During Phase I, the CEO and CFO will be using OIS to provide insights into improving the firm’s financial performance without disrupting the traditional budget’s process and its associated income statement. It will be, in effect, a “second opinion” income statement. The author’s suggestion is that OIS support should be provided by small CHQ department reporting to the CFO.

It’s a small department because OIS is a model so the turn around is quick and the staff requirements are modest. Another way to think about the department is that it becomes, in effect, an advanced analytics “wheel house” for the CFO/CEO.  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 OIS will address!

Examples of the financial planning support OIS will provide the CFO and CEO include:

• If there are cross-silo squabbles that could frustrate OIS’s implementation, they are the ones who can reconcile them
• They have responsibility for profitability within the firm; no one else does.
• OIS is updated any time a new forecast is generated for what ever reason (e.g., new product slip). If new profit opportunities are 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 OIS’s departments’ costs with the appropriate departments’ budgeted costs and adjust the budget as appropriate.
• OIS’s forecast is within 90 days of real demand.
• OIS includes a rolling forecast so the CFO/CEO will never have any less than three quarter’s view into the future.
• Use the activity-based costing data available to each department manager to shift focus from controlling its costs to improving its efficiency.
• OIS’s business case is likely financially compelling
• OIS allows evaluating business models other than profit
• OIS provides sophisticated analytics for evaluating mergers/acquisitions
• OIS provides customer and product profitability
• Best possible scenario analyses
• They would be the ones sharing OIS’s profit good news with the firm’s Wall Street analysts

Phase I is also the time during which the department with the CEO/CFO develop the plans to replace the current budget and all its limitations in Phase II.