During Phase I, the CEO and CFO will be using S&OIS to provide insights into improving the firm’s financial performance without disrupting the traditional budget’s processes. The author’s suggestion is that S&OIS support should be provided by small CHQ department reporting to the CFO.
It’s a small department because S&OIS is a model so the turn around is quick and the staff requirements are modest. The department becomes, in effect, an advanced analytics “wheel house” for the CFO/CFO. In fact, such function was out-looked in 2014 by the then CEO of Deloitte. In addition, in 2016 Thomas Davenport published another article in CMO describing Finance as currently behind in advanced analytics’. Certainly, something S&OIS will address!
Examples of the financial planning support S&OIS will provide the CFO and CEO include:
- As S&OIS is updated and new profit opportunities identified, CFO/CEO can make “in flight” course corrections to the budget to improve profit. Data is readily available to assess the extent of the budget’s misalignment. Simply compare S&OIS’s departments’ costs with the appropriate departments’ budgeted costs and adjust the budget as appropriate.
- Use activity-based costs in each department to focus on improving its efficiency rather than managing costs
These data are readily available to assess the extent of the budget’s misalignment with the new profit opportunity. Simply compare S&OIS’s departments’ costs with the departments’ budgeted costs and adjust the budgets, as appropriate
- Use the activity-based costing data available to each department manager to shift focus from controlling its costs to improving its efficiency.
- Share S&OIS’s results with firm’s stock analysts
- Phase I is also the time during which the department with the CEO/CFO develop the plans to replace the current budget in Phase II.
- Use the activity-based costing data available to each department manger to shift focus from controlling its costs to improving its efficiency.
- Share S&OIS’s results with firm’s stock analysts
Phase I is also the time during which the CEO/CFO develop the plans to replace the current budget in Phase II.