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The Ins and Outs of Management Reporting

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The Ins and Outs of Management Reporting

by Eric Noren, Accenture, 30 September 2011
topics:
Accounting and Regulations Investor Relations
tags:
business intelligence EPM ERP governance management reporting reporting centre of excellence

In recent years, companies have made significant investments in their ERP systems to improve their external reporting capabilities – investments encouraged by the push of International Financial Reporting Standards (IFRS) to more comprehensive business unit and geographic segment-based reporting. Similar pressures are being exerted by U.S. Generally Accepted Accounting Principles and tax requirements.

 
In effect, companies have become better at explaining what is happening in terms of financial results, but their ability to efficiently understand why it is happening (or what is next operationally) is lagging behind.
 
While they have made the investments in ERP, their investments in business intelligence (BI) technologies to improve internal management reporting capabilities have often been decentralized and structured in different ways by business unit and/or function, such as distribution, marketing or customer care.
 
This lack of centralization and consistency in BI capabilities means that non-value added work is needed to reconcile internal and external management reporting. This creates not only an unwanted layer of cost; it also limits the company’s visibility in terms of what is really driving growth and profitability.
 
Closing the Gap
There are a number of initiatives that companies can consider to improve internal and external reporting reconciliation. Among them:
 
  • Companies can consider establishing an enterprise data warehouse. Companies that spend a great deal of time and effort on aggregating and reconciling data can benefit most from the warehouse’s construction.

 

  • Data architecture is often a problem, because it may not be designed to meet the needs of both external and internal stakeholders. The data architecture provides a hub for a single data source and avenues to facilitate information flow between the systems of record and the financial management reporting activities.Ideally,the format of this data architecture will be understood by both the business stakeholder and decision makers.

 

  • If the company really wants to lower the cost of finance operations, it might consider a reporting center of excellence for finance, a BI competency center, or some combination of the two.

 

  • To manage the common source of information, the data architecture and the overall reporting solution, companies also need an effective governance structure.
 
No one of these initiatives should be considered in isolation. Rather, the idea is to use such innovations – along with other enterprise performance management (EPM) techniques – in concert to improve overall program structure and management.
 
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