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Financial Executives International

Committee on Finance and Information Technology

Committee Meeting

Microsoft

New York, New York

June 4 and 5, 2009

 

MINUTES

ATTENDEES

 

Members
Arthur Alderson (conference call)	Wal-Mart Stores, Inc.
William Burns	Gartner
John Ferrara	EDGAR Online Inc.
Ann Flatz	Intel Corp.
Taylor Hawes	Microsoft Corporation
Stephen Hosley	AOL
Arun Kumar	KPMG
Garry Lowenthal	Pranah Storage Technologies
William Overell	Overell Solutions
Gary Petrangelo	Japs-Olson Company
David Pleasance	Deloitte Consulting
Mahesh Shetty	Encore Enterprises Inc.
Robert Shultz	Hewlett Packard
David Taylor	Trintech
Margaret Yocher	UTC
Guests
Carol Sherman	TransLumen Technologies, LLC
Rhonda Longmore-Grund	Ingram Micro, Inc.
Carol Zoellner	Hallmark Cards, Inc.
Guest Presenters
Mark Bolgiano	XBRL US
John Kopcke	Oracle
Louis Matherne	Clarity Systems
Mark Nashman	Clarity Systems
John Van Decker	Gartner
FEI Staff
Marie Hollein
Bonnie Rhodes
William Sinnett
Maria Zadravac

 

 

I.          Call to Order

Chairman Bob Shultz called the meeting to order at 9:15 a.m. on Thursday, June 4, 2009. He welcomed the CFIT members and guests present, and asked them to introduce themselves.

 

II.         Committee Business – March CFIT Meeting Minutes

Bob Shultz asked for comments on the minutes from the March 2009 CFIT meeting. There were no suggested changes. Upon a motion duly made and seconded, the CFIT Committee accepted the minutes of the March 12, 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 said that the Emerging Technologies Subcommittee could use additional members, because he was currently the only active member of the subcommittee.

 

Bill said that FEI’s advocacy program should come from a position of knowledge, and the Technology Issues for Financial Executives survey provides that knowledge. Bill said that the final report should be distributed to legislators as a knowledge piece.

 

Bill said that he was chairing FEI’s Taskforce on Chapter and Member IT, and that he and Taylor Hawes will represent CFIT in FEI’s Strategic Planning meeting next week.

 

Bill referred to the “Emerging Technologies Subcommittee Report: June 2009” which had been provided in the meeting materials. Bill said that the second page of his report listed the top CFO technology concerns mentioned in the Technology Issues survey done by Gartner:

• Corporate Performance Management
• Improving Financial Processes
• Web-Oriented Software
• Optimizing technology investment to business value
• Identifying level of security
• Information Integrity
• Governance, Risk and Compliance
• Increasing use of common systems/shared technology

 

Bill suggested that the other CFIT subcommittees should follow these topics.

 

Bill referred to his e-mail of May 28, 2009, which described the goal, approach and desired outcome of FEI’s Taskforce on Chapter and Member IT. He said that the goal was to:

“Improve FEI’s value proposition to members, potential members and chapters by better meeting their needs through Information Technology, including improving the member experience, serving the needs of local FEI chapters and enhancing member recruiting.”

 

Bill said that the attached questionnaire would be used for in-person interviews of some of the FEI chapters, and would then be used for an e-survey of all FEI chapters. He said that the Task Force would look at IT needs through two lenses:

• Member needs and
• Chapter needs.

 

Bill asked CFIT members to review the attached questionnaire and see if it misses anything of importance to members or chapters. Ann Flatz said that she could help with chapter interviews.

 

Marie Hollein said that FEI had hired KPMG to review FEI’s entire IT platform. She said that FEI had also just hired a new vice president of IT, who was starting today.

 

Steve Hosley said that AOL uses both the Corporate Executive Board and the Hackett Group, which were both expensive memberships. He asked whether FEI wanted to provide classic CFO compliance information or optimization and competitiveness information.

 

ACTION: CFIT subcommittees should review the top CFO technology concerns mentioned in the Technology Issues survey done by Gartner for potential topics.

 

ACTION: CFIT members should review the member and chapter IT needs questionnaire and see if it misses anything of importance.

 

IV.        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 had not met since the March CFIT meeting.

 

Taylor said that he was now a member of FEI’s Working Group on Financial Regulation Reform, staffed by Cady North of FEI’s DC office. Taylor said that the Working Group will comment on proposed regulation reforms and will represent FEI in front of Congress. He said that he would forward the latest draft of FEI’s financial regulation position to CFIT members.

 

Marie Hollein said that FEI has been active in its advocacy efforts. She said that FEI had promoted Matt Miller to Senior Director in the FEI DC office, and FEI technical committees had filed 50 comment letters in the last six months.

 

Taylor said that the Federal Government should use a common standard to reduce regulatory costs. He said that Mark Bolgiano of XBRL US would update the committee on XBRL, a common standard, this afternoon. Taylor said that FEI’s Working Group on Financial Regulation Reform could recommend that the federal government require the use of XBRL to enable compliance. He asked if CFIT should comment on the standardization of compliance.

 

Marie Hollein said that XBRL US would co-locate with FEI at its November Current Financial Reporting Issues (CFRI) conference.

 

Taylor said that the Technology and Reporting Subcommittee was sponsoring a FERF research project on Performance Management, and added that FERF staff needed help to get case study companies. He suggested that another possible project might be on the costs of compliance.

 

Taylor added that he had invited Carol Zoellner of Hallmark Cards to this meeting to discuss her work on forecasting.

 

ACTION: Taylor Hawes will forward the latest position paper of FEI’s Working Group on Financial Regulation Reform.

 

ACTION: Bill Sinnett will work with the Technology and Reporting Subcommittee on a research project on Performance Management, and/or another project on the costs of compliance.

 

V.         Business & Technology Optimization Subcommittee Report

Bob Shultz asked Art Alderson to present the report of the CFIT Business and Technology Optimization Subcommittee, which Art chairs. Art said that the subcommittee has had a conference call each month, and is focused on its key initiatives. Because he was participating in the meeting by conference call, Art asked Ann Flatz to present the subcommittee report.

 

Ann reviewed the subcommittee’s Vision and Mission:

 

Vision

The Business & Technology Optimization subcommittee will help FEI members understand the possibilities to optimize business processes and performance with technology.

 

Mission

The subcommittee will act as a sounding board for members and technology providers, share best practices and provide communications to members through papers, presentation, articles and group sessions.

 

Ann said that the subcommittee had four key initiatives:

 

Corporate Performance Management: Maximize Results. She said that this is where Finance can add value.

 

Ann discussed the subcommittee’s approach to “Maximize Results.” She said that the subcommittee plans to:

• Benchmark to determine member gaps and needs
• Define the ideal system requirements to add value
• Develop business cases
• Provide “consumer product” ratings on a variety of tools
• Influence software vendors

 

Collaborative Tools: Teleconferencing solutions, costs and benefits.

Ann said that Garry Lowenthal will report on collaborative tools at the September CFIT meeting.

 

Investment Management: Evaluation and improvement.

Ann said that Steve Hosley will lead this initiative.

 

Business Process Outsourcing

Ann said that Mike Capone would lead this initiative.

 

Returning to Corporate Performance Management, Ann said that companies are struggling with long-range forecasting and planning. She said that there was a lack of linkage between long-range planning and short-term budgeting. She said that the subcommittee would like to do a survey in this area, and also sponsor a series of benchmarking sessions, which would result in articles or white papers.

 

Bill Overell suggested that the subcommittee identify a presenter for “Best Practices in Budgeting” for the May 2010 Summit IT Track. He said that such a presentation could be previewed at the September CFIT meeting.

 

Art Alderson stressed that Business Process Design was very important. He said that the steps should be defined first, and then be enabled by technology.

 

Bob Shultz noted that the timing of forecasts was a challenge. He said that in this disruptive economy, speed and agility is usually missing in the forecasting process.

 

Art Alderson said that IBM would like to make a presentation on the costs of IT ownership at the September CFIT meeting. Taylor Hawes asked that it be a real-life, practical presentation. Bob Shultz suggested that the theme be: Is there life after ERP (Enterprise Resource Planning)? He suggested that a panel include a company that dropped ERP and now uses Software as a Service (SaaS).

 

There was then an extensive discussion on the costs of IT ownership. Art said that there were three components to the cost of ownership:

1. Infrastructure was usually the most expensive
2. Operating costs and maintenance
3. The software was usually the least expensive component.

 

ACTION: CFIT members should provide input on various budgeting and forecasting tools to Ann Flatz and David Taylor.

 

ACTION: Art Alderson will work with IBM on a presentation for the September meeting.

 

VI.        Governance Risk and Compliance Subcommittee Report

Bob Shultz asked Margaret (Peggy) Yocher to present the report of the CFIT Governance Risk and Compliance (GRC) Subcommittee, which she chairs.

 

Peggy described the scope of the subcommittee:

• Governance – The process by which policies are set and decision making is executed.
• Risk Management – The process for addressing risk with a balance of mitigation through the application of controls, transfer through insurance and acceptance through governance mechanisms.
• Compliance – The process of adherence to policies and decisions. Policies can be derived from internal directives, procedures and requirements, or external laws, regulations, standards and agreements.

 

Peggy described a Gartner Quadrant on GRC software vendors. She said that Trintech was not yet on the Quadrant. David Taylor said that Trintech was not on the GRC Quadrant because its software is considered to be Finance GRC. Peggy said that the subcommittee would look at GRC software vendors, and that she and David Taylor would draft an article for Financial Executive magazine.

 

Peggy said that the key emerging technology in the GRC software space was Continuous Controls Monitoring Auditing software.

 

ACTION: The GRC Subcommittee will review GRC software products.

 

VII.       The Technology Supply Chain

Bob Shultz invited Rhonda Longmore-Grund, VP Global Information Systems Finance for Ingram Micro, Inc., to discuss “The Technology Supply Chain.”

 

Rhonda said that Ingram Micro was the world’s largest provider of technology products and services, with 2008 revenues of $34.3 billion, 14,500 associates worldwide, and customers in more than 150 countries.

 

Rhonda said that Ingram Micro was a vital link in the IT Value Chain, linking 1,500 vendors to more than 170,000 resellers. She said that Ingram provides the following services:

• Sales and marketing
• Financing
• Technical support
• Inventory management
• Vendor relations
• Managed services

 

Rhonda said that Ingram’s value added resellers (VARs) target small and medium business markets, the “sweet spot” of the IT industry.

 

Rhonda said that Ingram’s value proposition was: “We help customers and vendors build their businesses and become more profitable:

• Identify and bring new market opportunities to our partners
• Enable our partners to focus on their core businesses and leverage our vast capabilities
• Provide customers with the resources for success
• Understand today’s market challenges and offer relevant solutions

 

Rhonda predicted the future of IT distribution:

• Innovation and diversification continue
• Cost management will become increasingly important
• Economic conditions cloud the current outlook
• Geographic diversification creates growth opportunities

 

VIII.      Technology Issues Survey

Bob Shultz invited John Van Decker, VP Research for Gartner, to recap the results of this year’s Technology Issues for Financial Executives survey.

 

John listed the top CFO technology concerns from the survey:

• Corporate Performance Management
• Improving financial processes
• Web-Oriented Software
• Optimizing technology investment to business value
• Identifying level of security
• Information Integrity
• Governance, Risk and Compliance

 

John said that there were 267 responses this year, which was down significantly from last year (629). He said that the timing of the survey (January is a hectic time for financial executives) and the current recession could explain the low response.

 

John first described what went well with this year’s survey:

• The questionnaire process, but next year’s survey should be shorter, perhaps by 33%
• The content, which focused on the CFO’s point of view
• The collaboration between Gartner and FERF staff
• The results in aggregate

 

John then described what can be improved for the next annual survey:

• The participation, because the response was low
• The timing of the survey, launched during year-end closing, compounded by the recession
• Internal Gartner administrative support for the effort

 

John suggested a timeline for the 2010 survey:

• Begin planning in late July
• Finalize the survey by September
• Launch the survey in October, so that it can be completed in November
• Draft the research report by March
• Present the results at the FEI Summit (April 25 to 27 in Las Vegas)

 

John said that Gartner valued the relationship with FEI, and he was open to ideas to improve the response to the next annual survey. He said that Gartner may need to come up with incentives to promote the next survey.

 

John said that Gartner was investigating opportunities for a CFO offering. He said that such an offering would focus on:

• Educating the CFO on the CIO and technology issues
• Providing increased depth on financial management technology opportunities
• Best practices in technology.

 

John then introduced Andrew McCauley, Gartner’s VP Product Development and Executive Programs. Andrew said that Gartner’s investigation into this offering for CFOs required answers to the following questions:

• Are CFO needs periodic and event driven?
• How do their needs vary based on their relationship to the IT organization and their strategic focus?
• What topics are CFOs most interested in, and which are Gartner best positioned to address?
• What is Gartner’s best path to the CFO?

 

IX.        XBRL US Progress Report

Bob Shultz invited Mark Bolgiano, President and CEO of XBRL US to provide a progress report on XBRL.

 

Mark provided a progress report on XBRL US, which he described as “Act Two.”

 

SEC Mandate Implementation

Mark said that the SEC will require the submission of XBRL-formatted financial statements via an “XBRL Exhibit” for annual and quarterly filings and registration. The timing of the requirement is as follow:

• Large accelerated filers (market cap greater than $5 billion) are required to submit the exhibit for periods ending on or after June 15, 2009.
• Other accelerated filers will submit for periods ending on or after June 15, 2010.
• All other domestic filers and foreign private issuers using IFRS will submit for periods ending on or after June 15, 2011.

 

Broader Market Participation & Leadership

Mark listed the 15 member Board of Directors of XBRL US, including:

• Chair: Al Berkeley, Chairman and CEO, Pipeline Trading Systems
• Vice Chair: Barry Melancon, President and CEO, AICPA
• Director: Taylor Hawes, Microsoft and CFIT

 

Maturing Business Model for XBRL US

Mark said that XBRL US integrates multiple content sources into a common set of tags. Content sources include:

• Standard setters (such as FASB)
• Regulators (such as the SEC and IRS)
• Oversight agencies (such as the Office of Management and Budget)
• Professional associations (such as the AICPA, FEI and CFA)

 

Mark described the XBRL US taxonomy as:

• Unified dictionary
• Consistent architecture
• Support & maintenance
• Document consistency
• Open source model

 

Transparency

Mark said that corporate actions present some of the most problematic and risky areas in financial services. He added that the servicing of corporate actions adds complications.

 

Opportunities for FEI and XBRL US

Mark said that XBRL US will co-locate its annual conference in November with FEI’s Current Financial Reporting Issues (CFRI) conference.

 

X.         Automated External Reporting and Integrated XBRL

Bob Shultz invited Mark Nashman, President and Chief Technology Officer of Clarity Systems, to discuss automated external reporting.

 

Mark said that Clarity Systems was founded in 1995 and now has over 40,000 users. He said that Clarity offers two solutions:

• Clarity 6.5 for Corporate Performance Management, and
• Clarity FSR 6.5 for Financial Governance and Automated External Reporting

 

Mark said that Clarity FSR provides “One version of the truth” across the enterprise, for:

• Internal Reporting
• External Reporting
• Regulatory Reporting
• Investor Relations, and
• Legal

 

Mark asked Louis Matherne, Clarity’s Director, XBRL Services, to demonstrate Clarity FSR. Louis said that Clarity FSR automates the overall external reporting process, so timelines can be reduced. He added that with Clarity FSR, XBRL tagging is more efficient, because tagging is integrated within the external reporting process. He said that this results in reduced risk of late filings and reduced risk of errors.

 

XI.        Best Practices in Budgeting, Planning & Forecasting

Bob Shultz invited John Kopcke, Senior Vice President for Enterprise Performance Management at Oracle, to discuss budgeting, planning and forecasting.

 

John referenced a survey done by CFO Magazine in December 2008, which asked “How far out can you forecast given current market conditions?” 70% of the respondents said that they can’t forecast more than one quarter out.

 

John discussed seven imperatives to deal with the economic crisis:

1. Get insight, and share it
2. Monitor continuously
3. Plan flexibly
4. Re-think strategy
5. Invest and divest wisely
6. Build trust
7. And do all of this in concert

 

John suggested that executives think in ranges to manage risk and uncertainty. He said that to quantify risk and uncertainty, they should:

• Review full range of possible outcomes;
• Quantify the risk of not achieving your goals;
• Know the probability of a particular outcome; and
• Understand the key factors impacting your business.

 

John illustrated Monte Carlo simulation as a tool to measure the effects of uncertainty. John then summarized his suggestions:

• Assess the full financial impact of corporate strategy
• Quantify risk and uncertainty
• Link the strategic plan to the annual budget
• Integrate financial and operational planning.

 

XII.       Fewer Versions of the Truth

Bob Shultz invited Carol Zoellner, Corporate Controller at Hallmark Cards, Inc., to discuss “fewer versions of the truth.”

 

Carol said that Hallmark was a privately held company founded in 1910. Today, it has over $4 billion in revenue, with products sold in more than 40,000 stores in more than 100 countries.

 

Carol first described the scorecard issues, forecasting and planning issues, and technology and timing issues that Hallmark faced in 2005.

 

Carol said that Hallmark decided in 2006 on the solution that it wanted:

• Re-architecture data
• Utilize existing Enterprise Data Warehouse strategy
• Remove hard coding and hard wiring of data
• Upgrade the tool to a single integrated platform
• Consolidation, planning and reporting
• Improve stability, repeatability and timeliness
• Use a more flexible and robust planning tool
• Redesign scorecards, utilize cost drivers, re-write allocations, align actual and forecast structures

 

Carol described their solution process:

• Engaged external consultants
• Benchmarked directly with Alcoa and Sprint
• Selected Hyperion software
• Utilized off-shore IT to mine data from legacy systems for data warehouse storage (this was the hardest part)
• Used existing data, with no new tracking systems
• Utilized external Hyperion programming expertise
• Business areas developed logic for significant allocations

 

Finally, Carol discussed their lessons learned:

• Took longer and cost more than planned
• Getting data was the hardest part
• Doing it before SAP was absolutely the right call
• Too many project managers (IT, Finance, consultants)
• We will never be ‘done’ – many improvements are needed
• Hyperion technical expertise is hard to find and it is even harder to grow your own

 

XIII.      Small and Medium Business Subcommittee Report

Bob Shultz asked Mahesh Shetty to present the report of the CFIT Small and Medium Business Subcommittee, which Mahesh chairs.

 

Mahesh thanked the other members of the subcommittee, Ed Gourley, Garry Lowenthal and Gary Petrangelo, for their participation. He said that the subcommittee needs more members.

 

Mahesh said that their subcommittee takes ideas from the other subcommittees and applies them to the needs of small and medium businesses. He said that their current topics are Software as a Service (SaaS), XBRL, and emerging technologies.

 

Mahesh said that their plans for 2009 include:

·         Developing an online library of XBRL resources for the FEI Web site;

·         Hosting Webinars on XBRL;

·         Submitting an article on Human Resource Outsourcing to Financial Executive Magazine. [This article will appear in the September issue.]

·         Use FELIX to educate members of FEI on technology issues.

 

XIV.      FERF Report

Bob Shultz 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 added that FERF had developed on-line tools for two of the research reports, the Audit Fee Survey (AuditFeeCheck) and the Financial Executives Compensation Survey (PayCheck).

 

Bill then discussed current research projects:

• Meeting the Street
• Benchmarking the Finance Function
• Goodwill Impairment
• IFRS for Mid Sized Companies
• Performance Management Strategies
• Treasury’s Use of Technology

 

Arun Kumar said that APQC had extensive benchmarking experience, and might be able to help with the benchmarking project.

 

Ann Flatz suggested that the benchmarking survey provide specific definitions of terms such as “Finance.”

 

Bill Overell, a member of the FERF Research Committee, said that the number of downloads of FERF research reports was low. As one way to increase downloads, Bill suggested that FERF staff include the Executive Summary of the report in the e-mail announcement that is sent to all members of FEI, and then send highlights of each new study to FEI chapter leaders. He also suggested that FEI members be enabled to download research reports with one click, rather than a series of clicks through the shopping cart in the FERF Bookstore.

 

Taylor Hawes suggested that FERF facilitate round table discussions of best practices on various topics. These discussions could be done virtually by conference call or Webcast. FERF staff could then draft the highlights and distribute them as a research report.

 

XV.       FEI’s IT Task Force

Bill Overell chairs FEI’s IT Task Force. Bill said that the IT Task Force wants input from all chapters. He said that it could do three to six in person interviews with chapters such as Silicon Valley, and then refine an e-survey tool that would be sent to all FEI chapter presidents. Bill then led a discussion of suggestions for FEI’s Web site.

 

Here are some of the suggestions that were made:

·         Get all the mechanical stuff right. For example, members should be able to download a FERF publication with one click.

·         For social networking, use an existing platform:

o        Leverage the dollars already spent by vendors;

o        Leverage FEI members’ investment in their profiles and links on existing sites;

o        LinkedIn was by far the choice of the members present.

·         Make FEI the “go to” source for information & knowledge in selected areas.

 

XVI.      FEI Report

Bob Shultz invited Marie Hollein to update the committee on FEI’s initiatives.

 

Marie said that FEI had completed the staff job analysis survey, and had, as a result, made some staffing changes:

• Matt Miller had been promoted to Senior Director of FEI’s DC office.
• FEI had hired a new VP of IT.
• FEI is looking for a new VP of Membership.

 

Marie said that FEI had established a new Treasurer’s group, which meets by conference call on a monthly basis.

 

Marie listed FEI’s priorities:

1. Membership
2. Staff structure at FEI headquarters: “We need to do a better job.”
3. Technology

 

Marie said that her goal was to increase FEI membership by a net of 150 members.

 

XVII.     Future Meetings

 

September 10 and 11, 2009

Art Alderson of Wal-Mart will host the September meeting of CFIT at Wal-Mart’s headquarters in Bentonville, Arkansas, on September 10 and 11 (Thursday and Friday). Wal-Mart’s headquarters are located just 15 minutes from the Northwest Arkansas airport (XNA).

 

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).

 

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.

 

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).

 

June (TBD) 2010

Ann Flatz of Intel will host the June 2010 CFIT meeting at Intel’s headquarters in Hillsboro, Oregon (near the Portland Airport). Ann will check on potential dates.

 

XVIII.    Adjournment

The CFIT meeting was adjourned at 11:45 a.m. ET on Friday, June 5, 2009.

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