Sharpening Enterprise Management Competitiveness – A Note of Management Information Application of CCB

To sharpen the market competitiveness through internal management optimization becomes an urgent call in any industry in the current society. However, the ways to the objective vary. Though the idiom goes, "All roads lead to Rome", there is only one shortest road – information technology.
With the entry of China to the WTO, the finance enterprises of the country are faced with unprecedented impact and greater challenges than ever. As a state-owned commercial bank characteristic of medium- and long-term credit business, the China Construction Bank (CCB) launches operations in the main domestic and international financial centers. Development need and competition pressure uplifts the information application construction of CCB to a strategic height. To improve the management performance and the management system, CCB proposed a series of changes, including changes of the background (financial) manual operation into financial information application, discrete management into centralized network-based management, accounting-oriented operation into management-oriented operation, and discrete solutions into a complete solution with multiple management layer integration. On that basis, CCB further specified the intention of unifying the accounting system, financial system, integrated operation plan and management accounting methods, and optimizing the financial accounting function.

To achieve that end, CCB prioritized the reasonability and scientific appropriateness of the solution design system at the time of selecting the information application construction scheme. CCB believes that only a scheme that fuses the latest industry rules and advanced management concepts can provide full decision-making support to the management improvement of the bank, upgrade the level of information application of bank management, and truly boost the managerial and competitive capabilities of the bank. Secondly, CCB was concerned about the functionality of the G/L system. To improve the accounting means of the bank, guide the bank to evolve from financial accounting-oriented operation to management-oriented operation, and provide management with all-dimensional financial information through accounting, a G/L system with powerful functions is the key. Thirdly, the establishment of a management accounting model is a necessity. The model can provide advanced cost analysis methods, strengthen the cost awareness of the bank, know about the product cost information of the entire bank in a real-time and accurate manner, and provide a decision-making basis for the operation strategy adjustment and competitiveness improvement of the bank.

In fact, considering bank management information application, CCB started to embark on a series of principal reforms in capital management system, credit management system, and financial management system and accounting system in as early as 1994. The capability of capital centralized maneuvering, capital unified maneuvering, and capital operating of the headquarters and the provincial branches was enhanced, and the financial accounting system edged towards the general international practice. CCB made a significant step towards a new stage of reform and development.
In October 2001, CCB and Kingdee Software (China) Co., Ltd. concluded an agreement officially that CCB would launch a full-scale application of the Kingdee industry solution in the headquarters and its provincial branches, level-2 branches, and county-level branches and implement financial accounting, budget management, and cost management, and adopt an ultra large management model with a combination of distributed and centralized management. At the meantime, CCB would adopt operation cost accounting and rely on the management system to strengthen cost management in an attempt to implement the optimization of the financial accounting function, department-based cost accounting, effectively support the implementation of departmental budgets, and provide basic financial information to the operation management and decision making of the entire bank.

CCB implemented in its nation-wide branches the network-enabled management with a combination of centralized and distributed management in four vertical layers by means of Web, and successfully achieved financial accounting by organization, department, product, and individual. With the IT system, CCB automatically implemented multiple cost breakdown and cost collection, obtaining direct cost, indirect cost, departmental cost, product cost, individual cost, and other indexes. Backed up with a scientific and reasonable design, the system can provide flexible settings, and break down different costs of different departments with different methods to achieve the reasonable department and product cost. In addition, the system reflects the expenditures of the costs in different angles through various forms of reports.