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Financial Executives International
Committee on Finance and Information Technology
Committee Meeting
Microsoft Corporation
Redmond, Washington
March 4 and 5, 2010
MINUTES
ATTENDEES
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Members |
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Arthur Alderson |
Wal-Mart Stores, Inc. |
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William Burns |
Gartner Inc. |
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Michael Cangemi |
Cangemi Company LLC |
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Gregory Grocholski |
The Dow Chemical Company |
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Taylor Hawes |
Microsoft Corporation |
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Garry Lowenthal |
Pranah Storage Technologies |
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William Overell |
Overell Solutions |
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Gary Petrangelo |
Japs-Olson Company |
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David Pleasance |
Deloitte Consulting |
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Leslie Porter |
University of Southern California |
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Mahesh Shetty |
Encore Enterprises |
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Robert Shultz |
Hewlett Packard |
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David Taylor |
Trintech Group Inc. |
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Carol Zoellner |
Hallmark Cards Inc. |
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Technical Advisor |
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Sridhar Ramamoorti |
Infogix Advisory Services |
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Guest Presenters |
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Robert Anderson |
Microsoft Corporation |
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Marilee Byers |
Microsoft Corporation |
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Mat Fogarty |
Crowdcast |
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Jerry Leishman |
Microsoft Corporation |
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Jerry Smith |
Microsoft Corporation |
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Robert Weede |
Microsoft Corporation |
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Guest |
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Barbara Gomolski |
Gartner |
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FEI Staff |
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Marie Hollein |
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William Sinnett |
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Maria Zadravac |
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I. Call to Order
Chairman Bob Shultz called the meeting to order at 8:15 a.m. ET on Thursday, March 4, 2010. Bob thanked Taylor Hawes for hosting the meeting at the Microsoft Executive Briefing Center. He welcomed the CFIT members and guests present.
II. Committee Business – December CFIT Meeting Minutes
Bob Shultz asked for comments on the minutes from the December 2009 CFIT meeting. There were no suggested changes. Upon a motion duly made and seconded, the CFIT Committee accepted the minutes of the December 8, 2009, CFIT meeting.
III. Emerging Technologies Subcommittee Report
Bob Shultz asked Bill Overell to present the report of the CFIT Emerging Technologies Subcommittee, which Bill chairs.
Bill Overell described his “Compilation of Top Leading and Emerging Technologies” matrix, which includes topics from:
- CFIT/FERF/Gartner’s 2009 Technology Issues for Financial Executives,
- AICPA’s Top 10 Technology Initiatives for 2009,
- Gartner’s Top 10 Strategic IT Initiatives,
- IDC’s 2010 Predictions,
- Saugatuck Technology’s 2009 Top 10,
- Other potential topics from CFIT members, and
- CFIT’s efforts tied to these areas.
Bill noted that he is still waiting for the top 10 issues from the 2010 Technology Issues survey, and will update the matrix when these are received. He added that the matrix indicates what the CFIT subcommittees are doing to address these top emerging technologies.
Bill discussed FEI’s Strategic Plan Goals, and how CFIT can help:
- Positioning and promotion of the FEI brand: The CFIT/FERF/Gartner Technology Issues survey promotes FEI.
- Global presence and thought leadership: CFIT provides practical knowledge around technology issues.
- Becoming a leading electronically linked community: CFIT has implemented its own LinkedIn group.
- Delivering value through a unique and rewarding experience: CFIT meetings deliver value to the members attending, and that value is provided to other FEI members through the e-newsletter and Financial Executive magazine articles.
- Alignment of structures, processes and culture with purpose and vision: CFIT provides input to FEI’s technology infrastructure.
Regarding the “Delivering Value” goal, Sri Ramamoorti asked if FEI has an Ethics committee or a similar disciplinary body.
Marie Hollein said that FEI used to have a membership committee, which was disbanded. She said, however, that FEI has re-formed an Ethics and Eligibility Committee. She said that FEI has a Code of Ethics, and suggested that FEI should award a certificate in ethics.
Art Alderson said that he was a member of FEI’s Ethics and Eligibility committee when Richard Schrader was FEI chair, during the aftermath of Enron and WorldComm, and that the committee had developed good guidelines. Marie said that the current Ethics and Eligibility committee has picked up that work. Art said that FEI is a highly regarded organization, and should maintain that credibility with high ethics and values.
ACTION: CFIT Subcommittee Chairs should forward information about the topics that they are working on to Bill Overell.
ACTION: CFIT Subcommittee Chairs should link their activities to the FEI Strategic Plan Goals.
IV. Technology and Reporting Subcommittee Report
In the absence of Taylor Hawes, Bob Shultz asked Bill Sinnett to present the report of the CFIT Technology and Reporting Subcommittee, which Taylor chairs.
Bill Sinnett read from the Subcommittee’s report, which was handed out at the meeting.
“Vision: The Technology & Reporting Subcommittee of CFIT is a recognized resource and advocate for FEI members and companies regarding emerging analysis, reporting and technology trends.”
“Scope:
- Reporting transparency through the use of technology
- eXtensible Business Reporting Language (XBRL)
- International Financial Reporting Standards (IFRS)
- Corporate Performance Management (CPM)
- Scorecards/Dashboards
- Government reporting standardization
- Business Intelligence
- Enterprise Data Warehouse”
Bob Shultz questioned how much business reporting should be standardized. He said that there could be tax reporting implications. Greg Grocholski said that there were global trends in standardization. He predicted that in some countries, such as Argentina, Brazil and Mexico, the government would know what taxes companies would owe before the companies did, and could then fine the companies if they were delinquent.
Bob Shultz suggested that CFIT promote balance in the use of XBRL for standardized reporting, including the ramifications of the use of XBRL.
ACTION: Bob Shultz will discuss the challenges of transparency in business reporting with Taylor Hawes.
V. Governance, Risk and Compliance Subcommittee
In the absence of Peggy Boissoneau, Bob Shultz asked Bill Sinnett to present the report of the CFIT Governance, Risk and Compliance (GRC) Subcommittee, which Peggy chairs.
Bill said that GRC Subcommittee was providing input on two FERF research projects:
- ERM: Operational Trends. Peggy is a member of a focus group to help provide research project guidance to BMR Advisors, the research team.
- Continuous Monitoring and Continuous Audit. Subcommittee members Michael Cangemi and Sri Ramamoorti are developing a research proposal.
VI. Business Technology Optimization Subcommittee Report
Bob Shultz asked Art Alderson to present the report of the CFIT Business Technology Optimization (BTO) Subcommittee, which Art chairs.
Art reviewed the BTO Subcommittee’s Vision:
“The Business & Technology Optimization subcommittee will help FEI members understand the possibilities to optimize business processes and performance with technology.”
He then reviewed the BTO Subcommittee’s Mission:
“The subcommittee will act as a sounding board for members and technology providers, share best practices and provide communications to members through papers, presentations, articles and group sessions.”
Art said that the BTO Subcommittee will identify tangible topics that members can use. He said that the subcommittee would then identify how the topics should be communicated to other FEI members. He recommended that each subcommittee identify all means of communication for each of their topics.
Art said that David Taylor and Ann Flatz would present on CPM (Corporate Performance Management) at the FEI Summit in April. David Taylor said that Mat Fogarty of Crowdcast would make a presentation to CFIT tomorrow on using a “crowd” of employees to develop better corporate forecasts. David added that Mat would be part of their Summit IT Track presentation. David said that he would confirm someone from SAP to make a presentation at the June CFIT meeting. Also, Carlos Passi of IBM will make a presentation on “Driving the Future: the Rise of the Integrated Finance Organization” at the FEI Summit.
Art said that another of the BTO Subcommittee’s initiatives was how to integrate voice and data. Art said that this integration could help improve performance and lower costs.
Mahesh Shetty asked if the BTO Subcommittee had looked into VOIP (Voice Over Internet Protocol) for small businesses. Art said that Tandberg (which has been acquired by Cisco Systems) had solutions for small businesses. He said that small cameras could be attached to telephones to add video to audio, and that this could help lower the cost of infrastructure. He suggested that Mahesh work with Garry Lowenthal to show how small businesses can use VOIP.
Greg Grocholski said that cable providers could provide VOIP, without requiring any new infrastructure.
ACTION: Each subcommittee should identify all potential means of communication for each of their topics.
VII. Small and Medium Business Subcommittee Report
Bob Shultz asked Mahesh Shetty to present the report of the Small and Medium Business Subcommittee.
Mahesh said that the Subcommittee’s one major initiative was Software as a Service (SaaS). He said that he would moderate a panel discussion on “The Mechanics of Software as a Service” at the FEI Summit on Tuesday, April 27. Mahesh said that other panelists would include:
- Peter Bendor-Samuel, CEO of Everest Group
- James Jones, Director of Financial Planning and Analysis at KANA Software, Inc.
- James McGeever, CFO of NetSuite, Inc.
Mahesh said that the Subcommittee was also working with Bill Sinnett on a research report on Software as a Service for FERF that was being sponsored by NetSuite.
Mahesh said that the Subcommittee was also investigating the use of XBRL by private companies.
ACTION: Mahesh Shetty and Gary Petrangelo will provide Bill Overell with the Small and Medium Business Subcommittee’s activities related to emerging technologies.
VIII. Implementing FEI’s Strategic Plan
Bob Shultz asked FEI President Marie Hollein to discuss how FEI plans to implement its Strategic Plan.
Marie said that FEI had five goals, and 20 strategies to achieve those goals over five years. She said that these 20 strategies have been classified as High, Medium and Low, meaning that they should be accomplished within the first, second or third years respectively. These strategies were classified by the FEI Strategic Planning Committee working with the FEI Board of Directors.
Marie described FEI’s five goals, and discussed ways in which they could be implemented:
Goal A: Positioning and Promotion of the FEI Brand
Marie said that FEI was benchmarking with other organizations on how to promote the FEI brand.
High priority strategy: Raise awareness of FEI through collaboration with other associations/organizations.
Goal B: Global Presence and Thought Leadership
Marie said that one of the ways in which FEI could expand its global presence was to work with the FASB, SEC and IASB on the convergence of International Financial Reporting Standards (IFRS) and U.S. GAAP, and on the implementation of IFRS in the U.S.
Goal C: Becoming a Leading Electronically Linked Community
Marie said that FEI was committed to developing a best in class social networking platform.
High priority strategies:
Develop and implement a three-year IT plan and budget. FEI has implemented virtual servers.
Design and deploy a robust infrastructure to support future growth.
Identify, develop and deploy significant improved IT capabilities.
Goal D: Delivering Superior Value through a Unique and Rewarding Experience
Marie said that FEI plans to launch a member survey after the FEI Summit. The results of this Summit can be used to adjust the Strategic Plan, if necessary.
High priority strategies:
Define member segments to assess programs and services.
Develop a membership marketing plan.
Marie said that CFIT members Bob Shultz and Taylor Hawes are serving on FEI’s International Task Force.
IX. Global Risk and Compliance
Bob Shultz asked Jerry Leishman, Senior Program Manager Compliance Solutions, and Marilee Byers, Director, Corporate Finance, to discuss Microsoft’s Governance, Risk and Compliance Management Suite.
Jerry Leishman first described Microsoft’s GRC solution areas, including:
- Regulatory Compliance & Controls
- Risk Analytics & Reporting
- Security & Privacy
- Business Continuity
- Document & Records Management
Jerry said that the solutions for these areas would become part of Microsoft’s System Center, its GRC Management Suite, which will launch in April.
Marilee Byers described the objectives of Microsoft’s System Center:
- Support compliance programs;
- Improve integration with automated controls; and
- Migrate to one GRC platform to leverage compliance efforts across the company.
Marilee said that System Center was currently in public Beta, and could be released in April. She said that there were several ways that FEI members could get involved:
X. Cloud Strategy
Bob Shultz asked Bob Anderson, Senior Director, IT Business Evangelism, to discuss cloud strategy.
Referencing the NIST (National Institute of Standards and Technology) definition, Bob said that Cloud Computing is a model for enabling:
- Convenient, on-demand network access
- To a shared pool of configurable computing resources
- That can be rapidly released with minimal management effort.
Bob said that Cloud Computing has five essential characteristics:
- On-demand self-service
- Broad network access
- Resource pooling
- Rapid elasticity
- Measured service
Bob said that Cloud Computing was the fifth generation of computing:
- 1970s – Mainframe
- 1980s – Client/Server
- 1990s – Web
- 2000s – Service Oriented Architecture
- 2010s – Cloud
Bob said that there were at least three Cloud scenarios:
- Move – Migration of existing applications
- Enhance – Addition of service capabilities
- Transform – Building scale-out applications
X. IP Portfolio Optimization
Bob Shultz asked CFIT member Taylor Hawes, CFO, Intellectual Property & Licensing, to discuss patents at Microsoft.
Taylor said that the real value of a company is its Intellectual Property (IP). He said that there are four categories of Intellectual Property:
- Patent
- Copyright
- Trademark
- Trade Secret
Taylor then described an IP Optimization Framework:
- Goals and Tactics: Develop taxonomy and playbooks to execute tactics and goals
- Investment Value: Discern between financial, defensive and competitive value
- Method of Optimization: Design portfolio optimization techniques given constraints and objectives.
Finally, Taylor described financial objectives for portfolio optimization using quantitative discipline that enable optimized results:
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Current |
Optimized |
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Patent Portfolio |
Top patent issuance and quality |
Optimized portfolio investment by business division |
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Investment Tradeoffs |
Invest in secondary market |
Measure value trade-off in alternative strategies |
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Manage Costs |
Aggressively defend Microsoft in litigation |
Use alternative vehicles to minimize cost of litigation |
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Consistency |
IP investments by business groups assessed independently |
Uniform measurements for ease of comparison and decision making |
XI. Gaming the Forecast
Bob Shultz asked Mat Fogarty, CEO of Crowdcast, to discuss how to leverage collective intelligence for real-time, accurate forecasts.
Mat said that Crowdcast, from “Crowd Forecast,” quantifies the wisdom of crowds. He explained that:
- Forecasts are often subject to bias, stickiness and gaming
- Crowdcast leverages the wisdom of employees and partners
- It is based on a prediction market
- It produces unbiased, real time forecasts of key metrics
- It can be valuable for new products, key projects and external metrics
Mat then described a prediction market:
- Based on stock market or betting market
- Aggregates knowledge of diverse groups
- Players weight forecasts
- Players are rewarded for early, accurate predictions
- Anonymous and meritocratic
- Accurate players are given more weight over time.
XII. Future Meetings
June 17 and 18, 2010
Ann Flatz of Intel will host the June 2010 CFIT meeting in Portland, Oregon.
September 16 and 17, 2010
Gary Petrangelo of Japs-Olson Company will host the September 2010 meeting in Minneapolis.
December 2010
Carol Zoellner of Hallmark Cards will host the December meeting in Kansas City, Missouri. Dates to be determined.
March 2011
Bill Burns of Gartner will host the March 2011 meeting at the Gartner headquarters in Stamford, Connecticut. Dates to be determined.
June 2011
Greg Grocholski of Dow Chemical will host the June 2011 meeting in Midland, Michigan. Dates to be determined.
XIII. Adjournment
The CFIT meeting was adjourned at 1:30 p.m. ET on Friday, March 5, 2010.
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