When Frans Spaargaren arrived at Gemplus, an €865 million ($1.041 billion) Geneva-based maker of smart cards, it didn’t take him long to realize that not everything about the company was smart. Internally, managers and executives were drowning in data. The finance team foisted reams of information on them every month, churning out huge reports stuffed with rows and columns of numbers. “It was a data dump,” says Spaargaren, who took up the Gemplus CFO job in June 2004 after three years running joint ventures at Philips, the Dutch electronics giant. “We basically reported everything, giving them 40 PowerPoint slides full of tables — thousands of numbers in total — and expecting them to pick out key messages and key information. It was much too much to take on board.”
Spaargaren spent the bulk of his early months overhauling the internal reporting process, stripping out “irrelevant” details to focus on “what really drives the business.” A year later, his corporate analysis team produces a slim booklet, half the size of the former report. The data found inside is more focused, more graphical and more colorful, with major deviations against budgeted targets marked in green and red ink. He has also pumped up the non-financial data, and reports now include metrics on operational efficiency and customer satisfaction, along with progress updates on groupwide initiatives such as the implementation of customer relationship management (CRM) software and supply chain rationalization, among other things.
Given this more streamlined, targeted way of reporting, Spaargaren reckons management committee and board meetings at the Paris-listed firm are now more productive. “We can focus not only on understanding and highlighting the relevant issues, but can also discuss the action plan,” he says.
But Spaargaren’s not finished yet. His ultimate goal, he says, is to adopt a more “interactive” model of management reporting. He wants to move financial data out of the general ledger into a data warehouse, putting the onus on managers and executives themselves to sift the data and create their own customized reports and “what if” analyses. That way, all that’s left to be circulated on a monthly basis is a standard top layer of information — “the bare essentials.”
Plenty of finance executives around Europe share that vision. Many, in fact, have already spent time and money addressing it, investing in business intelligence or performance management software from the likes of Cognos, Hyperion, and SAS. “By giving managers the option of access to much more data on their own systems, you don’t have to have such a voluminous package on a monthly basis,” says Daniel Bednar, deputy CFO of Bureau Veritas, a €1.4 billion ($1.68 billion) inspection and testing agency based in Paris, which rolled out a SAS Information Delivery Portal in 2001.
Spaargaren, for his part, built himself a primitive performance management tool over ten years ago at Varta Batteries, a €145 million ($174 million) Hanover-based firm. Now that software vendors have caught up and begun offering more sophisticated alternatives, he’s shopping around for a customizable product, and aims to have something in place by the end of next year. “The role of finance should not be simply to consolidate and report the numbers, but to help people understand what is going on in the business and make the right decisions,” he says.