Basic principles common to all enterprises
I attended the NAB (National Association of Broadcasters) annual convention in Las Vegas, NV where we have several clients who are regular exhibitors. The slogan for this particular event was “Every Story Starts Here”. This is to convey the idea that every content and delivery method (radio, television, cable, Internet and other forms of delivery) starts with the use of technology represented by the over 1700 vendors that were represented at this convention.
I’ve been attending this show since the early Eighties, first as an exhibitor of audio processing equipment used in video post-production, then as a member or non-member and now as a consultant to three companies in this market segment.
Over the years I’ve seen incredible increases in the size of the show, the number of exhibitors and attendees, as well as the number of news conferences, show podcasts, photos and videos.
Over the same period of time technology advancements helped the product and service offerings transform from simple radio and television over-the-air broadcasts to global distribution of content via cable, satellite and over IP (Internet Protocol).
The volume of content has also increased dramatically as production and distribution technology advanced. This enormous amount of content is now available for traditional viewing or listening devices (radio and TV) and also for computers and mobile devices globally. Every time you touch a button or select something of interest on your phone, tablet or any other desktop or mobile device you are relying on these technologies represented at the NAB convention.
How is this story connected in any way to our usual topic of finance, planning and analysis (FP&A)? It’s through the NAB slogan, the title of this blog post; and we have to thank NAB for the idea it conveys which can be applied to FP&A and to many other facets of business in understanding the great impact technology is making on all business entities.
Organization of all types and sizes generally have similar goals and require, in addition to vision and adequate funding, solid and constant planning. In order for planning to take place across all business units of the enterprise, it requires management commitment to engage in such planning, using leadership by example. This means that planning starts at the top and gets executed on all levels of the organization.
In order for planning to be effective and support management’s commitment to this practice, there have to be certain tools employed in the process to make it effective, complete and accurate. These tools are the products of the ever changing, ever evolving technology, and especially computer hardware and software solutions.
In the area of FP&A there are many software solutions. Some are for large enterprises, with very complex and lengthy set up, constant maintenance and very high licensing, upkeep and training costs. Others are very basic, only able to assist the smallest companies in preparing simple budgets and some are specifically targeted at the SMB (Small & Medium Sized Business) market.
There is a trend today to move all software applications to the web (cloud) and also to allow users to perform their tasks without programming and without using formulas and functions within the application. The move is toward an intelligent process and the ability to quickly perform several or even many iterations on the budget to test for various scenarios and assumptions. Another trend developing in this software application category is offering a complete set of forecasted financial statements, synchronized with one another and the underlying budget. This is designed to provide managements insight into the future financial health of the organization, and the ability to modify the plan and budget at will in order to achieve forecasted goals, all without any manual calculations or resorting to very complex (and often questionable) financial models.
Progressive managers are beginning to realize that traditional budgets and their preparation processes, and especially the usefulness of the data in performing analytics functions is of little or no benefit to their organizations. They are starting to embrace a new approach, one that promises true insight and practical and useful information they can use with greater confidence in their decision-making process.
This reality is only possible thanks to technology that never stops evolving. As such, every company’s story starts here: Vision, planning and execution, all relying on powerful and intelligent, technology enabled, processes.
Alan Hart, MBA, is Principal Consultant at Pacific Shine Group in Portland, Oregon, with responsibility for client business development and hands-on client project implementations. Prior to starting Pacific Shine Group, he worked in various executive accounting and finance positions with technology and growth companies. Notable is his 18 years in the hi-tech manufacturing industry where he served as Controller, Vice President of Finance and CFO of several privately as well as publicly held companies in the Hi-Tech industry, such as Hybrid Arts, Inc., Hamilton Bay Associates and Syncronys Software. In his role in management consulting, Alan has worked in diverse industries and with a variety of clients, including fortune 1000 companies such as Boeing, Delta Airlines, Intel, Wyndham Worldwide and others, as well as many mid-market organizations such as Guitar Center, Ducommun AeroStructures, Cypress Semiconductor, TriQuint Semiconductor and others.
Combining his skills and experience in engineering with deep understanding of technical accounting, he is able to assist small and medium-size manufacturing companies establish GAAP compliant accounting and reporting systems.