Effective Use of Technology

Stephen R. Goldberg and Joseph H. Godwin

BOOKS REVIEWED:

Coveney, Michael, DennisGanster, Brian Hartlen, andDave King. 2003, The StrategyGap, Leveraging Technology toExecute Winning Strategies,(Hoboken, NJ: John Wiley &Sons).

Bergeron, Bryan. 2003, Essen-tials of XBRL: Financial Report-ing in the 21st Century (Hobo-ken, NJ: John Wiley & Sons).

THE STRATEGY GAP

The Strategy Gap refers toand addresses the gap betweenstrategy formulation and execu-tion. In other words, the strategygap is the missing steps that getorganizations from where theyare today to where they want tobe in the future. The authorspresent a process for effectivelyintegrating best practices in per-formance measurement andstate-of-the-art information tech-nologies. Coveney et al. helpmanagers identify whether strat-egy gaps arise from the manage-ment process or technologyissues and then how to resolvethose issues. They suggestapproaches to IT applications

that better utilize corporateresources. Both financial andnonfinancial measures of perfor-mance are addressed.

For most of their 50 years ofcorporate usage, computers wereused for processing transactionsthrough independent applicationssuch as payroll, sales, and inven-tory management. In the lastdecade, the emphasis hasswitched from isolated to inte-grated applications that moreefficiently link sets of tasksbased on managerial processes.The primary example is enter-prise resource planning (ERP)systems that tie together applica-tions related to sales, delivery ofgoods, and related financial mat-ters.

The authors present the fol-lowing eight key processes toeffectively integrate applicationsfor planning and control: 1)strategy formulation, 2) scenarioanalysis, 3) planning and budget-ing, 4) communication, 5) moni-toring, 6) forecasting, 7) report-ing, and 8) establishing feedbackloops. The authors refer to theresulting capabilities as corpo-rate performance management(CPM). In other words, CPMconsists of methodologies, met-rics, processes, and systems used

to monitor and manage businessperformance. Recent develop-ments in relational databaseswith multidimensional capabili-ties make the authors’ approachfeasible. The authors also pro-vide interactive checklists andtemplates that can be down-loaded for management toimplement their own CPM. Thebook provides guidance onselecting the right systems archi-tecture, establishing the rightteam, and understanding keys toCPM solutions.

The authors indicate plan-ning begins with defining theorganization’s reason for exist-ing—that is, its mission. Next,objectives are determined con-sistent with its mission. Goalsare established that quantifyobjectives. Strategies are deter-mined that define the majormethods used to achieve objec-tives. Management specifiesaction steps or tactics to imple-ment each strategy. Finally, keyperformance indicators (KPIs) ormeasures of performance aredetermined that indicate progresstoward achieving goals.

The authors suggestapproaches to overcome the fourmajor management-induced rea-sons for a strategy gap: 1) not

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85© 2004 Wiley Periodicals, Inc.Published online in Wiley InterScience (www.interscience.wiley.com). DOI 10.1002/jcaf.20042

getting manager and employeebuy-in for the plan, 2) not com-municating strategy, 3) notadhering to the plan, and 4) notadapting to significant changes.The book also addresses ways toovercome process-induced gaps.These include issues related totranslating the plan into action,allocating assets to variousstrategic initiatives, and monitor-ing and measuring tactics. Tech-nology system–induced gapsinclude fragmented systems andoveremphasis on enterpriseresource planning.

The evolving role of thechief financial officer isemphasized. CFOs shouldincrease finance departmentvalue by providing leadershipin planning, reporting, andanalysis. The strategy gap iseliminated through effectiveCPM. The first chapter definesthe strategy gap and introducesthe concept of CPM. In the fol-lowing nine chapters, theauthors communicate to readershow to design and implementan effective CPM solution andanalyze the return on invest-ment in CPM. The StrategyGap is 215 pages of informa-tive reading for all managersinvolved in planning, but par-ticularly those in financial,information technology (IT),and line management positions.

ESSENTIALS OF XBRL

XBRL is positioned as themajor technological solution toprovide for the electronic com-munication of financial data.The language has the support ofindustry, government, and ven-dors and is becoming widelyaccepted by IT professionals asthe primary means for data com-munication over the Internet. Asa result, managers of companieswith significant financial report-ing volume should assess costsavings, efficiency, and competi-tive advantages of this promisingtechnology.

Bergeron provides an easy-to-read, 220-page paperback bookthat can give the executive ahigh-level understanding ofXBRL and its value for onlinefinance and business reporting.The text is organized into eightchapters that can be read in theorder that best suits the manager’sunderstanding and background.

Chapter 1 provides anoverview of key concepts, termi-nology, and the historical contextof XBRL in the finance industry.Chapter 2 identifies opportuni-ties with XBRL-based reportingfrom the perspective of bothsenior management and account-ing professionals. In particular,the ability of XBRL to providerapid access to timely financial

data while ensuring security andaccuracy is addressed.

Chapter 3 reviews the stan-dard setting process for XBRLand the role of vendors, govern-ment, the computing industry,and trade organizations in settingstandards for finance and busi-ness reporting. Relating standardsetting to requirements containedin the Sarbanes-Oxley Act is anew imperative. Chapter 4explains how XBRL can be anenabler of financial and businessprocesses by addressing knowl-edge management principles andthe ability of XBRL beyondfinancial reporting.

Chapter 5 examines the tech-nological underpinnings ofXBRL in an understandablefashion. Chapter 6 describessolutions that XBRL vendorsoffer and discusses how to pre-pare for and evaluate an XBRLinitiative.

The economics of an invest-ment in XBRL are addressed inChapter 7. This discussion is fol-lowed in the final chapter by con-crete examples of the resources,time, and costs involved with anXBRL initiative. The text pro-vides senior managers with aworking vocabulary that will per-mit them to communicate intelli-gently with IT professionals andvendors about XBRL productsand services.

86 The Journal of Corporate Accounting & Finance

© 2004 Wiley Periodicals, Inc.

Stephen R. Goldberg, PhD, CPA, and Joseph H. Godwin, PhD, CPA, are professors of accounting at GrandValley State University. Their teaching and research interests focus on financial accounting, internationalaccounting, financial derivatives, and economic value added. They have published articles in a number ofacademic and practitioner-oriented journals. The authors gratefully acknowledge the support of David Can-non, PhD, CPA, for his efforts and help with the reviews.