The Bottom Line

Are You a Value Integrator?

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I ran into Gary Cokins at the most recent CFO Core Concerns conference, which I highly recommend if you’re a financial executive.  I’d read his book on Activity-Based Management years ago so I introduced myself and found out he’d wanted to get to know me a little as well.  Gary and I are peers in the CPM market, yet we work for competing companies.  We spent most of the time getting to know one another, but I’ll spare you all the personal stuff.  What’s most interesting is that neither he nor I came from the finance world.  His background is in industrial engineering.  My background is quite different.  I spent most of my working time developing software products at a number of companies prior to coming to Acorn Systems, most recently BMC Software.  While at BMC I had an opportunity to work in a small group tasked with helping BMC find new product opportunities.  I’d already spent a fair amount of time working on automated systems and application management products under their PATROL brand.  One of these opportunities was an automated root cause analysis product line that was a critical component of a self healing system.  BMC already had the then market-leading automated recovery capabilities.  This was in the latter half of the 1990s.  About the same time you saw a massive adoption of ERP systems with SAP leading the way.  Of course, we immediately focused on managing the mission critical business applications that were essentially running the business.  Add self-healing diagnostics and you begin to see how a service level management approach would be extremely valuable to the business that had essentially turned over their processes to SAP, Oracle or Microsoft’s business applications. 

Yet, in the back of my mind, I’d always wondered what if you could actually manage the business itself?  I’m not referring to systems or applications here.  I’m referring to the actual performance of the business.  However, I could never quite figure out how you could manage the people that ran the business the way we were managing the systems that ran the business.  That’s when I met Steve Anderson who introduced me to this concept called Time-Driven Activity-Based Costing.  At the time I was somewhat familiar with ABC, but it had lacked adequate capabilities for measuring and managing the people that ran the business in an automated fashion.   Specifically, it couldn’t account for the variability that creates the biggest challenges in managing any business.   The critical thing that TDABC offered was an ability to account for peoples activities without asking them where they spent their time.  Instead, it relied upon transactional events available from any ERP system to create an extremely accurate simulation of where they spent their time using a number of different events and a model that translated what that meant in terms of resource consumption by business processes.  In other words, it’s root cause analysis for CPM, that missing link I was looking for.   I was so intrigued; I joined the company and began working on driving automated applications management principles into a solution platform that automated CPM.

So, what does this have to do with my conversation with Gary?  Gary and I are both pretty passionate about Corporate Performance Management.   With such innovative capabilities, why hadn’t more companies exploited them?   I wondered about this as I was sitting in the remaining sessions of the conference. Gary’s gave his opinion in his blog here. I think it’s a bit more complicated.  Like many other senior executives, the finance executive has been busy dealing with compliance issues, changing accounting standards, process efficiency and an increasingly complicated business environment.  Everyone has an opinion on what their issues are and how to solve their problems, so, where do they start?  The most recent IBM Global CFO Study (2010)groups CFOs into four finance profiles: Scorekeepers, Disciplined Operators, Constrained Advisors and Value Integrators.

It’s pretty consistent with what I’ve seen out in the market place and it sounds like Gary’s experiencing the same thing.  The study identifies several examples of what other CFOs have done and identifies some suggestions for CFOs wanting to become Value Integrators.  They’re all valid recommendations, but I think something’s missing.

In this respect, CFOs share some of the same challenges IT and many software development executives have been struggling with for years.  They need to make their contributions relevant to the business.  IT and software development executives have consistently tried to manage their relationship with the business at arm’s length.  I’m sure you’ve all experienced very detailed requirements documents that almost border on legal contracts and include everything but the proverbial kitchen sink because everyone’s convinced they have one shot to influence the outcome.  In response, these projects attempt to design the ultimate Swiss Army Knife solution that can do everything, but, in the end, nothing very well.  It takes a long time and no one is very satisfied in the end.  It’s enough to make your head spin, especially if you’re an agile practitioner like me.  But agile development practices can only help you so much and they’ll expose the real problem rather quickly.  If you don’t spend time understanding the perspective of your customers and collaborate with them on a solution, you’ll invariably miss the mark.  The best way to do this is to educate yourself on the nature of their challenges and needs in such a way that you can begin to frame a solution using their language.  That doesn’t mean you have to become an expert.  Instead, you simply have to learn enough to be able to map your expertise to their problems.  It’s one of the biggest challenges in IT Financial Management, as I have previously mentioned here.

The nature of our business here at Acorn Systems has forced me to become a value integrator.  Along the way I’ve had to move beyond my comfort zone as a software and IT professional in order to learn about what the business needs.  We’ve managed to build leading solutions that have enabled our customers to become value integrators with amazing results.  So, if you’re a finance executive and your peers are looking for a forecasting or risk management solution, take a moment to look at the world through their eyes.  Don’t be afraid to collaborate.  You’ll be surprised at what you will learn.  Value integrators, like Elkay’s John Hrudicka, consistently achieve remarkable results.  The road won’t always be easy, but your efforts will translate into a winning strategy.