Closing in on a better process

How Finance Transformation is helping Boeing close books each quarter with speed, accuracy

"The quarterly closing process should be a nonevent." Corporate Controller Harry McGee's statement represents a rarely achieved finance utopia that Boeing now may be approaching.

The closing turns reams of data into a certifiably accurate picture of Boeing's financial position. Thanks to what's known as Finance Transformation, the ongoing rationalization of disparate financial systems and processes, Boeing closed its first-quarter 2006 books in five days. Prior closings took nearly a month. These efforts demonstrate how teams that work in offices can benefit from incorporating Lean principles used in factories.

"We worked together to identify, standardize and simplify" the closing, said Rich Smoski, leader of the Finance Transformation program. "We approached it as a series of repeatable processes and drove for consistency, timeliness and accuracy."

Finance Transformation is a significant commitment to improving productivity. While it was already under way when Boeing Chairman, President and Chief Executive Officer Jim McNerney focused the company on four growth and productivity initiatives in January, it represents what the initiatives are all about.

"Finance Transformation shows how applying a thorough, long-term approach to process improvement and commonality across the enterprise can bring great benefits," said Rick Gross, leader of the Internal Services Productivity initiative. "It's making Boeing Finance people more productive, it's making our financial reports more reliable, it's reducing cycle time, and it's uncovering improvements that can be made in the future."

In March, McGee expanded a separate effort that's also aimed at improving Boeing's financial disclosures. He chartered a team from Accounting, Communications, Investor Relations and Legal to simplify the first-quarter earnings report.

The 2002 Sarbanes-Oxley law expanded disclosure requirements companies must meet. Partly in response to that, many companies' quarterly filings (also known as a 10-Q report) became longer and harder to understand. But through reorganization, rewrites and elimination of redundancies, the team made Boeing's first-quarter 10-Q easier to follow and about 17 percent shorter than last year's. And they uncovered areas that can be improved in future filings.

"This team found a way to get this done quickly, and they delivered a document that people without degrees in accounting and securities law can understand," McGee said.