of others. The SDM peer group is consistently demonstrating that time spent on transaction side is lowering and the time spent on reporting, analysis and preparation for earnings release is increasing substantially.
4. Revenue accounting was examined across two key stages of cycle – managing sales order and managing and processing collections.  The SDM peer group has 76% fewer people in managing sales orders and in managing and processing collections, the SDM peer group demonstrated 56% fewer people.
5. Analysis of account payable showed similar results. The SDM peer group’s cost of account payables is 33% lower and shows a 43% improvement in transaction processing efficiency.
6. In payroll processing, the SDM peer group shows a 45% improvement overall as measured by the ratio of payroll employees to the number of employees paid.. For reporting time, the SDM peer group’s total process costs are 29% lower and personnel costs are 84% lower. For managing pay, the total process costs are 43% lower and personnel cost component is 38% lower. On the quality side, the SDM peer group has a 47% lower occurrence  with  the number of voided payments.

The findings provide quantitative validations supporting the value of deploying service delivery models across most General Accounting and Finance Operations functions. These examples demonstrate significant savings which provides opportunity to invest in other finance transformations – such as those focused on analytics and enterprise support that can make finance a better and stronger business partner.

Excerpts, comments and quotes from “IBM benchmarks demonstrates the effectiveness of service delivery models for finance and operations functions” Copyright IBM Corporation 2011.

Sustainability is more than legal compliance or philanthropy. Enterprise sustainability is a strategic business imperative. Today, well informed consumers are interested to know about a company’s track record on actions pertaining to ethical behavior, community relations, health and safety programs, environmental protection, financial stewardship  and employee and supplier diversity. The increasing demands of consumers hold companies accountable for credibility of the programs and interactions with society.

In fact embedding effective sustainability provides numerous benefits. It creates a competitive differentiation and a positive brand image. Enhances cost efficiencies in energy, water and waste management. And it creates potential for gaining new share in growing markers.

Innovative leaders have always been in the forefront and have successfully differentiated on the basis of managing risks and establishing organizational and network alignment. Innovators have also differentiated based on incorporating sustainability benefits into customer value proposition and developing strategies for adding attributes to the brand.

Cost efficiencies have been achieved successfully by innovative leaders. Successful innovators have been able to develop appropriate metrics and scorecards in line with their business objectives and have relentlessly pursued the targets resulting in cost efficiencies. In addition, innovators excel in communication efforts. They strive to establish organization alignment as well as engage and communicate with their employees, value chain network partners and customers. They also develop and implement broad corporate level sustainability marketing and communication initiatives, communicating with and educating their stakeholders to promote their sustainability agenda.

IBM’s environmental policy objectives address topics from workplace safety, pollution prevention, energy conservation and smart buildings to product design for the environment and the application of IBM’s expertise to help address some of the world’s most pressing environmental problems. This comprehensive environmental affairs policy is supported and implemented by a global environmental management system (EMS) that governs IBM’s operations worldwide. The EMS integrates the company’s various environmental requirements, incorporating specific mechanisms for setting environmental policy, strategy and planning; implementation and operation; measuring and monitoring; and management review. Such efforts helped IBM become the first major company to obtain a single global registration to the International Organization for Standardization’s ISO 14001 in 1997.

Also committed to working with environmentally responsible suppliers, IBM introduced its supplier environmental evaluation program in 1972. In 1998, IBM explicitly encouraged suppliers to align their environmental management systems with ISO 14001 and to pursue ISO registration. And in 2004, IBM published its Supplier Conduct Principles to articulate the company’s supply chain social and environmental requirements. In 2010, IBM issued new requirements and objectives, calling for suppliers to deploy a corporate responsibility and environmental management system, measure performance and establish voluntary environmental goals, publicly disclose performance results and cascade this set of requirements to their own suppliers that perform work material to products and services supplied to IBM.

Similarly focused on promoting energy efficiency across the hundreds of facilities that support its global operations, IBM has taken a leadership role in implementing energy conservation and building management practices. For example, using a solution that integrates asset and service work-order management with energy and sustainability management analytics, IBM’s Rochester, Minnesota, campus realized an estimated 5 percent year-over-year incremental energy savings, an 8 percent annual savings from equipment operating costs (based on pilot program observations), improved asset reliability, longer asset lifespan and decreased operational costs. IBM’s proactive environmental and sustainability initiatives have served the company well; further illustrating that strong environmental leadership fosters business efficiency and effectiveness.

Some questions to be considered:

1. Are product and service lifecycles designed for sustainability?
2. Are your company’s processes optimized, applying lean sigma principles?
3. Are you using advanced analytics to model energy efficiency and impact? Do you use predictive analysis for environmental impact management?
4. Do you have “smarter buildings” for energy efficiency and “green data centers” for energy efficiency?
5. Have you re-engineered manufacturing process and supplier compliance for water, energy and waste reduction?

References and Quotes from “Driving Performance through sustainability” Copyright IBM Corporation 2011.

The 2011 IBM Global CIO Study, “The Essential CIO,” reveals that CIOs are very involved in the efforts of their organizations to simplify operations, business processes, products and services and increase competitiveness as they try to cope with increasing complexity. In fact, of the 3,018 CIOs from 71 countries and 18 industries interviewed, 83 percent indicated that they have visionary plans that include business intelligence and analytics, followed by mobility solutions (74 percent) and virtualization (68 percent).

These CIO efforts and plans are not that different from those of CFOs. From the 2010 IBM CFO Study, we have learned that CFOs are frequently involved in company conversations about forecasts, profitability, risk management and strategic decisions with an emphasis on analytics, information integration and people, all of which can be tied to the CIO plans. The study also introduces the idea of a CIO having a specific mandate, which is how the CIO’s enterprise directs the use of IT to help realize overall organizational goals. The study has identified four distinct mandates for CIOs, and IBM has assigned names to these mandates based on varying organizational needs and goals: leverage, expand, transform and pioneer.

Interestingly, CFOs can also deliver on these mandates as they transform the role of the office of finance to that of value integrator. For example, the principal goal of the leverage mandate is streamlining operations and increasing organizational effectiveness. CFOs can deliver on this mandate with finance efficiency and business insight—two characteristics of the value integrator. Finance efficiency can be achieved with process and data consistency and access to timely and accurate data. Business insight helps CFOs drive operational efficiency, spot market opportunities, react faster and ultimately predict changes in the business environment.

The principal goals of the expand mandate include refining business processes, enhancing collaboration and turning data into insight to grow the business. CFOs can act on this mandate by eliminating duplication and streamlining processes, which helps reduce costs and increase organizational efficiency. When costs are taken out of ongoing finance operations, greater investment in innovation initiatives is possible. In addition, with easier access to information and by working with others in the business, CFOs gain valuable insight into business performance and are able to make smarter decisions for better business outcomes.

For the transform mandate, the objective is changing the value chain with improved relationships. For CFOs, the challenge of this mandate is extending collaboration, process alignment and simplification beyond the finance organization to the entire enterprise and even further to their industry’s value chain partners. Here the aim is also to streamline operations and increase efficiency but on a much greater scale, which means a greater emphasis on enterprise risk management. Risks have a direct impact on finance.

The pioneer mandate is unique in that it focuses not on improving what is already there, but on developing new and innovative business models, inventions and client relationships. Advanced analytics is the key to acting on this mandate. Sophisticated analytics can help CFOs uncover correlations between seemingly unrelated pieces of information and find patterns nearly impossible to detect manually, all of which contributes to significant enterprise value creation, which is the ultimate goal of the pioneer mandate.

By acting on these mandates, you can help focus your enterprise on making timely decisions while mitigating financial risks with access to the right information and insight-driven analytics.

Questions to consider:

What can your finance organization do to streamline operations and organizational effectiveness?

How is your finance organization currently refining business operations and enhancing collaboration?

What are your plans for reaching out to everyone in your value chain?

What are you using as an impetus for developing new business and relationships?

IBM has completed 100 years and not many people know that IBM has been much more than computers. Recently I got  copy of the book “Making the World work better – The ideas that shaped a century and a company” by Kevin Maney, Steve Hamm and Jeffrey M O’Brian with copyright of International Business Machine Corporation. It’s a mind blowing revelation of how IBM shaped business and influenced mankind over a century.

Not many would know that computers did not exist when IBM was formed. The company started its journey as a computing, tabulating and recording company providing simple business solutions for repetitive tasks. But while evolving and making its impact on mankind, I find a few nuances that touched me and I would like to share these with you.

As narrated by the authors – the company’s sales executives met every day at 8.00 AM to talk about new developments and ideas. On one gloomy winter day in 1911, the team could not come up with a discussion topic.  Thomas Watson Sr. the founder of IBM strode to the podium and urged them to think. “The trouble with every one of us is that we don’t think enough. We don’t get paid for working with our feet. We get paid for working with our heads. Feet can never compete with brains”.  Watson then softened his tone and spent 10 mins lecturing on the usefulness of thinking. “Knowledge is the result of thought and thought is the keynote of success in this business or any business”. From that day “Think” became the company’s slogan and till today it is “Think” that drives our action for the benefit of our stakeholders.

Many of the policies that Thomas Watson Sr. created to shape IBM grew out of respect for his employees. He considered all employees to be equal, laying out what he called “the Man Proposition” in his speech in year 1915 to all executives, sales people and factory workers. On a large sheet of paper, Watson wrote out a list of roles in the company, including “sales manager”, “sales man”, “factory manager” and “factory man”. Then he crossed off everything except the word “man”. He told the people “We should keep in mind at all times regardless of what our occupation or duties are – we are just men – men standing together, shoulder to shoulder, all working for one common good; we have one common interest, and the good of each of us individuals affects the greater good of the company”. This attitude was very different from industry captains from that era.

“The Man Proposition” also applied to women. In 1935, much before the World War II, IBM started recruiting women. He said in the same year that “men and women will do the same kind of work for equal pay. They will have the same treatment, the same responsibilities and the same opportunities for advancement”.

What makes the difference was that IBM from the beginning was a people’s company, inspite of being a machine and business solutions company.   Even after having presented solutions which can replicate near human capabilities, IBM will always rely and be led by the culture of “Think” by its people. Respect of people – irrespective of race, culture, gender, geography is the primary culture of IBM and this will drive IBM for many more centuries.

Reference and quotes from : “Making the World work better – The ideas that shaped a century and a company” by Kevin Maney, Steve Hamm and Jeffrey M O’Brian with copyright of International Business Machine Corporation