28 December 2004

XML Feed CFOs: Will they use the Tsunami as an excuse to hide costs?

Sure, CFOs will do anything if they can get away with it.

Although still rising, Asian oil demand was already below OPEC forecasts. This means Asia was already "not growing" as fast as had been originally forecast.

Growth rates were in sufficient to sustain IT investment

In other words, even before the Tsunami Asia was both already failing to meet required forecasts to sustain IT investment; and the revenues were not sufficient to sustain the planned IT development efforts.

In short, the developers already knew prior to the Tsunami that funding was tight.

Development efforts were already facing cost overruns

Further, the problem the CFOs have is "how to make the bad news related to software development problems" disappear.

They are looking for excuses to divert attention from their in-house problems: Delays; inadequate development baselines; high priority items not meeting user needs; and end-products essentially performing no better than the "problem" they were designed to solve.

We've seen plenty of anecdotal evidence that XML feed development efforts were facing problems.

Indeed, only a few short weeks after launch, one firm announced it was surprised by a "new" software program. Some might accept this explanation.

One tiny problem with this excuse. The "new development effort" actually launched months before the platform feigning surprise.

We are not supposed to be surprised by history. Details!

What to do?

The Tsunami gives them a way out: Hide the cost overruns related to the development glitches; and then bring forward the future costs and dump them into late 2004 and early 2005 as writeoffs.

Hide the bad news. Blame an external problem. Make the numbers look good. And the stock price goes up.

However, there's one small problem. It's called the Securities Act.

Also, CFOs are advised against falling for the trap of revenue sharing with their Wall Street promoters.

Vigilance

As the scope of this disaster sinks in, carefully watch what the CFOs are doing. The "sudden problems" were already brewing.

An unfortunate earthquake and Tsunami are the needed excuses to avoid accountability.

Whether the markets and individual investors dig deeply into the numbers remains another matter. Buyer beware!
Sure, CFOs will do anything if they can get away with it.

Although still rising, Asian oil demand was already below OPEC forecasts. This means Asia was already "not growing" as fast as had been originally forecast.

Growth rates were in sufficient to sustain IT investment

In other words, even before the Tsunami Asia was both already failing to meet required forecasts to sustain IT investment; and the revenues were not sufficient to sustain the planned IT development efforts.

In short, the developers already knew prior to the Tsunami that funding was tight.

Development efforts were already facing cost overruns

Further, the problem the CFOs have is "how to make the bad news related to software development problems" disappear.

They are looking for excuses to divert attention from their in-house problems: Delays; inadequate development baselines; high priority items not meeting user needs; and end-products essentially performing no better than the "problem" they were designed to solve.

We've seen plenty of anecdotal evidence that XML feed development efforts were facing problems.

Indeed, only a few short weeks after launch, one firm announced it was surprised by a "new" software program. Some might accept this explanation.

One tiny problem with this excuse. The "new development effort" actually launched months before the platform feigning surprise.

We are not supposed to be surprised by history. Details!

What to do?

The Tsunami gives them a way out: Hide the cost overruns related to the development glitches; and then bring forward the future costs and dump them into late 2004 and early 2005 as writeoffs.

Hide the bad news. Blame an external problem. Make the numbers look good. And the stock price goes up.

However, there's one small problem. It's called the Securities Act.

Also, CFOs are advised against falling for the trap of revenue sharing with their Wall Street promoters.

Vigilance

As the scope of this disaster sinks in, carefully watch what the CFOs are doing. The "sudden problems" were already brewing.

An unfortunate earthquake and Tsunami are the needed excuses to avoid accountability.

Whether the markets and individual investors dig deeply into the numbers remains another matter. Buyer beware!
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