Corporate performance management provides the technology and infrastructure link between governance and compliance.
Gartner research released early in 2006 highlighted the growing importance major organisations are attributing to financial data. The report, entitled 'Sarbanes-Oxley spending continues to disrupt software purchases', confirms an increase in spending for financial compliance management and corporate governance software in 2005 and forecasts continued growth through 2007.
The study points out that as companies mature in their approach to compliance and corporate governance, they will move through a continuum of technologies, from point solutions for compliance to holistic solutions for governance and corporate performance management. The report states that corporate performance management provides the technology and infrastructure link between governance and compliance, thus providing insight and visibility into how well an organisation is complying.
There is an industry-wide demand for solutions to make compliance sustainable, more efficient and more effective. One reason for this is that organisations are not deriving sufficient return on investment on their enterprise resource planning (ERP) and business performance management (BPM) applications. ERP systems track everything on a day-to-day basis and the BPM applications help with decision-making, but there is a gap in the middle because the data going into the BPM application is of insufficient quality.
Therefore, there is a drive towards financial data quality management (FDM) solutions. It is not just that organisations must comply, or that compliance with regulations is regarded as best practice. There is also the fact that this compliance requires expensive auditing; that there must be sustainability and reliability; and that there must be return on investment. If auditors can go to one place to prove how every single number in the annual report got there, fees can remain constant.
FDM fulfils two vital roles: it ensures that the person who originally owned the data and loaded it into the system is the person who signs it off and has responsibility for it; and it provides an audit trail which enables the auditor to trace any number loaded into an application back to its original source.
It is a prewritten application that uses a simple four-step workflow process to load numbers into a specific application and create an electronic audit trail for them. The four stages are import, validate, export and check.
At the import stage, the numbers are loaded from the ERP system, in any format and without any manual data entry. They are time- and date-stamped, mapped to a home in the targeted application and exported there. Finally, a report is delivered to allow the user to check whether the data is valid, consistent and complete.
Having a full audit trail helps improve the level of confidence in the numbers in an organisation. It prevents people coming up with different figures at meetings and prevents bad decisions being made based on data of poor quality.
With financial data quality management a company can help a group report and consolidate faster and more confidently than its competitors, thereby enabling faster decision-making and gaining competitive edge. The market today measures companies on how fast they close their books because it shows they have a handle on their business. Compliance need not be a major burden to bear. Rather, with financial data quality management it can be a business enabler.