Management reporting: Implementing effective organizational data processes
INSIGHT ARTICLE |
With a growing global economy, executives are continuously striving to build and enhance a competitive advantage through timely, actionable data. Advances in technology allow smaller companies to efficiently communicate and operate globally, but employees must have access to relevant data to continue profitable growth. Effective management reporting provides a greater depth of information to empower executives to make pertinent business decisions, increasing operating efficiency, and thus remain competitive.
Many businesses have systems and reporting processes in place, but they are often not optimized to produce meaningful and timely information. In many cases, a company does not have time to introduce new processes, may not understand existing software or does not have the capacity to move high-value employees from the core business to report evaluation. However, adjustments to existing processes can bring significant benefits, providing more complete analytics to run and grow your business.
The need for management reporting
Inefficient reporting processes that yield inaccurate and dated information normally cause more harm than good. Strong management reporting is a necessity to produce timely, reliable information, in order to make high-quality business decisions about the future of your company. Insight gathered from reporting allows for deeper analysis to understand problems, provide accurate comparisons against competitors and implement controls to hold employees accountable for budgets.
Effective processes uncover material financial misstatements prior to circulating information with investors and other stakeholders, and identify and address problem areas before they elevate to unmanageable levels. Without management reporting, employees may know there is a problem, but are unable to identify its origin. Reporting identifies the problem’s source, so you can begin working toward a solution. It also allows you to understand your current financial position compared to competitors, in order to focus or realign business strategies to improve specific operating activities.
Often, businesses attempt to develop reporting processes, but miss the mark in achieving desired results. Common challenges include:
- Selecting and correctly using the right system to develop and deliver reports
- Manipulating data in order to display the best metrics to make better business decisions and understand the company’s current position
- Implementing an inefficient accounting close process that does not allow for timely report delivery to stakeholders
- Ensuring the integrity of the data
- Adopting management reporting processes at the incorrect stakeholder levels throughout the organization
Essential components to management reporting
A successful management reporting process contains several key elements. Your program should begin with accurate, healthy data and metrics to support core business strategies and initiatives to specific stakeholders. Data should support both the long- and short-term vision for the company, and should be trustworthy and from a reliable source. For example, failing to remove data for a discontinued product will negatively skew the remaining pool of data and your ultimate reporting information.
When communicating data, consider formatting, report priority and user-friendly interfaces. Information should be easy to digest and understand, as tight and compact as possible, in order to meet specific user needs.
Developing a successful management reporting program
As with any key process, executive buy-in and vision are required upfront, in order to effectively implement and change management reporting in an organization. After that has been attained, you can begin taking steps toward implementing an effective management reporting program. These include:
Discovery: Identify and involve stakeholders early on, and effectively communicate the vision across the organization and to the appropriate stakeholders. Identify and access the data sources available to meet your specific data needs.
Analysis: Understand the level of effort involved in creating each report. Develop data definitions to ensure everyone interprets the data the same way. Keep the data tight and prioritize your information, in order to keep from overwhelming the data recipient, and further encouraging quick decision-making abilities.
Report creation and delivery: Create the reports and determine the appropriate delivery method of the data. Reports should be concise and comprehensive, but not overwhelming. Pay close attention to formatting and reporting, considering the specific needs of your users.
Implementation: Develop each report separately, and establish a governance process and policies to ensure data health across the organization. Define access control requirements, detailing who should have rights to access information. Minimize work by leveraging implemented software to create repeatable processes and automate report jobs for predetermined times throughout the month.
Access point: Create a common place for users to access data, such as a Web portal or SharePoint site.
Feedback: Collect comments and suggestions from users to discover ways to continuously improve the data and process.
In-house IT capabilities: Ensure that in-house information technology (IT) personnel can manage necessary systems and issues if they arise.
Determining management reporting stakeholders
For effective management reporting, the correct people must be involved in the process. As mentioned earlier, executive buy-in is a must to implement and show support for any new processes. Stakeholders should have very different requirements to bring more value and perspective to the program, and communicate specific user needs. Each potential stakeholder should be analyzed and considered individually.
In terms of access and user control, stakeholders should only be able to view what is relevant to their needs to increase security, and ensure that the right information is routed to the right people. Consider in-house training on the management reporting technology, allowing for report refinement until the final versions are settled on, as well as for data to be observed from several lenses.
Your stakeholders should develop a policy for how often management reports should be issued and the related process. Many organizations issue reports regularly for key performance indicators (KPIs), and on an as-needed basis for ad hoc decisions and analysis. For example, specified reporting may take place on a daily, monthly and quarterly basis, with additional reports issued as necessary.
Every business has the need for greater depth of reporting and more actionable data to make better business decisions. Unfortunately, not every company has the right systems or processes, or the right internal personnel to implement effective and efficient management reporting processes. An advisor can assess your current procedures, identify any process or technology gaps and implement a program to ensure the right information is getting to the right people to help grow your business.