Network Computing is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Firing On All Cylinders

In this era of heightened concern about compliance and cost controls, it's easy for investment management executives to monitor some parts of their organization. They can put in cost controls to oversee accounting and budgets or add technology that monitors trading compliance. But what about the overall operation? How do they know when the enterprise engine is firing on all cylinders? Corporate performance management (CPM) is a growing trend among financial services firms looking to improve their bottom lines and ensure that they don't run afoul of the ever-increasing regulatory environment in which they operate. "It's absolutely on people's radar screens," says Lee Geishecker, VP and research area lead for cross-enterprise operations at Stamford, Conn.-based Gartner. "Investment is starting to happen, and compliance is starting to have an impact."

Gartner estimates that spending on technology and services to assist firms in managing the performance of their companies is in the $350 million to $500 million range and will grow to more than $1 billion in about four years. One of the driving factors will be Section 404 of Sarbanes-Oxley, which requires publicly traded companies to put in place and maintain an adequate internal control structure and procedures for financial reporting, according to Geishecker. "You don't buy a CPM application and suddenly you're in compliance with [Section] 404," he says. "It comes down to getting a much better handle, in a faster time frame, of accurate, consistent financial data. You don't have the luxury anymore of taking 28 days to close your books."

Warning: Slippery Road Ahead

Most companies are extremely aware of the need to ensure the accuracy of their financial records and the soundness of their infrastructure, says Robert Coghlan, head of corporate governance at PNB Paribas in New York City. What's lacking is "the overall hierarchy of reviewing the entire organization," he says.

That means comparing what goes on across the entire organization and using a team approach to pinpoint deficiencies and ensure that steps are taken to improve weaknesses. And it means building an infrastructure comprising technology, policies and procedures, and standards for everything from human resources to accounting, and then ensuring that those policies and standards are the rule and not simply the exception. Coghlan says good governance stems from four factors: instilling a culture of integrity; integrating governance into business processes; creating measurement tools and metrics; and leveraging technology to make it all happen.

  • 1