Dashboards come of age: Under growing real time compliance

Pity the poor CEO?s and CFO?s of major corporations. At one time they ruled with impunity over vast organizations and global operations. Minions toiled day and night to draw profit from every corner of expansive conglomerates and when things didn?t quite go their way, well there was always a creative method for stalling the inevitable reporting until things blew over or the options were sold. And if they got caught cooking the books, well there was always ?plausible deniability?, that exceptional mantra of all past US presidents. But for ?C? level executives, the days of ?I didn?t know what was going on? have passed and real time reporting of developing trends is an emerging requirement of regulatory authorities all around the world. If there is one thing the trial of Bernard Ebbers has taught us, it?s that claiming that you didn?t know what was happening is one way of guaranteeing a quick trip to Federal court and a lifetime of prison. With Sarbanes Oxley 409 coming into greater prominence in the next few years, we are going to see a magnum shift of pressure on internal reporting procedures and the drive for real time dashboard reporting at the executive levels on the health of the organization. Not just the financial blood pressure of the organization as measured by financial reports that are often so far in arrears that the banks are already filing claims before the audit review but the real financial health of the company. Global cash positions, foreign exchange risk levels, physical values at risk, audit measures and real physical valuations of the flows of the organizations from headcount to inventory. All will be presented in simple to view dashboards of glowing charts, drillable numerics and warning indicators. But we are just at the start of the real comprehensive dashboard developments and as companies seek to mine their existing systems for real time data, the bulk of the work is being driven by the Sarbanes Oxley compliance teams that are focusing on the ERP data. The problem is that financial ERP data is old, often weeks old and prone to the same manipulation that eventually brought down Worldcom and Enron. Imagine that you are an executive at a large organization and you?ve just kissed your spouse and kids goodbye and driven in your luxurious car to your corner office. You turn on your computer and the first thing you will likely see are the revenue results as pinpointed by your sales systems. You scan the data and realize that you had a good week last week and everything is going just fine. Across the country an ice storm has wiped out your main distribution hub and orders are starting to back up. The overload on the systems is bringing down servers in your southern server farm and your web failovers are finally being stress tested. A wildcat strike has erupted in your southern flank and someone just managed to transfer $40,000,000 from your eastern partnership bank accounts. The dollar has dropped 120 points and your long dollar position has put some of your hedges offside. A fire has erupted in a key Asian plant and your inventory in a California retail operation has just dropped by 25% without corresponding revenue. At the end of the day, you turn off your computer and its sales chart and go home to your family unaware that your second in command has reported $1.2 billion in revenue from promised orders to match the $1 billion in excess inventory that you are carrying on your books. You arrive home, have a nice dinner and late in the night receive a call from your attorney. Now imagine that it?s a new day in an identical company. You arrive at work and turn on your computer to see a comprehensive physical and financial valuations model with charts indicating real time POS sales verses booked sales in a daily trend chart. A trouble spot map that ties into your operations physical plant control system shows that your distribution hub is down, an order processing health chart is glowing red as the orders back up, your IT control block is also glowing red along with a description of the trouble at the server farm and charts showing web traffic levels are down. Your HR box has an urgent flag indicating a strike developing and your financial control system is seeking your authorization for a $40M transfer that has just breeched your control rules. The key external changes box has indicated a drop in the dollar and the net impact to your bottom line and has also caused a mark to market revaluation of your hedge positions presented in bright red. The flash ticker is showing an internal item regarding a fire in an Asian plant and the inventory valuation chart is also red showing an over benchmark buildup in physical inventory of $1B and a special item regarding a 25% drop in California. You call your spouse and tell them you?ll be a bit late for dinner. No plausible deniability here but no jail time as long as you do something including simply reporting the problems to the regulator. This last scenario is the goal of the dashboard and system companies from treasury to IT management are all striving to make it a reality. But it takes a lot more than just mining the ERP to get to the fundamental understanding that financial numbers are late by their nature and subject to manipulation. It?s the mining of the physical operational data that will prove the most beneficial. Risk managers have known for a long time that they required real time physical underlying positions valued against real world pricing to understand if they are in the money or out of the money on a position. Now it?s time for that same level of thought process to invade software development shops currently working on dashboard technology. If the development team doesn?t understand the difference between an accrual and the real time, real world position, then your dashboard will be nothing more than another financial report just like those you currently receive each month. And if there?s one thing Bernie Ebbers taught us, it?s that you can?t say ?you didn?t know?. Source: businessintelligence.ittoolbox.coma>

Deel dit artikel

Submit to FacebookSubmit to Google PlusSubmit to TwitterSubmit to LinkedIn