Optimizing the business benefits from technology acquisitions: making intelligent technology purchases requires a vision, a long-term strategy and the knowledge that desired objectives are attainable. Smart companies--moving toward single data repositories across their enterprises--are doing things smarter, faster and better.

Businesses make significant investments in technology--purchasing software, computers, networking tools and other components necessary to stay current, drive business and sustain their competitive stance. Making budget trade-offs, measuring relative values of competing products and trying to get the most value for the investment is a daunting challenge for CIOs and CFOs alike.

Decision-makers must deal with a number of challenges in pursuit of their goal of effectively investing in technology. Some of these considerations include speed of adoption, system performance, technology support, training and the return on investment (ROI). Important cost factors can be overlooked or inadequately budgeted, which limits the effectiveness of these crucial purchases. Making effective and efficient technology purchases requires a vision, a long-term strategy and the knowledge that the purchase makes a company's objectives attainable. That translates to doing things smarter, faster and better.

Taking a seemingly structured approach to technology acquisition, a senior management team is established to develop new business practices and rules required to implement the technology. A transition team works to inform staff of new business practices and rules to ensure the seamless integration of an application or new hardware implementation. An information technology (IT) team assesses hardware, database, security and training required to roll out, secure, manage and support the implementation.

In short, a great deal of time and money is spent to ensure an effective implementation and transition to maximize the company's ROI on its technology investment.

Rollout complete, the switch is turned on.

Then what? Often, employees who were trained months before the implementation don't remember how to use the technology. The help desk is swamped. Pockets of users, comfortable with old business practices, resist change. Dial-up users connect to applications at a snail's pace. Productivity declines.

In a phrase, the technology has hit the fan!

Needed: Thinking Both Global and Local End-User

In hindsight, the structured approach to acquisition does not look so ordered. Overall implementation effectiveness and ROI on technology investments depend on end-user buy-in and the extent to which the application performs as promised across the enterprise and within new or expanding departments or divisions.

A large company must think like a global enterprise yet also think locally, like an end-user, when acquiring enterprise-wide technology.

End-user resistance increases if, for example, the technology forces staff to change functional business processes and does not provide optimum performance and high-speed access during business hours. Unexpected hardware, application, training, support, management, administration and security costs can also derail an implementation project.

That's why, to maximize technology effectiveness and ROI, companies must think like end-users while at the same time anticipating global scalability issues when rolling out critical financial technology that spans an expanding global enterprise.

For instance, to make effective business decisions, companies must be empowered to analyze accurate information in a timely manner. Critical decisions are often made on the fly, and based on a constant analysis of data. However, gathering accurate data in real time can be difficult for global corporations with divisions in several countries, running different resource planning and customer relationship applications on a variety of technology platforms.

That's why enterprise technology must be chosen with vision, strategy and a financial plan in place. Imagine what would happen to the ROI on a technology expenditure if:

* End-users resisted implementing the new technology because it required a complex and unnecessary business/culture shift.

* Users in several countries could not access the technology during business hours due to application maintenance.

* Dial-up connectivity resulted in onerous delays.

* The company expanded operations, but the technology could not accommodate new users without additional application servers and decentralized databases.

* The corporation acquired a competitor and discovered the technology applications do not run on the acquisition's platform standards.

To maximize ROI and minimize surprises that knock the wind out of anticipated productivity gains, a structured approach to application acquisition should take into consideration the needs of the end-user, scalability and performance goals. Without end-users on board or a cost-effective scalable process in place, the company will not achieve its objectives.

Thinking both like a global enterprise and like a local end-user, if the company's defined goals are to streamline and centralize business practices through optimum performance and scalability across a growing enterprise, potential vendors should be asked a series of questions (see the sidebar on page 39).

Answers to the questions will help determine if the vendor can provide local users with a technology that performs at optimum speed, efficiency and effectiveness on existing network infrastructure and within existing business rules. In addition, it will help the corporation meet defined global goals as the technology is scaled across an expanding enterprise.

Now, consider the impact technology has on various critical enterprise functions. In today's fiercely competitive economic environment, a business case for a technology application that is a luxury, versus a necessity, will quickly be vetoed by the CFO. An essential enterprise technology acquisition must undoubtedly meet the previously mentioned prerequisites of enabling the organization to use technology smarter, faster and better.

For example, various corporate accounting functions can be maximized with the right applications. One set of functions prime for such improvement is budgeting and planning (see the sidebar on page 41 for a case example of how this can work successfully).

Another area that typically receives little corporate attention is the largest expense item on the corporate income statement: tax. Imagine the CFO's reaction if the tax area could be strategized and planned for--and such planning and strategizing could result in saving many thousands of dollars.

Maximizing Technology for Corporate Governance/Tax

Global organizations often have hundreds of legal entities, in numerous countries, with their own financial accounting and income tax rules. Figuring out the tax burden of combined worldwide operations for these companies is difficult, at best. It is often almost impossible to anticipate, in advance, the tax burden of earning profits or beginning operations in order to minimize income taxes.

Now, imagine having to report to regulators, shareholders and the public the effect of all country, state, city and local government's income taxes on current and previous years' results. These are daunting tasks, but all are expected and required of the global CFO and tax executive, who are charged with minimizing the loss of corporate profits to income taxes, as well as the accurate reporting of the company's tax position.

A company's tax technology solution must enable the company to leverage the investments made in financial reporting systems, greatly improving the speed and accuracy of determining the organization's tax position. The solution should also increase the corporate tax department's focus on tax planning to drive shareholder value. It should be fully integrated to ensure the corporate tax department is in sync with corporate accounting across all business processes, including budgeting and financial consolidation.

Tax planning that is directly linked with strategic planning puts the power to effectively manage the bottom line at the financial executive's fingertips. There is no longer a need to guess about the impact of business decisions; the tax impact of forecasted operations, as well as the related financial statement tax disclosures, are immediately available and easily accessible.

By using the same data warehouse as the financial accounting information, the solution should be able to report consolidated income on a legal-entity and tax-adjusted basis, by country, state and city, and all in real time. This information, coupled with the defined business and tax rules, enables the strategic tax solution to compute consolidated effective tax rate, tax provision, related deferred-tax balance sheet classifications and notes to financial statements in accordance with FAS 109 and Sarbanes-Oxley regulations.

Further enhancing the corporate tax workflow, this same information is automatically fed into the company's tax return compliance system, whether it is CorpTax, InSource, VantageTax or any other system.

The Integrated Corporate Tax Workflow

Data collection -- Legal entity trial balances, which are linked to consolidated results, can be imported into the tax solution. There should no longer be a need for legal-entity accounting and financial reporting by the tax department. Excel or other tax input "packages" can be automated in strategic tax to allow distributed input into the tax database.

Quickly determine the effective tax rate by legal entity -- Starting with accurate pretax income by legal entity, permanent differences can be automatically calculated by the pre-programmed logic in the tax solution. These can be sourced from feeder systems or gathered via an automated input mechanism for permanent differences, to arrive at book tax income by legal entity. These amounts are then tax-adjusted, according to each country's rates plus the effective state tax rate, to arrive at the consolidated effective tax rate.

Easily calculate the effective state tax rate -- Take the federal or country tax income by legal entity that is booked, determine a state or province's share of that income and apply the appropriate state/provincial tax rate by legal entity, by state/province.

Quickly calculate deferred taxes by legal entity -- The majority of temporary differences impacting the calculation of current and non-current deferred tax assets and liabilities are automatically sourced from within the solution. Others are automatically calculated by the tax solution's pre-programmed logic or gathered via an automated input mechanism for temporary differences.

Automatically calculate estimated tax payments -- Easily calculate the estimated taxes due with the current year's federal or country returns. Also, having state/province apportionment information, the tax solution should automatically calculate the estimated taxes for all state/provincial returns using year-to-date actual apportionment information.

Easily produce the tax schedules needed to support tax returns -- Since this same information is generated for calculating the effective tax rate and deferred taxes, the tax solution should enhance the workflow by providing this information for purposes of supporting tax return filings.

Effectively plan for taxes -- The tax solution should enable the organization to effectively plan for federal, state and international taxes, including foreign tax credits, limited-liability corporation (LLC), partnership, check-the-box, controlled foreign corporation (CFC), transfer-pricing and mergers and acquisitions.

An enterprise tax solution is a logical extension of and fully integrated with an organization's financial reporting solution. So whether it is budget, forecast or actual book results, the tax impact is immediately available and in sync with corporate accounting.

Now, the tax department need not tie up precious corporate accounting resources trying to get accurate financial information in tax-sensitive views. It can, instead, focus on valuable tax planning that will impact the organization's bottom line and shareholder value. The CEO and CFO can certify the organization's financial statements, knowing that tax numbers are reliable, auditable, accurate and compiled from the same exact database as all other financial information.

The Impact of Transparency

Compliance with regulations means that companies in all markets have begun to sit up and look at how to comply with changes in financial reporting and culpability. Let's consider the impact technology has on corporate transparency.

Companies have had to become increasingly transparent, not only to avoid repetitions of the numerous, high-profile accounting scandals of late, but to enable them to make strategic decisions in a difficult market. Regulatory changes demand that directors of publicly traded companies are accountable for financial reporting, and need to know exactly what is going on across their entire business.

A problem, however, is that many companies have been sold technology applications that offer them the ability to meet the initial requirements and nothing more. Instead, what companies need to do is look at the data and how they use it.

Compliance and transparency mean that global companies will have to unify their IT systems and ensure that areas such as data management and recovery are consistent across the business. Many CEO and CFOs see complete transparency across their companies--particularly multinationals--as an unattainable goal.

This is as much about local regulations differing greatly from market to market, as the availability of the data. Enterprise finance departments are required to consolidate reports to satisfy regulators from the information they receive from regional teams, as there is generally not a single repository for all of the data.

Rather than building reports from information stored in numerous disparate systems in multiple formats, what companies need to do is develop a single repository of enterprise information. This "single repository" approach brings data from all markets and subsidiaries into a single database, collecting, processing and storing information in one place.

Such a system allows data to be accessed and included in reports, enabling accurate reporting to shareholders and regulators, enabling directors to make sound and accurate business decisions.

Companies that think this approach is not practical or cost-effective opt for applications that allow the finance team to draw information from multiple "siloed" databases across the company. This works for some, but hampers the transition to full transparency, since it takes time to locate and include information in reports. It also often requires multiple data inputs when the reporting application cannot read the information in a particular system, which can lead to redundancy and, ultimately, costly errors.

Technology that empowers companies to migrate the data stored in multiple legacy silo-based systems into a single repository is highly useful. As regulation grows across the globe, the only real option will be for companies to have a central data repository, so that reports can be compiled accurately and verified.

Obviously, there are limits to visibility. For legal and competitive reasons, some corporate information must always remain under wraps. But in today's business environment, much more must be visible to comply not only with new external legal requirements, but with public expectations.

In a large, diverse corporate enterprise with a complex finance organization, real-time visibility is achieved by means of technology most recently categorized under the umbrella term "corporate performance management," or by the acronym "CPM." But these CPM applications should also provide much more than a way to comply with external pressures.

Even more importantly, properly designed and implemented CPM solutions open up a tremendous opportunity to use visible, accurate and timely numbers to tangibly influence the conduct of the business, for the better. Today, it could be helping to reduce stale receivables, eliminate redundancies and drive sales. Tomorrow, it could be influencing decisions on which business lines to enter, or which to exit.

There's no doubt that making effective and efficient technology purchases requires a long-term outlook, an awareness of the investment objectives and the expected return, combined with input and insight of key stakeholders. Ask yourself: "Does this technology acquisition make my enterprise smarter, faster, better?" If the answer is yes, it's a good buy.

Dave Murray is CFO of Toronto-based Longview Solutions, a maker of enterprise software since 1994. He can be reached at [e-mail] or 888.4.LONGVIEW.

RELATED ARTICLE: Questions To Ask Potential Vendors

* Will the technology adapt to proven business processes, or will implementation require the wholesale change of business practices?

* Does the technology deliver information to the desktop and minimize end-user response?

* Does the technology provide maximum availability and accessibility to all network users?

* Is dynamic access to the central server and database available?

* Will regularly-scheduled backups and maintenance take the technology offline for users in remote locations?

* How many users can access a single platform?

* Will the technology operate on one central server and one central database for all users?

* Will multiple servers be required for users beyond particular geographical borders?

* Does the technology import data from disparate technologies and software and consolidate information according to consistent business rules?

* Will the software run on a variety of industry-standard platforms without having to implement and support multiple versions?

* What network upgrades are required to roll out the technology for anticipated staff beyond the current geographical locations?

* What IT staff resources are required to monitor, administer and otherwise support the system?

* Taking into account acquisition and operation (servers and network infrastructure upgrades and other IT resources), what is the total cost of ownership?

* Given the nature of the enterprise and defined business objectives, how long will it take to implement and roll out the technology?

* Beyond classroom training and manuals, is interactive e-learning available?

* To what extent can it be integrated with existing technology processes as new business rules are developed?

RELATED ARTICLE: Better Decision-Support Information

When Vermont-based regional solid waste consolidator Casella Waste Management Inc. applied a finance technology solution, it transformed its spreadsheet-based budgeting and forecasting system into a highly efficient, automated process. Significant improvements in data collection and consolidation, cycle time and the ability to model and save different financial scenarios combined to reduce the process burden on key staff. These improvements also provided senior management with timely and actionable business decision-support information.

Casella is a publicly traded, regional environmental services leader that has successfully integrated numerous acquisitions into a platform of contiguously linked markets.

The Challenge

As acquisitions continued and Casella became a more complex organization, with multiple business units and operating entities, its spreadsheet-based budgeting and forecasting process no longer met its needs. Excel spreadsheets developed over time were too numerous to manage efficiently and had become so massive they were difficult to work with, and especially so for users away from the head office. Also, the process of consolidating spreadsheets from all operations into the J.D. Edwards General Ledger application had become very cumbersome.

Budgeting had become a long and painful process, and, due to the underlying effort required to revise the budget information, "what if" analyses were all but impractical to perform. That made it difficult for senior management to explore possible business directions.

Budgeting and planning at Casella is a very granular process, involving detailed calculations for 30 percent to to 40 percent of its P & L items and many of the balance sheet accounts. For example, based on what is received in a single recycling load, Casella will often ship a dozen different commodities--glasses, plastics, cardboard, paper, tin cans, etc--so it needs the ability to build a detailed revenue forecast by commodity and specific recovery programs.

To address its problems, Casella chose an integrated performance management application suite with the ability to streamline and enhance global finance functions, including management reporting and analysis, modeling, budgeting, planning, forecasting and consolidation.

Its research team did a great deal of due diligence ensuring the technology solution they chose fit their needs. Their research included discussions with their auditing firm.

For the initial implementation, Casella activated one key business process--Budgeting, Planning & Forecasting. A Client Services group was engaged to help detail functional specifications and build a technical design based on configuring various templates and processes to match its particular workflow requirements. Casella then created a number of company-wide and business-unit-specific models, including cash flow and rolling revenue forecasts, driver and expense models, and capital and balance sheet models.

Now, Casella can do an even better job of modeling its performance and business trends for both the revenue and expense sides of the business, and it can easily perform a variety of "what if" scenarios to see how to take advantage of those trends.

This has made it easier to roll things up in order to quickly get a sense of where Casella is and what changes need to be made. This has also significantly shortened its budgeting and forecasting cycle. Now, its users--roughly 130 accounting staff and business unit general managers--can spend more time thinking about where the numbers are coming from and how to improve their business, rather than struggling with the mechanics of finding and entering the numbers in order to manage all their previous spreadsheets.

With an automated consolidation capability, the time to make last-minute changes and expense allocations--an inevitable part of the budgeting process--is reduced from several hours to just five or 10 minutes.

RELATED ARTICLE: takeaways

* Making effective and efficient technology purchases requires a vision, a long-term strategy and the knowledge that the purchase makes a company's objectives attainable.

* Overall implementation effectiveness and ROI of technology investments depend on end-user buy-in and the extent to which the application performs as promised across the enterprise and within new or expanding departments or divisions.

* Properly implemented corporate performance management (CPM) solutions enable companies to use visible, timely and accurate numbers to improve the business.