Jun 14, 2021

Data Transformation: Rethinking Financial and Operational Reporting

Robert L. MorganBy Robert L. Morgan

Have you ever considered the level of effort and time it takes to produce and distribute monthly financial and operational statements? What about the forecasting processes? Optimizing all of these financial and operational processes is crucial to maximizing your human and technological resources.

Many organizations are starting to rethink their financial and operational reporting processes. They’ve come to understand how much effort goes into producing and distributing reports and how the systems that support these processes may be lacking. They’re also realizing that much of the data presented on reports and dashboards are not even used; in some cases, entire reports and dashboards are not considered. This can lead to management becoming frustrated and, often times, skeptical of the veracity of their data. Consider the following problem areas:

  • Growth (whether organic or through acquisition) results in lengthy manual processes for reports and dashboards that don’t necessarily support today’s reality.
  • Key stakeholder turnover or attrition, without appropriate training and on-boarding processes, leads to broken processes and unused reports and dashboards.
  • Reporting and analysis tools that, at one time, were sufficient, are now making it difficult to produce detailed, timely, accurate, and meaningful results.

Silhouette incorporating visions of charts and graphsSeeing the need for change, many organizations are undertaking what’s known as a financial and operational data transformation initiative. There are two main phases to data transformation – assessment and implementation. In the assessment phase, management and key process/system stakeholders are interviewed, the results are documented, and recommendations are made for improving the people, processes, and technology used to support them. In the implementation phase, the recommendations are acted on and prioritized based on management’s goals and needs. This could include the development of new standard operating procedures, implementation of new controls, development of training curriculum, and the selection of new reporting, planning, and data analytics software to implement.

To optimize the implementation, many organizations are turning to corporate performance management (CPM) software. Many of these applications contain data warehouse, reporting, planning, and dashboard capabilities contained within a single piece of software. In addition, direct system integrations, automated report aggregation and distribution, and a collaborative workflow environment streamline inefficient and outdated business processes.

The data warehouse component enables organizations to integrate disparate systems to store and aggregate all the key financial and operational data in one place. This could include systems such as accounting, operational, payroll, among others.

Arguably the most significant element of CPM software is the financial and operational reporting component because it presents to the report consumer the performance of all the activities that occur within the business. Another critical component to the software is the planning capabilities that support the budgeting and forecasting processes. A CPM solution can address a wide range of important planning concerns, including consolidating planning data from disparate systems and management of the planning processes across the organization, using the combination of a collaborative environment and workflow functionality.

Finally, being able to visualize the data in the form of charts and graphs is critical as well. It enables users to independently analyze the data by being able to “slice and dice” the data as they see fit to answer business questions, understand root causes, or identify new opportunities.

Robert L. Morgan is a senior manager at Schneider Downs & Co. Inc. in Pittsburgh. He can be reached at rmorgan@schneiderdowns.com.

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Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.