From the February 2009 issue of Treasury & Risk magazine

Better Than Spreadsheets

Evaluating spending alternatives can be a frustrating process for many finance executives who end up juggling dozens of spreadsheets to make important decisions on capital funding programs. Often fruitless in the best of times, this exercise has become much more critical in today's volatile financial environment. IBM Corp. and its Cognos unit believe they have a better alternative. Their Strategic Investment Management Blueprint blends IBM Cognos software and services to provide the long-term visibility and analytical tools needed to determine, track and manage investments, says Tony Levy, IBM director of marketing for financial performance management products.

"The time is ripe," says Steve Kowalke, a former Target Corp. vice president and treasurer, whom IBM asked to assess the model's potential value to CFOs and treasurers. "With the global economy so turbulent and access to funding limited, corporations need to rethink spending strategies" with an eye toward cash flow, cost-containment and balance sheets.

The blueprint--a pre-determined analytical model offered free to Cognos licensees--could provide the layers of data necessary to assess, say, whether a shared service for finance and accounting would reduce general and administrative costs enough to help finance the purchase of new manufacturing equipment, which, in turn, would increase productivity and profits. Another challenge might be to determine whether it's potentially more profitable to build a new plant where labor costs are low, or to use that money for organic growth.

The model can handle bigger challenges, too, says Kowalke, now a consultant to non-profits. Companies can look at five-year strategic plans across the enterprise and estimate the gap between the targets and the reality in certain market conditions, and then evaluate strategies to reduce those gaps.

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