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What EU Leaders Can Learn From You

by Dave Hannon

November 29, 2011

By Dave Hannon


The current financial crisis in the European Union is an extremely complicated problem with global financial impact. I'm not going to pretend for a second I fully understand the many aspects and issues that caused this crisis or what its impacts are. But one of the the latest, last-minute solutions being floated rang some bells for me and I would guess it did for you.

According to news reports today, one controversial proposal being floated to solve the debt crisis is the creation of a centralized treasury that controls more of the fiscal policy on behalf of the members of the European Union that share the Euro currency. "We have to modify eurozone governance," said France's finance minister Francois Baroin. "We definitely have to move toward more integrated budgetary consolidation, fiscal convergence with our neighbors."

Centralized authority as a way of controling the operations and policies at various "subsidiaries? Frankly, it surprised me to learn something along these lines wasn't already in place in the EU. Because in the business world, the first step in gaining control of your various subsidiaries and their fiscal operations is to centralize accountability, right? I'm sure I'm oversimplifying a bit here -- when it involves sovereign nations, that proposition has a very different implication, but the concept is basically the same. If you want to keep everyone accountable, create that accountability through centralized visibility.
But centralized visibility only turns into accountability if policies are in place to allow action be taken based on what is being seen. Having knowledge and access to disparate operations is only useful if it is acted upon and everyone struggles with this issue, including the U.S. government. According to a recent Deloitte survey, more than half (56%) of U.S. government workers polled say their agency or program may consider downsizing its workforce in order to achieve cost-savings, while only 23% of respondents will analyze data to review the outcomes of programs, reduce improper payments or consolidate their business systems.  According to the survey, more than 70% of federal government managers believe budgetary cost constraints are increasing the importance of data collection to make decisions about their programs, but 58% of respondents report that using the data externally in a “meaningful” way remains challenging.

So these agencies continue to use short-term staff reductions as the primary method of cutting costs instead of using the visibility they have into operations via the data they're collecting. Old habits die hard, I guess.

Of course the key to achieving that all-important visibility is technology. It not only gives you access to the information, but can be used to support the policies in place to act. You're the experts in that.

Along those lines, a recent AT Kearney study proves this out, showing how the right technology can help gain that visibility and support compliance policies. The survey showed that leading companies in spend control are far more advanced in their adoption of procurement technology (no surprise). The survey says: "They have more control over what they spend because they have technology that allows for more visibility into spending. Most leading companies are fully automated with real-time access to data and are ahead in the adoption of technology to support contract management and compliance."

What do you think? Are there parallels between the corporate world's increasing move toward "accountability through visibility" and the Eurozone's challenges or are we talking apples and oranges here? (Or maybe grapes and watermelons is a better fruit-based analogy to convey the scope here).

As always, I welcome your thoughts.


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