Why Governance One EVM?

Capital Market Imperative

With recent events of ethical lapses of accounting firms and the malfeasance of high-profile executives, investors have a battered image of the integrity of the securities market. Without faith that companies are providing accurate information on the underlying performance of their business, investors will be wary and turn away from the capital markets. Investors need to be protected and have confidence that the market is conducting business in a manner that is striving towards the goal of maximizing returns for them. To restore the investors' confidence , companies need to understand the importance of disclosing meaningful financial and other information in order to help investors evaluate companies' future financial performance.

EVM is not only an immensely powerful tool for financial planning, analyzing and forecasting, but also a financial framework which investors can monitor if the company's on-going performance meets their expectations. EVM enables accountability, transparency, and consistency through improved plan accuracy, data integrity, and performance visibility. Acquiring the trust of shareholders, EVM helps companies set up the sound ethical standards and disclose valuable and meaningful information to the shareholders.

Strategic Agenda

Financial performance has traditionally focused on measurement of a company's historical data, instead of what will create value for the organization in the future. Today, fundamental changes are occurring in the way organizations conduct their business. Financial executives are realizing that reaching their stretched goals may require a complete transformation of their traditional budgeting and financial management practices. No longer can the budgeting and planning process succeed without direct linkages to the value drivers of the business.

A focused strategic business analysis process can improve management's ability to anticipate and respond to dynamic market conditions. EVM helps executives identify and diagnose the value drivers of their business a nd enables executives to monitor the company's operation at a single glance. With a shift of focus from historical to forward-looking real-time information, CFOs can proactively connect themselves with the front lines of businesses and rapidly align the organization around new financial objectives and plans. Furthermore, executives have a comprehensive view of the business risks associated with each possible course of action. EVM helps the company stay focused on short-term goals as well as looking forward in the long run.

Focusing on Business Units

Many companies nowadays include multiple business units, which rarely share the same growth potential or profitability. It is important to value each business unit separately or to build up consolidated forecasts from the sum of individual units. Once a company understands how to create value in each business by influencing the value drivers, the next challenge is managing each business to attain results that are consistent with the top-down aspirations. Getting a fit between top-down and bottom-up targets requires iterative negotiation between the center and the business unit. While this demands more time and energy than simply dictating targets from the top, the iterative approach draws more deeply on the business unit managers' expertise and is more likely to gain true commitment from the entire team.

EVM serves the purpose of translating value metrics, value drivers, and targets into employees' daily actions and decision-making, and greatly assists companies to formalize the commitments from business unit managers, such as performance contracts containing the milestones and quantitative and qualitative goals they intend on achieving. EVM helps the company avoid the misdiagnosis of wrong value drivers and enables the company to grasp all value creation opportunities.

The Impacts of the Sarbanes-Oxley

The Impacts of the Sarbanes-Oxley Act of 2002 change the way corporate America does business. While the Sarbanes-Oxley Act of 2002 primarily focuses on public companies, it is widely believed that the Act will have a significant impact on private companies as well. With the possibility of private companies going public in the future or merger and acquisition by public companies, all companies need to ensure the accuracy, consistency, transparency, and timeliness of financial results and reporting.

With the use of EVM, companies will have an easier time complying with the Sarbanes-Oxley Act. EVM's planning, forecasting, and reporting functions makes the process of meeting the strict financial reporting and management requirements set by SOX easier. EVM ensures accuracy with a single version of the truth that the company can rely on and that will address all questions. EVM ensures timeliness with real-time data for effective decision-making and performance transparency. Also, EVM promotes consistency ensuring the reliability and uniformity period over period. Most importantly, EVM gives understanding and unquestioned transparency by providing detail and clarity behind the numbers.

Limitations of Spreadsheet Models

Many organizations find their spreadsheet systems frail. Spreadsheets are great as personal productivity tools, but disastrous as financial planning, budgeting, and corporate performance management systems. Spreadsheets only provide a single view of the organization. Changing or analyzing data takes huge amounts of time and runs the risk of being wrong due to undetected errors.

EVM takes the planning process beyond spreadsheet, dramatically reducing planning cycles and increasing forecast accuracy and data integrity. EVM includes many sophisticated features that users won't find even in macro- intensive spreadsheets, for example, organizational planning, built-in different pricing models, multidimensional revenue forecasting, rolling forecasting, what-if scenario analysis, etc. These features make the budgeting and on-going financial planning process more strategic and truly dynamic.

Cost Reduction and Affordability

While growing, companies' financial support processes get unwieldy and expensive. No one can waste time and money perfecting support functions that demand growing investment in technologies and training.

More and more stakeholders expect finance organization to play a greater role in creating wealth and to transform themselves from a perceived overhead function to value creators.

With the cost of budgeting, financial planning and performance management software easily reaching six figures, Governance One's EVM is an affordable solution at an unbeatable value. With the capabilities and features EVM has, financial executives can focus on value-creation activities while reducing cost of their financial operations.