Getting back to basics

"Be specific" should be the mantra of chief financial officers about to invest money and time in business process analyses

Whether investigating the risks inherent in the treasury department's cash management practices or completing a more ambitious company-wide risk assessment, corporate executives need to be specific about their goals. If not, the CFO could end up throwing hundreds of thousands of dollars away on a 60-page report that collects dust on the CEO's desk.

"If you don't know why you're reviewing your processes, you won't achieve your results," says Jim Negus, a principal of financial risk management at KPMG in Los Angeles."You have to know your objectives:'

Stephan Hagelauer, product marketing director of XRT America in King of Prussia, Pennsylvania, agrees. "Identify your problem; know what your goal is. Don't just ask the consultant to come in, or he'll be wearing a very big smile," Hagelauer says.

Some of those objectives, Negus suggests, could be identifying risks, improving company efficiency, or simply making sure the operations of a specific department are in line with the "best practices" of other firms in the same industry.

While many executives initiate an analysis after a mishap in a department costs the company too many dollars, another good time to identify the key processes and controls of a company operation is before an investment in new software."This time offers a good opportunity to find out where you can increase the overall efficiency of the business process and how you can streamline the process," says Hagelauer. XRT America is a subsidiary of the Paris-based XRT SA, which makes treasury management software and runs a consulting arm.

Catherine Morley, a principal consultant at TCA Consulting in London, cautions CFOs against being too sure of the results they want to see before the review begins. Business process analysis "is an investigative and exploratory process, so you don't want to be too prescriptive," Morley adds.

She also advises executives to be aware of the informal, or "shadow," process that can surround a business process and enhance or undermine the company's performance. "If someone is supposed to make a telephone call to double check on some transaction, you want to be sure that telephone call is being made," Morley says. "If it's not being done, it could be undermining the process."

Negus says that an effective business process analysis can help a CEO who is flooded with an overload of information. "There's so much information in today's business environment," he says. "But the biggest concern for CEOs is the lack of real-time information and relevant data. Either the systems are not integrated or the process in which the information is digested is not efficient; Negus adds. "And at the end of the day, what the CEO or CFO wants is real-time information." -Paula L. Green