Balancing self-service and governance in financial reporting

Utrecht, 13th of January 2017 – Executive decision making is highly dependent on the quality of the information available. In order for decision making to be effective it needs to be based on shared and trusted businesses performance information, and reporting governance is the key.

Within most organizations Excel is commonplace, which is understandable as the program is very flexible and contains a high level of functionality. However, due to human error, or multiple versions of the same report, the system also carries a large risk factor. Alternatively, companies opt for an “all-in-one” self-service BI solution for their financial reporting, unfortunately this can compound the problem.

The issue lies within the fact that finance or EPM data is the result of a complex consolidation and harmonization process of ledger data. These processes are based on corporate guidelines, strategy including even rules and legislation. These processes are centrally managed and governed to ensure the trusted view of the performance data which is shared throughout the organization.

However, Excel and BI solutions void this shared and trusted view by allowing individual users to make decentralized exports and manipulate data to their discretion, disregarding the corporate guidelines for data harmonization and reporting.

THE PITFALLS OF INDIVIDUALISTIC FINANCE

Within the last decade finance has been focused on empowering individuals to support decision making through self-service reporting. However, without an institutional guideline clearly outlining the context, goals and values. This has created more problems than solutions, mainly where individuals are no longer moving in the same direction. As Gartner Research wrote in one of their research notes:

“To drive value, the modern BI&A [Business Intelligence & Analytics] platform must not only leverage a diverse array of data sources and expand access to a range of users across the enterprise, but also assure adequate governance [of self-service content].”

When looking closer at the reporting process there is a clear distinction between the needs of the individual ad-hoc analyst and the wider management reporting needs. Nobody (and least of all the long-suffering office of finance) will disagree with the usefulness of sharing information (not “data”) more widely in the organization and providing executives with the “self-service” ability to answer some of their own questions. Moreover, the IT department, pursue their solution of “a single BI platform for the whole company” and insist on the use of these systems.

In practice, this “modern” idea of organizational data dissemination threatens to descend into an all too familiar old-school scenario: “multiple versions of data/reports” and meetings that get bogged down on the questions of “which numbers / reports are right?” and “can we trust the data?”, rather than “this is what has to be done”. The results are equally familiar: windows of opportunity missed for lack of rapid action, heightened risk of sub-optimal decision-making, erosion of finance credibility (“not in control of the numbers”) and a dangerous smokescreen for avoiding accountability, masking critical errors and fraud.

THE FINANCIAL INTELLIGENCE SERVICE

The second concept known as “self-service”, is pushed by most BI players and is in direct opposition to the needs and wishes of management. Where the greatest challenge is to find the needles hidden in an exponentially growing haystack of data. The appropriate use of the right technology plays a pivotal role in facing up to this challenge: to continue to use static, printed output would make thing worse for finance.

Few senior executives will, however, appreciate trading their current static packs in for a rich but bewildering data-discovery toolbox with the message: “Good luck! You can now do your own analysis”. In fact, they expect their (finance) teams to help them make optimal use of their scarce and valuable time and apply the capabilities for which they were hired to guide them quickly and efficiently through to the major issues and possible solutions. They expect a higher value-added service, coupled with an increase in the quality of advisory services, not the same super-charged data-dump.

GUIDED SELF-SERVICE ANALYSIS

Essentially the matters discussed are a process issue, and it is not going to be solved by attaching on fashionable new technology with blinking lights and fancy graphics. Adopting a “quick and dirty” self-service concept will create more questions than answers, and increase the pressure on the team, rather than increasing executive satisfaction.

But what is the solution? How do we combine the objectives of a “single version of the truth” with the good intentions of self-service: to optimally support the decision-making power of the organization through better and more flexible access to information (again note: not “data”!).

The key lies in guidance, which we call “guided analytics”. The solution shifts the focus on to creating a unique system with dynamic reporting and dashboard packs. Built by finance for finance, with a relevance-driven analytics connected directly to the organization’s Enterprise Performance Management (EPM) source.

In doing so the executives are unambiguously guided, in a quick and effective manner through the current business performance story. The benefits of this solution are namely: Faster response time due to live and easy to understand visual information; One version of the truth, eliminating multiple copies of the same report with altered data; Finance managed reports allowing for the proper information to be shared; Finance governed data sharing; Secure data sharing and collaboration; Enabling finance to tell a complete story with Storyboards and narratives in document, fully connected to the source.

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