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Financial Executives International

Committee on Finance and Information Technology

Committee Meeting

EDS, a Hewlett Packard Company

Plano, Texas

December 4 and 5, 2008

 

MINUTES

ATTENDEES

 

Members
Arthur Alderson	Wal-Mart Stores, Inc.
John Ferrara (conference call)	EDGAR Online Inc.
Edward Gourley	Infogix, Inc.
Neal Hannon (conference call)
Taylor Hawes	Microsoft Corporation
Arun Kumar	KPMG
William Overell	Overell Solutions
Leslie Porter	Leventhal Scholol of Accounting
Mahesh Shetty	Encore Enterprises Inc.
Robert Shultz	Hewlett Packard
Guests
Christopher Loy	Time Warner Cable
CFIT Technical Advisor
Mike Willis (conference call)	PricewaterhouseCoopers LLP
Guest Presenters
Charles Bess	EDS Fellow
Joseph Schulz (conference call)	Hewlett Packard
Matthew Soderberg	Deloitte Consulting
Patrick Wimberly	Deloitte Consulting
FEI Staff
James Abel
William Sinnett
Maria Zadravac

 

I.          Call to Order

Chairman Bob Shultz called the meeting to order at 9:05 a.m. on Thursday, December 4, 2008. He thanked the CFIT members present for coming to the meeting, even though many companies have instituted travel restrictions, and asked them to introduce themselves. He then welcomed invited guest (and potential CFIT member) Christopher Loy, Vice President of Finance for Time Warner Cable.

 

II.         Presentation of Gifts

Maria Zadravac presented former CFIT Chairman Taylor Hawes with a plaque and a TSA Friendly Laptop Case in recognition of his three years of service as CFIT chairman. Bob Shultz thanked Taylor for his three years of service.

 

III.        Committee Business – September CFIT Meeting Minutes

Bob Shultz asked for comments on the minutes from the September 2008 CFIT meeting. There were no suggested changes. Upon a motion duly made and seconded, the CFIT Committee accepted the minutes of the September 25, 2008, CFIT meeting.

 

IV.        Emerging Technologies Subcommittee Report

Bob Shultz asked Bill Overell to present the report of the CFIT Emerging Technologies Subcommittee, which Bill chairs. Bill Overell referred to the “Emerging Technologies Subcommittee Report: December 2008” which had been provided in the meeting materials.

 

Bill said that the Emerging Technologies Subcommittee will develop three to five topics to follow. He noted that his report provided Gartner’s Top 10 Strategic IT Initiatives and the AICPA’s list of 2008’s Top Technologies. He added that one of his subcommittee’s initiatives is the CFIT/FERF Technology Issues survey.

 

Bill said that there were a number of new technologies that financial executives should know more about, such as Enterprise Mash Ups and Web 2.0. Taylor Hawes suggested a monthly feature in Financial Executive magazine on IT terms. Les Porter volunteered to join the Emerging Technologies Subcommittee and draft these brief articles. Neal Hannon said that he was also interested in this initiative.

 

V.         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 was addressing topics including Extensible Business Reporting Language (XBRL), Corporate Performance Management (CPM), and International Financial Reporting Standards (IFRS).

 

Taylor said that CFIT had submitted a comment letter to the SEC on IFRS which was supportive of IFRS, with caveats to accounting standards convergence. He said that he had met with the XAC (the XBRL Advisory Committee) to the International Accounting Standards Board (IASB), and with Mark Bolgiano, president of XBRL US. He said that there were challenges with the current XBRL taxonomy, which includes both U.S. GAAP and SEC reporting requirements. He added that it would be much easier for companies to implement IFRS in XBRL format if SEC reporting requirements were separated from accounting rules.

 

Taylor said that he met SEC Chairman Christopher Cox at the FEI Hall of Fame, and thanked him for his support of XBRL. He said that Chairman Cox told him that the SEC’s proposed rule on XBRL would be codified before he left the SEC.

 

Art Alderson said that Brazil had recently announced digital reporting requirements for:

• Digital reporting of bookkeeping entries,
• Digital reporting of tax returns, and
• Digital reporting of invoices.

 

Art suggested that CFIT support standardized global reporting requirements and promote those standards worldwide. Mike Willis said that the Netherlands and Australia had both standardized reporting, and that this was a policy issue, not a taxonomy issue. He added that Standard Business Reporting (SBR) is a best practice, and suggested speaking with Tom Hood, CEO of the Maryland Association of CPAs, who knows a lot about SBR.

 

Taylor said that XBRL US is integrating with other standard setting bodies to develop a common structure for reporting information. These bodies include:

• ISO 9000 and
• SWIFT (Society for Worldwide Interbank Financial Telecommunication) regarding anti-money laundering issues

 

Taylor said that the SEC has asked XBRL US to build out a corporate action taxonomy. Mike Willis added that XBRL US is also building out a taxonomy for Management Discussion and Analysis (MD&A), which has been published on the Internet for comment. Taylor said that Microsoft is working on a framework for data and governance reporting requirements (a Balanced Scorecard), and that he would identify someone to speak at the next CFIT meeting.

 

VI.        Leveraging Lean

Bob Shultz introduced Joe Schulz, senior director in charge of Hewlett Packard’s financial systems. Joe is responsible for specifying, deploying, and supporting IT solutions that meet global requirements for the HP Finance & Administration (F&A) functions. Prior to this position, Joe had been the chief technology officer for the General Electric Company, with a dual role for IT and quality.

 

Joe discussed “Leveraging Lean.” He described the Lean mindset:

• Hunt for waste: Uncover non-value added steps and features
• Waste is engineered out: Defect prevention is better than defect detection
• Defects are never acceptable: The quest to eliminate errors never ends
• Maintain a holistic perspective: End-to-end visibility starts and ends with the customer
• Cross-functional teams: Harness people’s diverse skills and ingenuity

 

Joe then described the fundamental tools of Lean:

• Waste elimination: This equals efficiency
• Value Stream Mapping: See the entire process, not islands
• Takt Time: Level output
• 5 S: The Building Blocks of Lean
• Sort: Proper Arrangement
• Standardize: Orderliness
• Simplify: Clean Up
• Sweep: Cleanliness
• Self-Discipline: Discipline
• Action Workout: Five days to a working solution
• 7 Ways: New process development
• 5 Whys: Get to the root cause
• Assessment Tool: Performance at a glance
• Observation Sheet: Where is the waste?

 

Joe said that many of these Lean tools can be easily applied in finance and IT. Bill Overell suggested that these tools be used as the basis for an article for Financial Executive magazine.

 

Joe said that Lean supplements Six Sigma tools and methodologies for mature processes that operate near the entitlement line and that Lean reduces cycle time without sacrificing quality. He said that the key tactic is the Action Workout, in which a fully functional team is assembled and empowered to make changes on the spot. Joe concluded by noting that it is not necessary to make a large investment in Lean to see big results.

 

Art Alderson said that at Wal-Mart, associates keep track of all daily incidents. For each incident, the owner does a Root Cause Analysis. Art said that this process can help train people.

 

VII.       Future Meetings

 

March 11, 12 and 13, 2009

KPMG will host the March 2009 meeting in Silicon Valley, California. Bill Overell suggested “Emerging Technologies and Key Trends” as the meeting’s theme.

 

June 2009

CFIT would like to visit the New York Stock Exchange to learn how it is using technology. This meeting could be held during either the week of June 17 or June 24. Members will be polled on their preference in late January.

 

September 9, 10 and 11, 2009

CFIT would like to visit Wal-Mart in Bentonville, Arkansas. Art Alderson will check availability.

 

VIII.      Business and 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 he had provided a draft vision statement for the subcommittee in the meeting materials. He said that this subcommittee should be inclusive of large and small companies.

 

Bill Overell suggested that subcommittee’s vision could be broadened by replacing the phrase “to assist in managing the IT function” with “to assist in managing their companies.” He added that this subcommittee could address Sourcing, which could be part of an optimization model. Taylor Hawes suggested renaming the subcommittee “Business and Technology Optimization,” by adding the work “and.”

 

Art asked for suggestions for three to five key topics to promote. The members decided on the following topics:

• ERP vs. Best of Breed (perhaps Gartner could write a report?)
• How do I get a return on IT?
• Portfolio Management
• Benchmarking

 

Art noted that each member of CFIT should join a subcommittee. Maria Zadravac said that she would send a subcommittee preference form to the CFIT members.

 

IX.        Governance, Reporting and Compliance Subcommittee Report

In the absence of Margaret Yocher, Bob Shultz asked Les Porter to present the report of the CFIT Governance, Reporting and Compliance (GRC) Subcommittee. Les reviewed the report prepared by Margaret Yocher, provided in the meeting materials. Art Alderson asked what other topics other companies include in GRC. One suggestion was to get Gartner’s definition.

 

Mike Willis said that the Open Compliance and Ethics Group (OCEG, based in Phoenix, Arizona) was a good source of information on governance. He said that OCEG’s members were large multi-national companies. He added that Scott Mitchell was the president of OCEG, and that he could provide an introduction. The committee decided that Scott could be invited to speak to CFIT at their March meeting.

 

X.         Small and Medium Business Subcommittee Report

Bob Shultz asked Mahesh Shetty to present the report of the CFIT Small and Medium Business Subcommittee. Mahesh said that he had used Art’s template for his report, and provided a draft vision, mission and description of potential programs in the meeting materials. He said that his subcommittee’s topics could overlap with those of other subcommittees.

 

There was some discussion of the size limit for small and medium businesses. Arun Kumar suggested including companies with annual revenues of up to $500 million.

 

Mahesh discussed potential topics to be addressed by the subcommittee. Taylor Hawes suggested including topics that would help financial executives to better run their day to day business. Mahesh agreed, and said that the subcommittee would identify innovative business practices. The topics to be addressed include:

• Software as a Service (SaaS)
• Corporate Performance Management (CPM)
• Customer Relationship Management (CRM)

 

 

XI.        Reporting Strategy

Bill Sinnett introduced Patrick Wimberly and Matt Soderberg of Deloitte Consulting LLP, the authors of an article for Financial Executive magazine titled “Reporting Problems? Not Software’s Fault…Check Process.”

 

Patrick said that the majority of organizations are simply the victims of poor information processes. He said that companies that get it right often follow a similar roadmap:

1. Understand requirements: Requirements are defined by your information outputs (start with the end in mind)
2. Data Model: The data model creates the reporting information structure
3. Establish Governance: Governance provides the foundation for maintenance
4. Technology as Enabler: Technology should be the correct enabler to deliver your requirements.

 

Patrick said that the adage, “It isn’t the tool, it is the hand that wields it,” says it all. Matt said that the success of a company’s reporting strategy is directly related to the rigor and harsh enforcement with which it is implemented.

 

XII.       Technology Issues Survey

Bill Sinnett said that the revised technology issues survey that had been provided to the committee in the meeting materials included comments and suggestions from Bill Overell. Bill asked for any additional comments and suggestions.

 

Bill Overell suggested that Gartner could invite their non-FEI member clients to take the survey also, which could promote FEI membership. Taylor Hawes asked if Gartner would be willing to “comp” passes to their annual conference in Orlando through a drawing.

 

XIII.      FERF Report

Bill Sinnett referred the committee to the FERF report provided in the meeting materials. Bill said that the first page of the report listed all of the Executive Reports, Issue Alerts, and magazine articles distributed since July 1, 2008. Bill noted that FERF’s President’s Circle Donors were listed on page 3, and included CFIT member companies Microsoft and Hewlett Packard.

 

Taylor Hawes said that there was a lot of information on the FEI Web site, and wondered how it could be better publicized to FEI members. Jim Abel agreed that FEI did provide a lot of information, so that it becomes too much to read. He admitted that even FEI Express had become too lengthy.

 

Mike Willis suggested that problem might be the categorization of what is relevant. He said that the SEC’s 21^st Century Disclosure Initiative said that information should be consumer centric rather than provider centric.

 

Les Porter suggested that each CFIT member submit links to their favorite Web pages, to give FEI staff ideas on how to organize the FEI Web site.

 

XIV.      The 4^th Wave: The Next Generation of IT

Bob Shultz introduced Charlie Bess, an EDS Fellow.

 

Charlie said that there have been four waves of Information Technology:

1. Mainframe Computers: 1956 to 1976
2. Personal Computers: 1976 to 1992
3. Networked Computing: 1992 to 2008
4. “IT Everywhere”: 2008 to 2024

 

Charlie said that the last significant downturn was in 1981. He said that we will come out of today’s downturn, but it will change the way we do things. He added that because of advances in chips (which now require less power), the computer has changed from a device to “in a device.”

 

Charlie described the major trends of the 4^th Wave and their business imperative:

• Explosion at the Edge
• Don’t Drown in the Flood of Data
• Seek Data for Decisions
• Rethink Workspace
• Respect your Customer’s Edge
• Understand the New Legalities
• Modeling & Simulation
• Understand the Ramifications of Automation
• Retool your workforce
• Personalization
• Personalized Privacy vs. Public Privacy Policy
• Switch from Business Function Focus to Single Customer Interface
• Think Demand Side Management
• Enterprise 2.0
• New Opportunities for Business Ecosystem Engagement
• Social Networking isn’t just for your kids
• Sustainability
• Pursue Green IT
• Source Clean Energy
• Digitalize Everything
• Virtual Presence
• Embedded IT

 

XV.       Adjournment

The CFIT meeting was adjourned at 11:00 a.m. on Friday, December 5, 2008.

 

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