Digitizing finance: Views from the leading edge.

• Author: Gattenio, Christine A.
• Position: Special Section: Digitizing Finance - Financial management at Cisco Systems Inc. and General Electric Co.

While "digital finance" or "digitization" as a business paradigm is undoubtedly here to stay, it is far from a monolithic, one-size-fits-all solution. It's understandable that CFOs, having invested heavily in more than a few major improvement initiatives in recent years, are wary about this new arrival on the scene. Indeed, just its mention raises questions: How can companies decide if e-Finance is appropriate, or necessary? If they decide to "go digital," how should they prioritize projects and sell them internally? And, perhaps most importantly, What kind of return on their investment should they anticipate?

These questions were asked recently of Dennis D. Powell, vice president, finance and corporate controller, Cisco Systems Inc., and Eric Duenwald, e-Finance leader at General Electric Co. -- two executives in the vanguard when it comes to using technology to make finance processes more efficient and more effective in furthering their respective corporate goals.

Without question, digitizing finance at both Cisco and GE has been an arduous, time-consuming and expensive proposition, and both Powell and Duenwald counsel companies that before embarking on initiatives to seriously consider whether gaining the ability to collaborate in real-time with internal and external partners -- the true value proposition of digitized finance -- is truly critical for gaining competitive advantage in their particular situations. "Even then, companies should initially focus on process-improvement before automating. Don't automate a broken process," warns Powell.

"Technology itself isn't the key to excellence in finance," argues Duenwald. "The question finance executives should ask is, 'How would having these capabilities help drive strategic advantage for the company?' If you can't answer that question, maybe you should look at other ways to gain that advantage."

Cisco: Improve the close process

Powell maintains that Cisco did not start off with the idea that it had to e-enable the finance group. "We began five years ago with the idea that we needed to improve our close process, and for this to happen we would have to enable delivery of better information and reduce cycle time. We recognized early on that we needed to standardize our financial reporting systems and any system relating to transaction processing, which called for a global enterprise resource planning (ERP) system. We decided that if we were going to scale up, this was the time to make the investment and get ahead in the game. Step one in this process -- the one you cannot sidestep -- is to get...