Companies that don’t keep a close eye on business performance will struggle to meet upcoming regulations, according to Cognos, the world leader in enterprise business intelligence (EBI) and performance systems.
Effective corporate governance is no longer just desirable; it is being mandated in the Middle East as greater financial transparency and consistent enforcement have been recognised as the key to increasing foreign direct investment into the Arab World. More than 100 countries have adopted IFRS so far, and all companies listed in the European Union must now apply the framework. Companies in Bahrain, Jordan, Lebanon, Kuwait and Qatar follow IFRS by law, but it is mandatory for only UAE banks to abide by it.
“Application of IFRS principles in regional accounting will boost investor confidence and go a long way to encourage foreign capital inflow into the regional economy. Companies will then have to measure the development, performance and position of the organisation against defined Key Performance Indicators (KPIs). A combination of strategy development, objective setting and KPI measurement, which is central to Corporate Performance Management (CPM), is the key to accounting compliance,” said Graham Walter, vice president, Cognos in Middle East and South Africa.
This calls for a business analysis based on financial and non-financial KPIs. False or even reckless statements will result in criminal prosecutions and large fines for directors. For the first time, public companies will need to give a prediction of future performance as well as supply KPIs on the main risks to the business, environmental matters, employees and social and community issues.
Strong analytical and business intelligence capabilities will help companies face compliance challenges. Regional companies need to take advantage of their capabilities to collect and analyse internal and external data to improve their decision-making, financial management and customer services.
In reaction to this Cognos has released a set of guidelines to help firms comply with regulations.
“While the task of complying with new regulations may seem daunting, the questions being asked are not new. The concept of performance management and the objectives of corporate governance are closely aligned. Forward-thinking CEOs, who have already embedded performance management within the organisation, have been asking those same questions for years,” added Walter.
“The Accounting Standards Board has introduced these regulations to add depth to financial statements by explaining the objectives and strategies of the business, as well as the risks they will face,” he continued. “It will be much easer for senior management to put a strategy in place if they know that they can rely on existing applications and processes to meet the governance challenge.”
Today business intelligence has evolved beyond data warehousing and reporting to focus on insight and analytics (i.e., translating data into information and actually using it to make decisions and impact strategy), data governance (i.e., determining who owns the data and then defining data definitions, business rules, and calculations) and competency centers (i.e., pooling internal or external resources, physically or virtually, to focus on data and business intelligence activities).
Cognos delivers software that helps companies drive, monitor and understand corporate performance and serves more than 23,000 customers in over 135 countries. It delivers the next level of competitive advantage, corporate performance management (CPM), achieved through the strategic application of business intelligence on an enterprise scale.
