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Financial Executives International

Committee on Finance and Information Technology

Committee Meeting

Wal-Mart Stores, Inc.

Bentonville, Arkansas

September 10 and 11, 2009

 

MINUTES

ATTENDEES

 

Members
Arthur Alderson	Wal-Mart Stores, Inc.
William Burns	Gartner
Ann Flatz	Intel Corp.
Taylor Hawes	Microsoft Corporation
Garry Lowenthal	Pranah Storage Technologies
William Overell	Overell Solutions
Gary Petrangelo	Japs-Olson Company
Leslie Porter	University of Southern California
Mahesh Shetty (conference call)	Encore Enterprises Inc.
Robert Shultz	Hewlett Packard
David Taylor	Trintech
Carol Zoellner	Hallmark Cards, Inc.
Guests
Michael Cangemi	Cangemi Company LLC
Greg Grocholski	The Dow Chemical Company
Carlos Passi	IBM
Guest Presenters
Mike Henderson	Verizon
Matt Kistler	Wal-Mart Stores, Inc.
Shaun Trippel	Verizon
John Van Decker	Gartner
John Paul Williams	Tandberg
FEI Staff
William Sinnett
Mark Steele
Maria Zadravac

 

I.          Call to Order

Chairman Bob Shultz called the meeting to order at 9:10 a.m. CT on Thursday, September 10, 2009. He welcomed the CFIT members and guests present, and asked them to introduce themselves.

 

II.         Committee Business – June CFIT Meeting Minutes

Bob Shultz asked for comments on the minutes from the June 2009 CFIT meeting. There were no suggested changes. Upon a motion duly made and seconded, the CFIT Committee accepted the minutes of the June 4, 2009, CFIT meeting.

 

III.        Technology and Reporting Subcommittee Report

Bob Shultz asked Taylor Hawes to present the report of the CFIT Technology and Reporting Subcommittee, which Taylor chairs. Taylor said that his subcommittee meets by conference call every two weeks.

 

Taylor said that the subcommittee has five initiatives:

1. Design a roundtable format to discuss technology topics, similar to that used by the Corporate Executive Board. This initiative will be led by Ann Flatz.
2. Draft a comment letter on pending Congressional regulatory legislation. The resulting comment letter will be used for CFIT’s DC Fly In, scheduled for December 7, 2009.
3. Support FEI conferences. This initiative will be led by David Taylor.
4. Work with FERF to develop a research project on Enhanced Business Reporting, tentatively titled “The Next Wave of Reporting.”
5. Author an Issue Alert on FAQs on The XBRL Exhibit. Mike Willis authored this Issue Alert, and it was distributed by FERF in July.

 

Taylor then discussed the details of these initiatives.

 

1. Design a roundtable format to discuss technology topics

Ann Flatz, Bill Burns, and Carol Zoellner are developing a format for quarterly Webinars on technology topics. These Webinars will be strategic in nature, and will be used to identify potential speakers for the Summit IT Track. They will be 50 minutes in length so that they will qualify for Continuing Professional Education (CPE) credit. Jim Eagen of FEI’s conference department will handle logistics.

 

Taylor said that the first Webinar will be scheduled for the 4^th quarter of this year, and will be a case study on Business Technology Optimization for CFOs. He said that the subcommittee is now looking for speakers.

 

Ann Flatz noted that CFOs now realize that their long range planning did not help them deal with the current economic downturn. She said that she was looking for someone who has “weathered the storm,” and has some leads.

 

Les Porter said that he had a contact at Anthem Blue Cross and Blue Shield.

 

Bob Shultz said that these Webinars should focus on real people with real issues, and could discuss “what the Big 4 will never tell you.”

 

2. Draft a comment letter on pending Congressional regulatory legislation

Taylor said that HR 2392: Government Information Transparency Act, was introduced in the U.S. House of Representatives by Representative Darrell Issa of California back in May:

http://www.govtrack.us/congress/bill.xpd?bill=h111-2392

 

Taylor said that this legislation would require a single data standard for all government reporting, including filing tax returns with the IRS. He said that the subcommittee would draft a comment letter on this pending legislation, which could be used for CFIT’s DC Fly In, scheduled for December 7, 2009. The theme of the comment letter will be that the U.S. government should standardize the reporting to all of its agencies. Taylor said that the subcommittee would draft the comment letter and circulate it to the entire CFIT membership before the December CFIT meeting.

 

Taylor added that XBRL US has developed taxonomies for corporate disclosures, corporate actions, and press releases.

 

Ann Flatz asked if CFIT would comment on IFRS. If so, it could align its comments with those of FEI’s Committee on Corporate Reporting. She said that Intel was concerned about the costs of implementation and dual reporting. Bob Shulz added that companies cannot capture the real and opportunity costs of IFRS implementation, and that it was like a tax.

 

3. Support FEI conferences

David Taylor said that he had discussed CFIT support of FEI conferences with Bill Sinnett. He said that the subcommittee could develop a session on Corporate Performance Management (CPM) for next year’s (November 2010) Current Financial Reporting Issues (CFRI) conference.

 

David said that, beginning in March 2010, all tax returns filed in the United Kingdom would be required to be filed in XBRL format.

 

4. Work with FERF to develop a research project on Enhanced Business Reporting

Taylor said that this research project would focus on the next wave of reporting. It would describe the problems with the current financial reporting model, and suggest ways to create more structured information for both internal and external reporting. He said that Gartner was doing work in this area.

 

Bill Overell said that the strategic issue here was “standardization.” He suggested that the project avoid the term “Enhanced Business Reporting” or “EBR,” and instead use terms like “industry specific” or “non-financial measures.”

 

IV.        Business Technology Optimization Subcommittee Report

Bob Shultz asked Art Alderson to present the report of the CFIT Business Technology Optimization Subcommittee, which Art chairs. Art said that the subcommittee is focused on three areas:

1. How finance can help the business improve results;
2. How to use technology for collaboration to improve results; and
3. How finance can lower the cost of technology.

 

Art said that the subcommittee would participate in FEI conferences and develop magazine articles and white papers.

 

V.         Governance Risk and Compliance Subcommittee Report

In the absence of Margaret (Peggy) Yocher, Bob Shultz asked Les Porter to present the report of the CFIT Governance Risk and Compliance (GRC) Subcommittee.

 

Les said that COSO (The Committee of Sponsoring Organizations of the Treadway Commission) was developing guidance on ERM (Enterprise Risk Management) for boards of directors. He expressed concern that this guidance would assign more responsibility to boards.

 

Bob Shultz said that COSO could lose credibility if it published this type of guidance. He said that it was his understanding that the board of directors should be sure that management has the right risk management processes in place.

 

Art Alderson suggested that FEI could take an active role in demonstrating that business can regulate itself without additional regulation by the government. He said that business’s credibility has been impacted by recent events, and government is trying to fix the problem. He asked whether FEI could take a lead and whether this could be a key strategic focus for FEI.

 

Art said that he was a member of FEI’s Ethics and Eligibility Committee when it reviewed its Code of Ethics, which is very important to FEI.

 

Bob Shultz asked that Marie Hollein, FEI’s president be included in the agenda for the December meeting to discuss this question. He suggested that FEI form a committee of 50 top CFOs to be “the tip of the spear” on these issues.

 

VI.        Small and Medium Business Subcommittee Report

In the absence of Mahesh Shetty, Bob Shultz asked Gary Petrangelo to present the report of the Small and Medium Business Subcommittee.

 

Gary said that the Small and Medium Business Subcommittee has two initiatives:

1. XBRL for SMB: The subcommittee is looking for smaller companies to implement XBRL. Gary said that his company would implement XBRL, and Mahesh has identified some candidates in the Dallas Chapter.
2. Software as a Service (SaaS): The subcommittee was putting together a panel for the 2010 Summit IT Track, which would include both vendors and customers. Bill Sinnett said that this session would compare SaaS with Business Process Outsourcing, and could include NetSuite.

 

VII.       Emerging Technologies Subcommittee Report

Bob Shultz asked Bill Overell to present the report of the CFIT Emerging Technologies Subcommittee, which Bill chairs.

 

Bill said that the Emerging Technologies Subcommittee started following SaaS and XBRL until they were picked up by other CFIT subcommittees. He said that he uses the annual Technology Issues survey, which started out as an issues survey, to identify emerging trends.

 

Bill said that he had developed the technology issues matrix to track the leading emerging technologies that other groups had developed, and to track what CFIT was doing. He said that the first five columns would become the basis of his subcommittee’s activities. He asked if the matrix showed any gaps.

 

VIII.      Technology Issues Survey

Bob Shultz asked John Van Decker, Vice President for Research for Gartner to present his recommendations for the 2010 Technology Issues Survey.

 

John first recapped the 2009 Technology Issues Survey. He noted that:

• Responses were down from 650 in 2008 to 267 in 2009
• Small companies were over-represented and larger companies were under represented
• The feedback was that the survey was too long
• Reporting of segment results was hindered by the low response rate

 

John then discussed his goals for the 2010 Survey:

• Launch the 2010 survey earlier than last year, and keep it open between the third quarter close and year end close for calendar year companies
• Increase participation to over 1,000 responses
• Increase the number of responses from large companies
• Achieve a critical mass for segment reporting
• Complete the report and distribute it by March 31, 2010

 

John said that he would like to get concurrence on the survey questions today and get approval to move ahead with the project plan.

 

John reviewed his project timeline:

 

Sept 16             Send revised survey questions to FEI

Sept 22             FERF Research Committee reviews revised survey

Oct 20              Launch the online survey

Nov 2               Send the survey to Gartner clients

Dec 22              Close the survey

Jan 8                Release preliminary findings

March 31           Release the final report

 

John described the guidelines that he used for the 2010 Survey design:

• Maintain consistency for trend reporting. Keep 80% of the survey questions constant.
• Reduce the number of survey questions
• Reduce the number of questions by at least 20%
• Remove questions with obvious responses
• Update the survey with relevant technology trends, such as Software-as-a-Service (SaaS)

 

John then led the committee members through a discussion of individual questions, to decide whether or not they should be removed from the survey. John will then revise the survey and send it to Bill Sinnett for committee review.

 

Taylor Hawes suggested that the e-mail announcing the survey launch be personalized, so that it would not be perceived as spam.

 

ACTION: John Van Decker of Gartner will send revised survey questions to Bill Sinnett, who will forward them to the CFIT membership for their review.

 

IX.        Integrating and Optimizing Financial Planning

Bob Shultz asked Ann Flatz and David Taylor to discuss integrating and optimizing financial planning.

 

Ann said that she and David were developing a presentation for the 2010 FEI Summit on “How to Build the Business Case for Corporate Performance Management (CPM).”

 

David Taylor then led a discussion on “CPM – Finance Adding Value through Integrated Planning.”

 

David first summarized the presentation on “Best Practices in Budgeting, Planning & Forecasting,” made by John Kopcke, Senior Vice President for Enterprise Performance Management at Oracle, at the June 2009 CFIT meeting:

• Key business challenges
• Access to capital, cost volatility, competitive landscape
• Challenges in forecasting: foggy conditions prevail
• 70% of CFOs cannot forecast more than one quarter out
• Result is withdrawal of earnings guidance
• Now is the time for the next wave: Management Excellence
• A smart, agile and aligned enterprise
• The 7 imperatives to deal with the economic crisis
• Results
• Monitor
• Plan flexibly
• Re-think strategy
• Decide
• Build trust
• Do all of this in concert
• Integrated business planning
• Linkage of the strategic plan and business goals to operational and financial plans, through Integrated Impact Analysis
• Strategic Planning is often fragmented
• Complex spreadsheets, not consolidated, errors, accounting integrity, cumbersome modeling and simulation times
• Managing risk and uncertainty
• Use of tools such as Monte Carlo Simulation for quantifying risk and ranges of different outcomes
• Integrate strategic planning with the Budgeting & Forecasting process
• Strategic Plan, Budget, Forecast, update Strategic Plan

 

David then presented their vision for a presentation at the 2010 FEI Summit:

• April 2010: Integrated planning will still be a key issue
• Deliverables:
• Provide a series of sessions
• Panel session of best practice examples
• Technology options overview (John Kopke, Oracle, or John Van Decker, Gartner)
• Fundamental drivers of business (controlled and uncontrolled, internal and external)
• Requirements:
• Find best practice example corporations
• Assessment of the various technologies available

• How Do We Get There?
• FEI CFIT December 2009
• Presentation by Best Practice Corporation
• Gartner CPM Tech Overview, from CFO Perspective?
• FEI CFIT March 2010
• Presentation by Best Practice Corporation
• CIMA presentation on organizational and people aspect
• FEI CFIT Webcast
• Webcast on CPM by Technology Subcommittee
• The 7 Key Takeaways from FEI Summit 2010
• Initiating a CPM project: Scope & Feasibility
• Designing the Integrated Planning System
• ROI and Cost Benefit Analysis
• Funding the Project
• Implementation Cases
• Measuring Success: Finance Adding Value
• KPIs, KRIs and Continuous Improvement

 

Bill Overell suggested that the description of the Summit presentation say “Here is a seven-step planning process to use for your annual budget.”

 

X.         Collaboration Tools and Teleconferencing Solutions

Bob Shultz asked Garry Lowenthal to lead the presentation on collaboration tools.

 

Garry first introduced John Paul Williams of Tandberg, a global provider of high-definition video conferencing solutions for unified communications.

 

John Paul said that one of the enablers of lean manufacturing is collaboration, because “the secret to a good idea is a lot of ideas.” He discussed the top trends in collaboration:

• Merging audio/video/data conferencing
• Convergence of synchronous and asynchronous collaboration functions
• Enterprise wide collaboration convergence and standardization
• Driving collaboration into industries and processes
• Mobility

 

John Paul said that video collaboration had three characteristics:

• Great Return on Investment
• Seeing the issues first hand is essential
• Leveraging knowledge is essential

 

John Paul discussed three mega video applications:

1. Product and process development
2. Discrete and process manufacturing
3. Maintenance and service

 

John Paul provided an example of how collaboration is helping supplier selection criteria:

 

	Traditional	Emerging
Market Knowledge	Provided/led by Customer	Customer’s knowledge augmented by supplier experience
Technology Capabilities	Provided/let by Customer	Core competence segmentation, joint strategic development
Manufacturing Capabilities	High Volume, Low Cost	Volume and schedule flexibility – cost avoidance
Contracting Philosophy	Short term, order oriented	Long term, strategic partnership

 

Garry then introduced Mike Henderson, vice president, and Shaun Trippel, regional manager, for Verizon Business.

 

Mike first discussed major trends in the workplace, such as:

• Make decisions more quickly while operating on a global scale
• Take costs out of the business and gain efficiencies
• Take advantage of new technologies
• Hosted solutions are gaining wider acceptance
• High-speed connectivity is now the norm worldwide
• Organizations are seeking travel alternatives

 

Mike defined unified communication and collaboration as:

“The integration of business telephony and IT applications, simplifying the way employees and key stakeholders communicate and collaborate.”

 

Mike then described different conferencing products”

 

Audio Conferencing

• Operator attended or self service
• IP audio conferencing
• Helps improve productivity
• Access anywhere, anytime

 

Net Conferencing

• Operator attended or self service
• Multiple delivery methods
• Integrates with audio conferencing
• Streamlines communications

 

Web Tools

• Web Moderator/e-meetings
• IBM and Microsoft scheduling integration
• Help increase collaboration
• Enhance customer experience

 

Video Conferencing

• Operator attended or self service levels
• IP video conferencing
• Hosted and premises options
• Pro-services and integration expertise

 

XI.        Business Transformation and IT

Bob Shultz asked Carlos Passi, Assistant Controller, Business Transformation, to discuss Finance Transformation and IT.

 

Carlos said that over the past decade, Finance has leveraged new IT technologies to transform the organization, driving simplification, productivity and effectiveness. Carlos described some of IBM’s initiatives:

 

Blue Harmony: Implementing a common SAP platform across three major processes:

• Opportunity to Order
• Order to Cash
• Finance

 

Continuous Control Monitoring: Managing risks in key business processes

• Uses IBM Complex Event Processing (CEP) technology to extract information from internal business applications and analyze the data against predefined criteria
• Monitors high risk transactions in key business processes that are administered in an automated environment to deter and detect circumvention of controls

 

COGNOS Integration: Increasing the value of finance through business analytics

• Leverage Cognos products to address new business requirements and find opportunities to transform and simplify processes
• Fundamentally change how IBM Finance will support the business and add greater value

 

Statistical Tracking & Assessment of Revenue (STAR): Consistent metric-driven model for performance estimation

• Consistent metric-based method
• Link tracking measures to performance
• Accurate in early weeks, low volatility over later weeks
• Re-focus human effort from estimating outcomes to decision-support activities

 

Finally, Carlos described Finance Transformation at IBM:

• Moving from a country-based model to a global model
• Standardizing data and systems
• Reengineering common global processes
• Implementing and promoting self-service
• Consolidating core functions into shared services
• Globalizing Centers of Excellence

 

XII.       Wal-Mart’s Sustainability Initiatives

Art Alderson introduced Matt Kistler, Wal-Mart’s Senior Vice President for Sustainability.

 

Matt opened with a quote from Mike Duke, Wal-Mart’s president and CEO:

“We’ll accelerate and broaden our commitment to sustainability. There will be no part of this company, anywhere in the world, that doesn’t contribute to making Wal-Mart more sustainable.”

 

Matt stated Wal-Mart’s sustainability goals:

• To be supplied 100% by renewable energy
• To create zero waste
• To sell products that sustain our resources and environment

 

Matt described Wal-Mart’s U.S. sustainability initiatives:

Be supplied 100% by renewable energy:

• Double our fleet efficiency in the U.S. by 2015 from 2005 levels
• Reduce green house gas emissions from existing stores, clubs and distribution centers by 20% by 2012

 

Create zero waste:

• Send zero waste to landfill in the U.S. by 2025
• Reduce global plastic shopping bag waste by an average of 33% by 2013
• 5% packaging  reduction by 2013

 

Sell products that sustain our resources and environment:

• Make the most energy intensive products 25% more efficient by 2011
• All wild-caught fresh and frozen fish for the U.S. market to be Marine Stewardship Council certified by 2011

 

Matt then described Wal-Mart’s international sustainability efforts:

Be supplied 100% by renewable energy:

• Energy-efficient stores are opened in China, Canada and Mexico
• Fleet improvements have been made in the U.K and Japan

 

Create zero waste:

• Recycling programs have been established in all our global markets, including Central America, Brazil and Argentina
• U.K. is redirecting 65% of store waste from landfills

 

Sell products that sustain our resources and environment:

• Brazil and Canada sell numerous organic items
• Locally grown food programs established in Guatemala, Puerto Rico, the U.K., Mexico and China

 

Matt referred the members to several Wal-Mart Web sites:

 

Wal-Mart’s Sustainability DVD:

http://walmartstores.com/Video/?c=577

 

Wal-Mart Sustainability Web site:

http://walmartstores.com/sustainability/

 

Wal-Mart Global Sustainability Report:

http://walmartstores.com/Sustainability/7951.aspx

 

XIII.      Committee Business

Art Alderson opened the Friday morning session of the meeting by recognizing the significance of 9/11. He noted that “It is not the event, but how you handle the event that defines you.” He said that FEI had a great opportunity to demonstrate leadership in corporate ethics and governance.

 

Member Invites

Bill Sinnett said that three new potential members for CFIT were visiting this meeting:

• Michael Cangemi, President, Cangemi Company LLC
• Greg Grocholski, Global Finance Director, The Dow Chemical Company
• Carlos Passi, Assistant Controller, IBM

 

Maria Zadravac said that each candidate had completed a CFIT Member Profile and had indicated which subcommittee they would like to join. She said that the CFIT Executive Committee would now vote on their membership in CFIT.

 

Ann Flatz suggested that CFIT invite new members from smaller companies. Taylor Hawes added that some of the CFIT subcommittees were light, and could use additional members.

 

Bill Overell said that CFIT should look for good technical advisors who don’t qualify for membership in FEI.

 

ACTION: Develop matrix of current CFIT member demographics, and discuss subcommittee rosters at December CFIT meeting.

 

ACTION: Discuss potential technical advisors at December CFIT meeting.

 

Future Meetings

 

December 8 and 9, 2009

Steve Hosley of AOL will host the December CFIT meeting at AOL’s headquarters in Dulles, Virginia, on December 8 and 9 (Tuesday and Wednesday).

 

March 4 and 5, 2010

Taylor Hawes of Microsoft will host the March 2010 CFIT meeting at Microsoft’s headquarters in Redmond, Washington, on March 4 and 5 (Thursday and Friday).

 

Taylor said that he could provide a number of Microsoft presentations, depending on committee interest:

• Governance, Risk and Compliance
• Decision Support
• Corporate Finance
• Next Generation Data Warehousing
• Future Thinking on Cloud Computing

 

Taylor said that CFIT meetings usually end with the Friday lunch, but he could schedule additional presentations for Friday afternoon.

 

June 17 and 18, 2010

Ann Flatz of Intel will host the June 2010 CFIT meeting at Intel’s headquarters in Hillsboro, Oregon (near the Portland Airport), on June 17 and 18, 2010 (Thursday and Friday).

 

September 2010

Gary Petrangelo of Japs-Olson Company offered to host the September 2010 meeting in Minneapolis. Dates will be finalized at a later meeting.

 

December 2009 Fly In

Bill Sinnett said that some of the CFIT members would like to organize a “Fly In” on Monday, December 7, the day before the CFIT meeting. The objective of the “Fly In” would be to meet with Congressional staff and staff of the U.S. Office of Management and Budget (OMB). The “Fly In” will be organized with the help of FEI DC staff, who will then be invited to attend the CFIT meeting to discuss FEI’s advocacy initiatives.

 

Bill Overell said that the basis of the Fly In was that CFIT develops knowledge, such as the annual Technology Issues survey, to support FEI’s advocacy effort. He said that CFIT would have to draft talking points about FEI and CFIT, and then focus on three or four issues, such as the XBRL.

 

Art Alderson suggested that CFIT first decide on its talking points, and then decide who in DC they would want to meet with.

 

Michael Cangemi suggested that once we know what CFIT members will participate, we can contact Senators or Representatives from those states. He added that CFIT members should ask with their companies’ government relations people to find out what they were already doing.

 

ACTION: Discuss Fly In and potential issues during the October 6 CFIT conference call.

ACTION: Draft White Paper on issues for talking points.

 

2010 Summit IT Track

Bill Sinnett discussed potential presentations for the 2010 Summit IT Track:

 

2010 Technology Issues for Financial Executives Survey

• Hosted by CFIT’s Emerging Technologies Subcommittee
• Gartner breakfast presentation
• Survey to be launched October 2009
• FERF Executive Report to be drafted by March 2010

 

CPM: How Finance Can Add Value with Integrated Financial Planning

• Hosted by CFIT’s Business & Technology Optimization Subcommittee
• Corporate Performance Management (CPM) is an automated scorecard
• Corporate performance measures (growth, profit)
• Key risk indicators (SOX, Continuous Monitoring)
• Oracle presentation, moderated by Ann Flatz of Intel
• Include CFO from best practice company who “has done it”

 

2010 CFO Study

• Hosted by CFIT’s Business & Technology Optimization Subcommittee
• IBM presentation, based on IBM research project

 

Software as a Service for SMBs

• Hosted by CFIT’s SMB Subcommittee
• Panel of vendors and users
• Include Net Suite

 

IT Track Sponsor Session

• Offered to company that sponsors IT Track

 

XIV.      FERF Report

Art Alderson invited Bill Sinnett to give an update on the work of Financial Executives Research Foundation (FERF).

 

Bill reviewed the research reports that had recently been distributed. He thanked the Technology and Reporting Subcommittee for drafting “The XBRL Exhibit: A Checklist of Things Not to Miss,” which had been well-received by the FERF Research Committee and other FEI members.

 

XV.       Adjournment

The CFIT meeting was adjourned at 10: a.m. CT on Friday, September 11, to travel to the Wal-Mart Distribution Center for a guided tour.

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