IT Focus – Drill down for details

At a management accountancy conference in April Ian Livingston, Dixons Group FD, declared the death of the traditional accountant. ‘We’re not about recruiting and training accountants,’ he said. ‘The business we’re in is about training commercial business managers.’

Livingston’s vision is becoming the norm. Industry accountants are expected to analyse more and number-crunch less.

As well as handling complex budget planning and consolidation – often across scattered subsidiaries – they work more closely with finance directors.

At group level and in subsidiaries, industry accountants are expected to forecast the future direction of turbulent markets while tracking a company’s performance indicators.

All of these changes depend on one force: the software industry. Software packages on the market – from companies such as Hyperion Solutions for the blue chips to more basic versions from Sage and Intuit – cover the whole budgeting cycle. To get ahead, then, management accountants will have to become more software literate.

Most budgeting and consolidation software draws data straight from the general ledger, integrating with other financial and enterprise resource planning systems. This cuts down the amount of data that needs to be re-keyed.

And, to help maintain the all-important ‘integrity’ of numbers in the budget, data can be locked after it is validated by an authorised manager.

This stops employees constantly altering different strands of the budget.

As Halford’s financial development manager, Marcus Jenks has seen the role of management accountants change radically over the last ten years. He started off ten years ago as a traditional management accountant but now concentrates on developing and integrating financial systems to fit in with Halford’s business model.

Jenks says he used to resent spending so much time gathering data for the monthly profit & loss sheets only to find that none of the managers had any time to sit down and analyse what action to take on them.

The main argument used against traditional, spreadsheet-based budget systems, still used by most companies, is they are not flexible enough to cope with the diverse budgeting and reporting demands of large modern companies. ‘Imagine trying to consolidate 400 budget models up a company chain without any errors,’ says Guy Haddleton, chief executive officer of Adaytum Software, the Bristol-based budgeting and planning specialist. ‘Then what happens if you want to change them? What about the 2,000 budget holders in your organisation? It’s extremely likely that there’ll be errors.’

Adaytum is planning to release a package which will integrate the budgeting, planning and reporting functions. According to Nick Griffin, partner in Deloitte & Touche’s management solutions practice, this will make it easier for industry accountants to analyse their company’s progress.

‘It’s essential to put budgeting and performance into one suite,’ he says. ‘You now have separate data feeds brought together into a spreadsheet and you can’t really model anything.’

Vendors are keen to target SMEs with specialist software. The Web and company intranets will also help take budgeting software to the masses.

Most of the main vendors offer Web-based applications that can be accessed through a standard browser.

Running a budget through a secure company intranet can slash software maintenance costs. Instead of installing software on each desktop the new version of the product only has to be installed once on the Web server.

It’s also relatively easy to maintain the integrity of information because it is stored on a central database and updated as users enter new figures.

Management accountant Chris Pyves is a consultant for BSC partnership, a Rochdale-based IT consultancy specialising in the SME market. Pyves is currently conducting research to find out how management accountants in SMEs actually use the Web. ‘Last year, we found about 33% of members in practice used the Web. This year, I think the figure is more likely to be 50%.’

Pyves insists it is wrong for management accountants to assume balanced-scorecard software is alien to the needs of small companies and accountancy practices. ‘Complex companies can get drowned in systems when they’re implementing balanced scorecards. The balanced scorecard is what management accountants have been looking for.’

This technology has encouraged companies to focus on software business factors, such as customer satisfaction, but coming up with the relevant performance measures can be tricky, and difficult to measure. The advice from consultants is to focus on a handful of performance indicators which are integral to your business.

This software-driven shake-up is also changing the way industry accountants work with finance directors. In larger companies this will often mean the FD will take a more hands-off role, according to Richard Knight, FD of Victory Corporation, the holding group for Virgin Clothing and Virgin Cosmetics. ‘A big company like Debenhams will have hundreds of management accountants for forecasting and other functions. The FD is more hands off. Their role is to act as a controller and check things.’

Management accountants at Victory’s two subsidiaries use separate accounting packages – from Sun and JDA – to meet the different demands of each business. ‘Management accountants summarise performance indicators and I produce a group summary for the board,’ adds Knight.

The work of management accountants is changing fast – hand in hand with powerful software. The upsides are obvious. If used correctly, budgeting and planning software will eliminate much of the ‘grunt’ manual work, allowing industry accountants to spend longer on more analytical forecasting and planning work.

But a company intranet could mean rolling monthly budgets with more budget holders. This means more information to consolidate and management accountants will need to maintain strict financial controls.

FDs are also demanding a more holistic view of their business, and accountants may struggle to quantify ‘soft’ financial information.

One candid management accountant stresses a company budget is still far from being an exact science. ‘They’re the bane of my life,’ he says. ‘It’s a guess, at the end of the day. You can predict trends but not what item will sell next month.’


The ERP giants offer reporting, budgeting and forecasting modules, but many companies are opting for specialist vendors.

Most suites are driven by powerful multi- or relational databases, such as Essbase, or Microsoft’s Sequel Server 7, allowing users to ‘slice and dice data’ – view it in different ways – and quickly drill down to focus on individual budgets.

Hyperion Solutions: the US-based market leader in planning and budgeting applications. Formed last year by the merger of Hyperion and Arbor. Targets multinationals.

Arbor’s best-known product is Essbase, an OLAP engine that analyses information from enterprise systems such as PeopleSoft. Hyperion’s budgeting and planning product is Pillar which includes ‘what if’ forecasting. Their consolidation and reporting product is Enterprise. Hyperion boasts Enterprise 5 can consolidate budgets up to three times faster than previous versions.

Comshare: now targets SMEs. Has three product suites: BudgetPlus and FDC, for consolidating and reporting, and DecisionWeb, decision support for managers. Just launched Web-based version of BudgetPlus. Can run on Essbase, Oracle or Microsoft Sequel Server 7 databases.

Adaytum: Bristol-based software house. Adaytum Planning handles budgeting planning and performance analysis.

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