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The strategy gap lavaraging thechnology to execute winning strategies - Goveney M.

Goveney M. The strategy gap lavaraging thechnology to execute winning strategies - Wiley & sons , 2003. - 242 p.
ISBN 0-471-21450-7
Download (direct link): thestrategygapleveraging2003.pdf
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208
What Lies Ahead
able. A downward trend in a company’s intangibles—e.g., its customer base—puts investors on notice that future sales revenue may be in jeopardy.”6 A second, even more daunting challenge that many professionals feel is long overdue is an overhaul of generally accepted accounting principles (GAAP). This, however, is a subject for another book.
A third challenge will be to locate and implement technology that has the architecture and business intelligence to accommodate accounting for intangibles. Unfortunately, many software vendors offer systems based exclusively on GAAP, which means they will not be able to make the transition to fair value accounting without significant architectural redesign.
According to Aberdeen Group, fair value accounting will require expansion beyond GAAP. One requirement, for example, will be the need for technology solutions to accommodate continuously changing asset valuations. Additionally, vendors “will need to define the business rules that logically express the interrelationships between the financial touch points in fair value, such as the link between ongoing marketing expense on branding.”7 There also will be new metrics and best practices for this new accounting regime.
Investors are searching for ways to identify the companies best able to cope with the demands of the business world in the 21st century. A CFO who is willing and able to identify, measure, and communicate intangibles will obviously provide a more complete picture of the company’s worth to the investment community. Reporting the value of intangible assets will make a company that is reporting positive results even more attractive. Fair value accounting will provide a company that must report negative results an opportunity to communicate how all its assets are being used to produce positive results going forward.
One of the driving forces behind the need to report on intangibles is the sheer number of individual investors who entered the market with the emergence of discount online brokers, such as Charles Schwab. These investors are demanding more meaningful information regarding how public companies plan to create sustained value for them. A second driving force, according to Lev, is “externalization,” or the outsourcing of decision making from corporations to, for example, customers (tell Dell which features to include in your computer), suppliers (manufacturers managing distributors’ inventories), and alliance partners (partners sharing research and development decisions).8 These entities require more and better information than ever before. Today’s information technology is making this possible by delivering a connected world.
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The Strategy Gap
CONNECTED WORLD
In his book The Agenda, author and business thinker Michael Hammer states his method of predicting major shifts in the business landscape and technology: “ ‘The Next Big Thing’ often extends ‘The Last Big Thing.’ ” He states that the last big thing, occurring in the 1990s, was the integration of processes and the demolition of internal business boundaries (“walls”) through solutions such as enterprise resource planning. He predicts that the extension of that in the 2000s will be the “destruction of walls between enterprises.”9 Corporate performance management (CPM) certainly comprises processes within the enterprise, but it also will extend beyond the organization’s borders to include customers, partners, and suppliers.
Extensible Markup Language (XML) and the Internet are breaking down these barriers, making communication between enterprises easier. Ratified by the World Wide Web Consortium (W3C) in 1998, XML is a platform-independent, royalty-free, universal format for structuring and sharing data across the Internet. It gives meaning to information through the use of easily understandable, user-defined tags and is very flexible. For example, the tag “<p>” in <p>500</p>, could be defined by an organization to mean price, people, paragraph, or anything else it wanted. XML can be used to present data on any device, including desktop computers, web TVs, cell phones, answering machines, personal digital assistants, and more.
Extensible Business Reporting Language (XBRL) is a relatively new XML-based framework for improving the ease of preparing, publishing, and exchanging financial information. Companies employing XBRL agree to use a common set of tags, which enables the comparison of one financial statement to another. They use XML style sheets to present information in specific formats. Currently XBRL International reports that Morgan Stanley, EDGAR Online, Reuters, Microsoft, Daimler-Chrysler, UK Inland Revenue, the U.S. Federal Deposit Insurance Corporation (FDIC), and every lending institution in Australia reporting to the Australian Prudential Regulatory Authority use XBRL to report financial information.10
How does XBRL make information more usable and easier to share? Consider this example. Traditionally, if one computer sent another computer data on a company’s $5,000,000 in revenues, the number 5,000,000 would be transmitted. The receiving computer had to be programmed in a way to recognize the number, then had to place the num-
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