How to join the competitive wars.

• Author: Meenan, James J.
• Position: Finance Reshapes Its Corporate Role

The Bell System divestiture put AT&T squarely into a fiercely competitive business environment. The AT&T financial organization had to bring the real economics of the business to the decision table.

James J. Meenan

Vice President & CFO

Communications Services

AT&T

Corporate finance departments today face many issues. They are accomplishing more with fewer resources. They are providing more sophisticated financial services to decentralized business units. They are reducing their personnel by increasing their use of computer technology. They are more involved in business operations, as they provide information to help fight competitive wars. In sum, they are doing things differently.

These developments were cited in Changing Roles of Financial Management, a recent study by Financial Executives Research Foundation (FERF). AT&T played a part in this study because we have obviously experienced major changes in finance since divestiture.

Before divestiture, AT&T's finance organization focused mainly on the accuracy of data to support external reporting and rate-of-return accounting with the state and Federal regulators. This was the right focus for that environment. It was marked by a relationship with operating management that was, at times, difficult and less than fully effective. An example of the relationship and how it worked was our monthly results meeting. The meetings were held about the fifteenth work day after the close of each month. The financial people would come into each meeting with a new set of view graphs, and all the operations people would be saying: what are they going to present today?

That's how we used to run AT&T. Finance people did not confer at a table with operations people. They were green-eyeshade accountants reporting a set of numbers. Like the other companies in the FERF report, however, AT&T's finance functions have gone from being command and control functions to being partners in business operations.

How has this new relationship changed the character and cost of the financial function? Many of us have reallocated our resources. We've taken our people from payroll, accounts payable, or account analysis and placed them in strategic business units. We put those people in the front lines, and at the same time consolidated our own staffs. The result is that financial control has become a responsibility shared by the management team throughout the company.

So finance is becoming streamlined, but it is also becoming...