DEC's decentralized financial system puts strategy above controls.

• Author: Ryan, Bruce J.
• Position: Digital Equipment Corporation

DEC's decentralized financial system puts strategy above controls In the 1970s, when Digital Equipment Corporation was experiencing growth rates of 30 to 40 percent annually, the firm's financial systems were known as "islands of automation." Now, Digital is nearing the close of a five-year plan to coordinate its information flow and let operating units make their own business decisions.

Why we did it Today's financial executive is in the middle of the trend toward decentralization of resources, while trying to support businesses that are faster paced than ever before. Traditionally, finance and accounting communications were narrowly prescribed, with most information flowing upwards to corporate headquarters, making it difficult for employees in a geographically dispersed company to manage data accurately and efficiently.

Now, more than ever, decentralization of administrative and financial functions requires that information move smoothly in multiple directions across computer systems and business functions. Management consultants favor this trend because they believe that finance and administration resources should be integrated throughout the company within individual business units. Under this management style, support staff becomes part of the decision-making process, and is better able to understand the issues managers face. Users are also closer to the computer power needed, allowing them to make business decisions faster with more information on hand.

Implementing a distributed financial computing system directly addresses the challenges managers face in attempting to effectively execute their multiple financial functions.

Unfortunately, many corporations are still locked into some form of their original, often centralized financial information system. Systems resources are often duplicated in similar function areas, resulting in needless replication of labor and difficulties in tracking financial data quickly and accurately. Digital Equipment Corporation faced this challenge and developed a five-year plan to create its own distributed financial computing system.

Decentralizing and reconstructing During the last decade, Digital has experienced dramatic financial growth and organizational expansion. During much of this time, financial computer systems struggled to keep pace. A centralized accounting system shouldered the burden of increasing decentralization. Financial programs varied from one operating unit to another, and the...