D Murali

How boards can leverage enterprise systems

D. Murali | Updated on December 11, 2011

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The modern CFO is not just a custodian of company finances, but an active player in the business ofvalue addition. THIRU VENGADAM, MD AND CEO, IFS SOLUTIONS INDIA PVT LTD, NOIDA.



I n today's competitive economy, an organisation can only be successful if it has a high-calibre CFO supporting the business, says Thiru Vengadam, Managing Director and CEO, IFS Solutions India Pvt Ltd, Noida (http://bit.ly/F4TThiruV).

“The traditional view has been that the CEO provides strategic direction and leadership to an organisation, while the CFO supports him/her with numbers and reports. Subtly, though, there has been significant evolution in the CFO's role,” he adds, during a recent interaction with Business Line.

The modern CFO, as he describes, is not just a custodian of company finances, but an active player in the business value addition. Our conversation continues over the email, on the theme of enterprise systems.

Excerpts from the interview.

What are the top expectations of CFOs from enterprise systems?

1) Managing the operations and decision making:

In order to take control, the CFO needs to make informed decisions using readily available, accurate and effectively managed information. Speed will be the essence here, but there also needs to be a focus on the right data, as well as a keen understanding of where to find the right sources of information – both internally and externally.

By tapping into the intelligence of their value chain, the ever-increasing quantities of data, CFOs need to move a company's disparate, non-specific and often duplicated data sources towards a more integrated and organised structure. In order to play this enhanced role, the CFOs can get a strong support from the enterprise systems, as follows:

Financial and managerial reporting – Enterprise systems offer the flexibility to report performance by business unit, organisation, or cost centre on a real-time basis.

Effective account closures – CFOs can streamline accounting, consolidation, process scheduling, workflow, and collaboration.

Improve cash flow and liquidity – By automating management of dispute, credit, and collections and offering electronic invoicing and payment capabilities that supplement traditional accounts receivable and accounts payable functions to accelerate and manage cash flow.

Optimise global cash management – With the help of enterprise systems, CFOs can report, analyse, and allocate cash in real-time; and integrate risk and treasury transactions with core accounting and financial reporting processes.

Reduce overall finance costs – Enterprise systems help you operate effective shared-services, collaborate with customers or suppliers, and streamline operations to reduce costs and resource demands.

2) Decision support:

With the support of real-time integrated enterprise systems, CFOs can see trends and patterns within the organisation, the effect of external shifts on the company and identify areas of disconnect that spur them on to decisive action.

They may recognise financial leakages in the form of undisciplined expenditure, or the potential to generate new revenue streams or plug revenue losses that may have been identified by initially attempting to understand a puzzling bit of analysis or the recognition of a trend.

3) Corporate governance:

While the requirements of corporate governance apply to the entire management of company, it is the CFO who has a greater role to play in this direction. The CFO is the repository of actual corporate information.

How can boards leverage enterprise systems and make the deliberations effective?

In these days of high level of adoption of information technology, the board can very well use the enterprise systems of the organisation to get direct inside view of the operations.

Here are a few suggestions:

1) By understanding the background of each of the members of the board, the enterprise system can be extended with the required type of user-interface depending on his/her level of sophistication of use.

This would increase the transparency and also improve the confidence of the director concerned.

2) While the members of board participate through electronic mode, they can as well have access to the data that they are to review through electronic mode from their enterprise systems.

Published on December 11, 2011

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