About 80% of the budgeting and planning process at AAA Life now goes toward data collection, and only 20% to analysis; the Cognos Inc. system will reverse that, CFO Jay DuBose says.
Cognos Planning, which is scheduled to go live Aug. 1, will give AAA Life greater visibility into its financial and performance data, including sales, servicing, and production information. It will also eliminate a manual, error-prone data-collection process. "We needed a product that could manage data across the organization and allow information to be more easily shared," DuBose says.
With sales growing at a 15% to 20% annual clip, AAA Life needed an analytical tool to match expected expenses with sales. "It's imperative that we be able to control expenses," DuBose says. The Cognos system "gives us much greater analytical insight into projecting expenses based on sales levels." The company also plans to deploy the software in its financial-reporting process; that effort will get under way over the next several months, DuBose says.
Like many companies, AAA Life relies on Excel spreadsheets and Accel databases to prepare its financial statements. In order to meet the Sarbanes-Oxley Act's section 404, which requires management to attest to the effectiveness of internal controls, the company needed a more systematic process. "A lot of [the decision] to go with Cognos was driven by Sarbanes-Oxley," DuBose says. "We were spending a lot of time manually testing and validating controls. With Cognos, those processes are automated."
AAA Life isn't alone. Companies that heavily depend on spreadsheets for closing their financial books take longer to prepare financial statements. In a study released last month, Ventana Research found that 49% of companies that sparingly used spreadsheets were able to perform their monthly close in four or fewer business days, compared with only 27% of heavy spreadsheet users.