Cognos unveils its latest upgrades in enterprise corporate planning capabilities, designed to provide a real-time single view of a company's operations.
Posted Dec 16, 2004
It's been three years since whistleblowers revealed the skeletons in Enron's accounting closet, but the repercussions are still overwhelming executives today, which is giving rise to the need for corporate performance management solutions. "Enron was clearly the poster child for corporate corruption, but it was only the beginning of a tsunami rather than a wave," says Lynn Brewer at a press conference during the BetterManagement LIVE 2004 conference, sponsored by analytics and CRM vendor SAS Institute in October. Brewer is a former Enron executive turned whistleblower, and author of House of Cards: Confessions of an Enron Executive.
Following Enron's collapse, more financial faux pas surfaced from such companies as MCI WorldCom, Arthur Andersen, Peregrine Systems, and others. Deceit seemed to be everywhere, and complaints roared into the Security and Exchange Commission (SEC) at an alarming rate. Prior to Enron's accounting irregularities, the SEC reported an average of 6,400 incidences of corporate corruption per month; afterward, complaints soared to 50,000 per month, according to Brewer.
To minimize corporate malfeasance, the government has cracked down on public companies and their accounting departments by requiring them to comply with the much-publicized Sarbanes-Oxley Act of 2002. SOX is designed to protect investors by requiring public companies to adhere to more stringent corporate accounting guidelines, which are designed to create a more accurate and updated representation of a company's financial health.
The problem, however, is not limited to the accounting department. Brewer argues that despite popular belief, it was not an accounting issue that devastated Enron, its employees, and its shareholders, but poor corporate performance management. "The world thought it was an accounting issue, but it's just the symptom, not the cause. There was a lack of understanding whether the business model would support itself and they didn't know where their revenue was coming from. And that comes down to performance management," she says.
Not to be confused with call center performance management solutions, which track customer service agents' performance levels, corporate performance management (CPM) has a much wider scope. By performance management, Brewer's referring to the ability of C-level executives to get a single version of the truth across the enterprise, or one accurate picture of the company's financial health. This enables a company to understand business initiatives and take action based on what's working and what's not.
To help companies do this, such vendors as SAS and Cognos offer applications to help organizations comply with SOX. For example, SAS offers its SOX compliance tools within its SAS Financial Intelligence suite. And Cognos has launched its Cognos Planning Series 7 Version 3, which is designed to extend a customer's ability to connect global operational and financial planning processes in real-time for immediate visibility into resource plans and projected future business performance. New distributed administration capabilities allow customers to share responsibility for plan administration across functions, geographies, and business units in a single, unified planning environment. Cognos Planning Series 7 Version 3 offers cross-functional plan-to-perform blueprints for such operational plans as headcount and compensation, sales forecasting and revenue, and cost-center budgeting. Additional plan-to-perform blueprints for marketing and customer service can be added and modified by each customer, with help from Cognos consultants.
If a public company has a stronger first quarter than it anticipated, it may wish to restate its Q2 quarterly guidance for Wall Street analysts. To do this, executives need to look at sales forecasting, head count changes, various cost centers, and so on. "The approach to planning that we've taken is really about supporting this connected enterprise challenge that CFOs are facing," says Delbert Krause vice president and director of enterprise planning for product marketing at Cognos. "Most organizations aren't as flexible as they'd like to be around the planned delivery of revenue. In version 7.3, we worked with some of our strategic customers to really let the orchestration of these connected plans happen in real time."
One such customer is Manpower, a staffing company with locations in 67 countries. To gain a single view of corporate performance, the company had to start off with an operational plan for each country, then implement a cost center plan, a revenue-by-customer plan, a head count plan, followed by a financial plan. Manpower had been using an older version of the Cognos planning tool since last year. Now the company is instantly able get budget updates from employees around the world. "We could never have sent out 1,000 spreadsheets and ask for input from users and then consolidate it. The tool has automatic consolidation capabilities, all changes are immediate and rolled up into the system," says Vivian Adashek, manager, U.S. Finance, at Manpower. "I'm pleased with what [Cognos] is doing and where it's heading." Manpower, she adds, is considering upgrading to Cognos Planning Series 7 Version 3 next year.
"Businesses have more consumers and more intelligence across the enterprise. More people are creating more reports, [such as] operating reports, inventory management reports, CRM system reports, and accounting system reports," says Doug Barton, vice president of enterprise planning for product marketing at Cognos. "The diversity of data sources is greater than ever. More consumers and more diverse data sources require the need to bring it all together. We're able to help leverage the data structure. Our open data strategy is designed to bring a logical view of the data into one location."
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