I know you might find the title of this posting a bit redundant, but there is a reason for it. As mentioned in my previous posting, an IFRS conversion program is by definition a program. At NorthPoint we like to think of a program as a portfolio of projects aimed at producing a needed outcome for an organization.
The first source of risk for an IFRS conversion program is the fact that it is a program. Within an IFRS conversion program there will therefore be multiple interdependent projects that address needed changes within and across different functions, processes, information systems, geographies, business ventures, et al needed to complete the IFRS conversion effort.
In large companies, an IFRS conversion program will take multiple years to complete successfully. During that time, multiple projects will need to be executed to deliver their expected outputs e.g. an enhanced and IFRS compliant financial reporting system, a new asset tracking process and supporting system, a new compensation procedure for the sales force tied to compliant revenue recognition. All of these individual projects which comprise the IFRS program will need to be identified, planned, resourced and executed through to completion.
To help manage a major program of change such as an IFRS conversion program, companies will establish a Program Management Office, or PMO. A PMO has multiple roles and responsibilities, and there are many good sources of information regarding PMO structures, best practices, software tools, etc. available on the web. However, this blog is not one of them…
Having said that, one of the critical purposes of a PMO which we do focus on is to help the professionals who run them identify and manage risks within and across the overall IFRS conversion program. Risk can be defined as likely areas of potential future harm that can arise from a present action or inaction. The other side of risk which is not often focused on is that risk, if managed properly, can be be a tremdous source of business value.
The critical aspect of a PMO’s role in managing risk for an IFRS conversion is to first identify sources of risk and then control those risks to ensure they do not negatively impact the conversion schedule or cost.
Helping clients identify and mitigate enterprise and program risk is our mission at NorthPoint Software and Services LLC. Our newly launched software tool, IFRS Risk Assessor (IRA) takes advantage of the data and results (all while vigorously protecting our client’s confidential data) from over 1,000 programs of various types (e.g. IT, Product Development, Service Development, JVs, M&A, Security) that we have conducted risk assessments for.
While an IFRS conversion program is unique due to its nature and its application at any given client, we have been able to leverage our proprietary data to develop Best in Class performance attributes for program execution – and an IFRS conversion program is exactly that – a major program of work.
In subsequent postings, I’ll drill down into the areas of program risk we focus on and provide some practical guidelines for IFRS conversion program managers – and their constituents – to use to help ensure success.
