A State of Chaos
In many businesses today, management reporting is in a state of chaos. All too often, it is ad-hoc, labor intensive, and cumbersome. Many times, the accuracy of management reports themselves are suspect. The information that drives this reporting is frequently housed in a myriad of unconnected (and often conflicting) data sets and systems. Reconciliation is tenuous at best, as many senior Finance officers will attest. Excel spreadsheets emerge and abound to fill the need for business intelligence, but this is far from an ideal solution.
In such an environment, decision-making can only be slow, tentative, and fraught with fear over the risk of unintended consequences. The default tendency from a managerial perspective is to simply continue doing what has worked in the past, but this has its own risks and those risks are growing. All in all, this is not an environment conducive to long term organizational prosperity. If information systems came with expiry or “best before” dates stamped on them, these dates would all be long since passed.
Recent Gartner Group research substantiates this rather stark picture. They estimate that between 50% to 65% of larger organizations still use Excel for budgeting and planning. In their words, “These are labor intensive activities that also create governance issues due to the high frequency of errors in spreadsheets and the difficulty of reconciling spreadsheet data back to the transaction sources.”
The First Step
The first step towards a more robust compliance capability, better management controls, and better strategy execution is an information architecture that integrates disparate systems and data sources. In some cases, this will require a modern-day ERP solution that can integrate with current Business Performance Management applications, Data Warehouses, Customer Relationship Management systems, and the like. It is the foundation of your ability to link together all the key data elements that are needed to give you a functional instrument panel with which to pilot your business.
As anyone who has attempted to steer an appropriate strategic management course with the sole aid of unreconciled spreadsheets will attest, it is an inherently dangerous endeavor. But modern-day ERP solutions, when integrated with core financial systems, data warehouses, Customer Relationship Management and Business Performance Management applications, are the equivalent of functional instrument panels in aircraft. No one would consider boarding a craft without this equipment, no matter what their degree of confidence in the pilot. But with such a “dashboard” in place, a steady strategic course can be maintained and adjusted as necessary, turbulence weathered, and a desired corporate destination safely reached.