Corporate governance - When Danger Looms.

(From Financial Director)

Byline: Tom Berry.

According to Ken McGee, a research fellow at IT analyst Gartner and author of Heads Up (Harvard Business School Press, $29.95), all businesses suffer from a disease he calls 'surprise'. McGee argues that too many company failures, financial scandals and misjudged business strategies occur because executives ignore warnings of impending failure.

"Every company disaster occurs with prior warning. Because there are warning signs there is an opportunity to turn impending disaster into business success," McGee says. He argues that what businesses need to do to protect themselves is take a good look at how they are using cutting-edge technology and business intelligence tools.

He says that more often than not businesses use real-time information to treat the patient rather than curing the disease. "A lot of people claim to operate real-time enterprises. They don't. What they are talking about is making responses to events more efficient; they are doing nothing to prevent disasters. It's what I call 'nice landing, wrong airport'," he says.

Most software vendors would argue they already provide tools embedded in thousands of enterprise resource planning systems that are designed to keep businesses away from danger. But McGee insists that IT is only an enabler - it won't steer businesses around the rocks if you are not looking for the rocks in the first place.

"You can put in a zillion large ERP systems and you will just keep on responding." McGee advises finance directors to throw away their digital dashboards and identify the 5% of information in their systems that is really ...