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

On the 6^th of April, I had written a blog “Importance of people in a transformation journey”. Taking reference from the IBM study “Journey to a value Integrator”, I had highlighted the importance of people and culture as a crucial mix for success in any organization spanning across continents.

Further deep dive into that study and trying to implement some of the key factors in my finance organization, I find some interesting revelations and hence am keen to share this with my CFO peers.

When companies consider transformation, it is very natural to concentrate on the processes, infrastructure and applications involved because they are integral parts of making a change. However, a transformation cannot be successful without buy-in from everyone in an organization, especially those at the top, and a willingness to keep improving. If no one accepts the transformation or if there is little desire to keep making things and people better, then all the effort applied to the task will have been for nothing.

The transformation of Finance is no different. The 15 value integrators profiled in IBM’s study, Journey to a Value Integrator, indicated that transforming Finance would not have been possible without strong resources, a full-time core implementation team, relentless execution and an evolving culture of continuous improvement. In the study, this combination of factors was summed up in simple equation: Success = People + Culture.

This equation underscores the importance of having a dedicated and talented team that focuses on both execution and continuous improvement. In a time when competition for the best minds and top talent is fierce, you might be wondering how to accomplish this. The answer lies in a combination of career and leadership development and business alignment.

For example, you could establish a rotational program for new hires where they spend time in both the finance organization and the business for a specific period (for example, three years). For leadership development, you establish individual development planning and annual reviews of the progress of your top 100 employees by your CEO.

Another idea is to orient your finance resources process with an emphasis on service to the business. Along with formal recognition and succession programs, you create a performance program that identifies the top services your finance organization provides. You then take this list of services and ask the business to evaluate the performance of your finance organization in these areas to help identify performance gaps.

These are the kinds of activities that not only attract and develop the best minds and the greatest talents but also encourage continuous improvement. The key to success is being aware of the type of leadership and talent that you have, so that you know when to develop from within or when you have to look outside your organization for what you need. You should also investigate the various methodologies for continuous improvement. The value integrators in the IBM study, for example, have found success using approaches such as Kaizen and Six Sigma.

When you have the right talent, unwavering leadership support and a relentless dedication to success and improvement, your organization can achieve the level of operational dexterity and analytical maturity necessary to outperform in today’s complex and volatile business environment. Combine that with an excellent business case, a structured, achievable playbook and a partnership with your CIO and you will be well on your way to becoming a Value Integrator.

Questions to consider:

How do you plan to obtain clear, continuous commitment and unwavering support from your leadership during planning and implementation of your transformation?

How will you identify your best people and dedicate them full-time to transformation?

What are some programs you could implement to develop current and new hires?

What steps can you take to ensure a culture of continuous improvement in your organization?

I am keen to seek your further views and opinion.

Ref : IBM companion study “Journey to a value integrator”

Year 2011 is very significant for IBM. We are celebrating our centennial. Not only looking back with admiration of what we have achieved till now, but to take an inspiration of many more things that we can do for many more years. I was really impressed with Mr. Sam J Palmisano’s, Chairman, CEO and Managing Director of IBM Corporation centennial lecture at HEC Paris Business School on the 2^nd of March 2011 and encourage you to see a video footage of this great lecture at  http://www.ibm.com/ibm100/us/en/lectures/mar2011paris.html.

I am taking this opportunity to highlight a few perspectives from Sam’s highly motivational lecture and quote liberally from his lecture.

The first secret that Sam shares is codifying and sustaining the core values of the organization.   “In IBM’s case, the need for continual forward movement is part of our business model. IBM’s value proposition is to create and provide innovative solutions to our clients –solutions they can’t get from anyone else. And because the frontier of what is truly innovative keeps moving, that compels us not to sit still. It is a constant reminder never to define ourselves by the things we make, no matter how successful they are today”, says Sam.  And this is especially true when the world is changing so rapidly in a globalised environment, with work flowing seamlessly across geographies; people need something to hold them together.

A classic example is while IBM introduced the IBM PC in the year 1981 and the IBM ThinkPad in 1992, which became extremely popular, we divested that business in the face of emerging computing model and commoditization of the PC industry. The decision was welcomed in the organization not because of economics or strategy perspective but because it was consistent with IBM values.

The second secret that Sam shares is about continuity. What if the founder of the organization is no longer around? A company that has been built around the persona and charismatic leadership of the founder will find it a challenge perpetuating that culture through time. As Sam says “Two forces that will drive change in the world for the foreseeable future are  technology and the re-balancing of economies”.

“You miss this if you see technology merely as a succession of gadgets, websites and next big things. It’s much more. It’s the way our world works. And therefore today’s leaders – those who want to keep moving to the future – have an obligation to understand it – not its mechanics, but its implications – and to incorporate it into how they build their organization – not just processes, but culture”, says Sam

The third secret is effective global integration. It is not about companies setting up replicas in different countries, but about setting up globally integrated enterprise where all functions like sales, marketing, finance, HR and research are centrally integrated.

IBM has significantly lowered their operational center of gravity by relying more on local geographies for decision making rather than taking a central decision. But being centrally integrated helps local geographies with vital formation which facilitates better decision making.

As Sam says – “It’s about where you locate expertise and decision-making – not concentrated in corporate headquarters, but globally networked. And it’s also about where you integrate your company – for us, at the point of client interaction”.

As Sam articulates about IBM’s learning through the years – “I would suggest that its lesson is this: If you want long-term success, you have to manage for the long term.

Of course, everyone pays lip service to that, but if you take it seriously – if you make long-term thinking a management approach – then it produces some clearly identifiable behaviors and choices.

It determines how and where you invest and allocate resources. It takes a kind of institutional patience to invest in R&D. The payoff, if it ever comes, can take years. It shapes your view of talent development. To develop talent that can lead the enterprise generation after generation takes money, time and patience.

And this is not just about people at the top – it’s about developing future leaders broadly and deeply throughout the organization. It shapes the way you see your company’s role in its industry, and in society.

I was very fortunate recently to attend a CFO evening at Bangalore and talk on how finance is taking the initiative of “value integrators” to the next level.

To be successful today and in the future, finance organizations need to transform themselves into value integrators, excelling at two capabilities: finance efficiency and business insight. Finance transformation has a good chance of success if you take a page out of the playbook of the 15 value integrators profiled in IBM’s study, Journey to a Value Integrator. Value integrators focus on cross-functional integration that is enabled by standardization and analytics.

The companies in the study demonstrated a consistency of approach to finance transformation, using five enablers—technology; process; operating model; data and analytics; and people—and many began by addressing technology.

Optimizing and simplifying technology is an excellent starting place for transformation because it can create a strong foundation for the other enablers and because a finance organization has most likely accumulated a number of different solutions that often run on different platforms and create “islands” of data that are difficult to access. A big part of transformation playbook will be to integrate these disparate solutions into a workflow-enabled, single interface financial system.

A “value integrator” is adept at integrating cross-functional operations to provide the much needed thrust for organization growth. I had written a blog earlier “Adding science to the art of marketing” where I had highlighted how important it is to partner successfully with the Chief Marketing Officer. Now I am going to mention how critical it is for finance to partner successfully with the CIO.

To get a good head start on this undertaking, engage your CIO. With technology simplification being the most common starting point and the prevalent path being to achieve transparency first and then insight, partnering with your CIO clearly makes sense. The 2011 IBM Global CIO Study shows that today’s CIOs increasingly help their public and private sector organizations cope with complexity by simplifying operations, business processes, products and services. In this study, CIOs cite key success factors for major implementation initiatives to be having IT and business talent in place, managing beyond line responsibilities, creating the right conditions before starting and building support that spans the company. These factors are very similar to the enablers of finance transformation. So, you can use this common ground to begin your partnership.

In addition, collaborating with your CIO can help you take an integrated and synchronous approach to transformation, implementing multiple transformation enablers simultaneously to realize the benefits of being a value integrator quicker. The CIO study introduces four mandates that CIOs identified as being prevalent in their workplaces—leverage, expand, transform and pioneer—and each of these mandates has an IT element that can be used to help you make your transformation. The sooner you become a value integrator, the sooner you can enjoy the advantages, the innovation and the insight.

Questions to consider:

What do you see as the starting point in the transformation of your finance organization?

What challenges do you need to overcome to achieve finance efficiency and business insight?

What do you require to integrate your disparate finance solutions into a single, workflow-enabled system?

What steps can you take to partner with your CIO to enable finance transformation and enterprise value creation?

Which mandate do you think your CIO is following for your company and how can you incorporate those activities into your transformation process?

The year 2010 saw an explosion in the rise of social media. Facebook crossed more than 500 million users in 2010. By March 2010, more than 10 billion tweets had been sent since twitter became active in year 2006. And by July 2010, the number of tweets doubled to 20 billion!

Social Media is a very unique channel. It is under the control of the user and not the sender. It is about a collaborative experience and dialogue. So is social media the jackpot when 88% CEOs across the world said that getting closer to the customer is the most urgent need?  So here are some facts from an IBM report “From Social Media to a Social CRM”:

1. Consumers all over the world, across all generations, are swarming to social media, but most interact only occasionally. Only a fraction of consumers – 5% are regular and post original materials
2. Social Media is about friends and family and not brands. In fact more than half of consumers don’t even consider engaging with business. 70% use social media for connecting with friends and only 23% engage with brands
3. Perception v/s reality gap. The smaller percentage of consumers who do engage with brands, expect tangible returns in exchange for their time, endorsement and personal data. This is direct contrast with what businesses perceive
4. Nearly 70% of executives say that their companies will be perceived to be out of touch, if they don’t engage in social media
5. Most businesses believe that social media will increase advocacy – but only 38% consumers support this fact. More than 60% consumers believe that passion for a business or a brand is a pre-requisite for social media engagement

From a consumer perspective – every social media user seeks some form of gratification – whether it is developing friendship, relationship, sharing knowledge, collaboration and this need will be there as long as they receive social acknowledgement and are socially engaged.  Enhancing the experience of social acknowledgement and engagement among consumers is what organizations would be keen to achieve.

How about providing on-line interaction forum? Knowledge exchange? Virtual seminars and registration through social media sites? Virtual thought leadership jams ?

And what do organizations gain?  Enhanced relationship, advocacy, trust and above all providing content that has value to consumer.

I would be keen to know your experiences and do send in your thoughts and comments.

Reference and notes from: IBM report “From Social Media to a Social CRM