Greater Transparency

Here's one CFOs conquered battle with consolidating volumes of data in a large, multi-departmental organization reliant on using what its employees were already invested heavily in: Spreadsheets.

The biggest benefit to the CFO from this new system is greater transparency. For example, Nemy says the new system enabled him to project an impending $1 million shortfall against the budget following its acquisition of a San Jose TV station in October 2006.

“The management team took immediate action based on that forecast, initiating more pledge days, which brought in $750,000 more than we would have had,” Nemy says. The company was able to make other adjustments to manage through the resulting lesser shortfall. “To me, the system in that one instance already paid for itself,” the CFO adds.

When he arrived at the company, although it had a Microsoft Navision general ledger accounting system, Nemy says it lacked any means to match up actual income and expense figures year to date against what was budgeted, or to do accurate forecasts of financial performance for the remainder of the year.

“It met our reporting needs, but it didn’t give me the information I needed as a user—for instance, how are we doing with this particular group and how will it do in the future?” he says. “There was no way to take year-to-date actuals and look at variances from the plan. It’s important that our department heads have a bottoms-up look at how their plans have changed and how they are performing against them.”  

Northern California Public Broadcasting has about 35 financial system users, including the CEO. Besides Nemy’s financial staff of 10, the rest are mostly budget managers and department heads. All use OutlookSoft with an Excel front end. “This system is Excel,” says Nemy. “The only thing really different is that instead of saving the spreadsheet data, they press the send button and send the data to the database. Then when they open the spreadsheet again, they must first retrieve their numbers.”

“We had to overcome that initial fear some people had, that scary feeling they got of not seeing the numbers they’d put into the spreadsheet,” he admits.

One reason is that some power users of Excel tended to put their own financial formulas to perform specific calculations inside Excel to speed the filling out of budgets and other financial data. As a result some users worried they might lose these formulas, which they felt were essential to their work as budgeters and planners.

“We had to assure them that if they wrote the formula inside Excel, they would see the formula later when they retrieved it,” Nemy adds. No doubt the unique functionality afforded by the spreadsheet is the reason many financial organizations continue to use it, despite its shortcomings relative to more sophisticated financial management and business intelligence packages.   

With the Excel front end and the SAP Business Planning and Consolidation application (formerly OutlookSoft 5), Nemy believes he has the best of both worlds. For one thing, he likes having immediate access to any department or project budget. “This technology is absolutely essential to me in my job,” Nemy says. “The ability to pull up anyone’s budget, to immediately consolidate numbers, and to make an instant forecast of where we will be three months or six months out is extremely useful. We’re able to see things we couldn’t see before.”

For instance, any numbers that are significantly out of variance with the budgeted figures appear in either red (over budget) or green (under budget). “Whether it’s good or bad, I can see it right away and ask, ‘Where did this $400,000 come from?’” Nemy says.

Because Northern California Public Broadcasting is a nonprofit entity, the firm is not legally required to comply with the Sarbanes Oxley Act of 2002. Nonetheless, Nemy says this spring the company will seek to comply with the “Audit Risk Assessment Standards,” a set of financial standards applicable to nonprofits.