Managing In An Unlimited Visibility World: A Q&A With SAP’s Thack Brown

Olivia Berkman

FEI Daily spoke with Thack Brown, chief operating officer of SAP North America, about the future of ERP and how much insight is too much insight.

FEI Daily: Are CFOs ready for the future of ERP?

Thack Brown: Finance needs to be sure that they truly understand what they can do with today’s capabilities. I see too many still designing based on the prior paradigm and not really getting a full understanding of what the new tools do. Finance folks have got to become functionally conversant in technology. That’s going to be key to their ability to do their jobs going forward. They don’t have to be technically conversant. They have to be functionally conversant.

What does that mean from a skillset point of view for finance going forward? How are finance organizations thinking about the skills that they will need? Are they adapting their workforce and bringing in new skills? What are those skills? I hear from finance folks all the time “What are we going to need? What do we have to do?”

They’re worried about the new FASB standards, some tax things, a compliance topic. It’s never been “I need to keep up-to-date on what’s going on with IT.”

FEI Daily: Who in the company is really going to own the ERP system?

Brown:  IT owns the system. They manage it. Typically, large companies are creating an IT function that is the interface to the functional area. “Here’s our IT group that takes care of finance. Here’s the one that takes care of sales.” And it’s up to that group to understand requirements and what needs to happen in this core system and try and work that back and forth, which I think is a great trend.

The IT folks are looking at the more technical side. Finance is looking at the functional side. They’re finding the place [to bridge the gap and] get a common understanding to make a decision. That, to me, is the future of the business interaction and engagement with IT.

FEI Daily: Would you say that CFOs are becoming more functionally conversant in technology, and IT is becoming more strategic or striving to have more insight into the business?

Brown: Yes. This has been a challenge for IT for the last 15 years.

I was at an IT outsourcing company before coming to SAP. Way back then, the whole conversation was around IT needing to step up to be more of business leader. The reality has been that some have managed, and a lot have not. That’s why I think you’re seeing the CTO emerging. They’re really trying to have the ability to bridge business to IT.

The CIO, in many cases, is becoming more the [person who says], “I know how to structure. To govern. To run projects. To keep the lights on and everything functioning.” Even when they could make the leap to dealing with the business, they were so dragged back into the operational side. That’s why you’re seeing that separation. The really good ones who can talk business are becoming CTOs. Folks who can operate and keep the lights on and get it done are becoming CIOs, in my view.

FEI Daily: What are some of the challenges that come up with more insight?

Brown: So now you suddenly have this unlimited visibility into data. Now there’s a very real concern, which is valid for finance folks who still have to have standards, that there still has to be a corporate taxonomy. How do they create that corporate taxonomy so they stay consistent, but at the same time, free the business up to have visibility? Where’s the right line now that the business can suddenly see all this and have their own interpretations?

FEI Daily: And for different companies, it’s going to look different. 

Brown: That’s absolutely right. It’s cultural. There are multiple reasons why a company has to define that differently as they go and maybe evolve it, maybe open up a little bit, see how that goes. So that’s a culture change.

When we show the boardroom of the future, I think the most common thing that CFOs say is, “I would never show that. Give them drill-down where they can look at all that stuff? No way. I would never do that.”

But it depends on the board you have. So it’s recognizing that a lot of board members are operators.

I’ve been on a couple of nonprofit boards, and our job is to guide, set direction, help, think. But if you’ve got a board of operators, you might be really worried. They might just drill down into it. I mean, you could have a board member saying, “So why are you paying Bob that salary, and why did he get that bonus?”

And that’s where I say, “Well, let me tell you how our CFO does it. He puts the financial results in the last 30 minutes of the board meeting. So, he shows it, he can answer some questions and then you’re out of time. Oops, gotta go.” So we’ve taken a lot of the work out of preparing the board results, but we’re not going crazy.

Another challenge is the auditors. In European countries, the equivalent of the IRS walks in and says, “Log me onto your financial system. Get out of the room. Lock the door. I’ll tell you if I have any questions.” And they’re surfing through the transactions in the financial system. All of a sudden you have that wide open.

Imagine I’m looking at the results in country X, but let’s say I have transfer pricing to country X from country Y, and now I have the unlimited visibility into that – and I’m the auditor. Now, in theory, it’s all detailed right there. Well, I start drilling into it and I want to understand why. I think the margin’s too high. We’re in a dispute with country Y, and we’re not getting anywhere country to country, so now I’m going to fine the business.

In an unlimited visibility world, how do you manage that?

This article originally appeared in FEI Daily and is republished by permission.

By embedding intelligence in finance applications and processes enterprise-wide, finance leaders can drive growth and inform strategic initiatives. Learn more in Intelligent Finance Boosts Business Performance.

Olivia Berkman

About Olivia Berkman

Olivia Berkman is the managing editor of FEI Daily, Financial Executives International’s daily newsletter delivering financial, business, and management news, trends, and strategies.