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keystrokes and create just one
version of the truth; and
• How to train staff to adopt best
spreadsheet practice.
Management information is a long
way from business intelligence: you
will probably find that management
information is collected in a variety
of ways which are perhaps creative,
but certainly time-consuming. The
information collected will probably be
incomplete, inconsistent and unfit for the
business’s needs. The process may have
been imposed by a group headquarters
many miles away, or even by a previous
owner, but its usefulness (or lack thereof)
won’t have been challenged recently
as all resources are tied up doing the
traditional finance stuff. If Excel is
involved, forget it as the process will be
virtually impossible to change. Frankly,
you will need to put the business back
into business intelligence. You will need
to consider:
• What management information is
necessary but missing, or redundant
but being collected;
• Whether financial and non-financial
metrics are aligned – in terms of
time or location, for example – and
whether meaningful business ratios
covering both can be produced; and
• How to design a process that defines
the information needs of the
business (detail, ratios, sub-totals and
so on) and achieves business buy-in.
You will then need to reconcile this
information with that which is
contained in the reporting of the
traditional finance stuff.
Management reports are either too
short where it matters, or too long
where it doesn’t: too many figures,
spurious accuracy, too many rambling
commentaries, inconsistent formats; all
“financial” and not enough “business”.
Why is management reporting so
neglected? You will need to consider:
• The information management really
needs to run the business;
• How best to synchronise lower-level
“operational” reports and high-level
“board-type” reports; and
• The appropriate format, taking into
account the management team’s
style.
Budgeting and forecasting processes
aren’t fit for purpose: the processes, if
they exist, are probably limited to a list
of basic macroeconomic assumptions to
use, a timetable for inputting data, and
an unfriendly set of blocking controls of
“the computer says no” variety. All very
manual, with everyone obliged to spend
lots of time creating their own Excel
files to ‘feed’ the required inputs. What
is missing is any method of modelling
the future from operational metrics in
use across the business. You will need to
consider:
• How to identify and document the
real business drivers in a way that
will allow you to forecast them;
• How the process should be rebuilt to
improve forecasting accuracy and
control, and reduce time; and
• How to add real value. Ask yourself:
what are the real time wasters and
bottlenecks, and what information is
currently missing?
Proper data management doesn’t exist:
collecting, storing, consolidating and
maintaining management information –
including non-financial information – is
probably unstructured and uncontrolled,
resulting in duplication of effort. You will
need to consider:
• How to extract information from the
key data sources in the business and
combine it in a reliable, efficient way
so that it is accessible by those who
need it;
• Categorisation (of products, for
example) will be a problem, however
much you might try to get it right.
The factors that need to be measured
tomorrow may not even exist today,
and categorising based on historical
usage restricts future analysis. The
best you can do is to stay as flexible
as possible; and
• Who should take responsibility for
maintaining the master data?
Real variance analyses are non-existent:
you will be unlikely to find anything
other than basic arithmetic “actual
– budget” variances. Many finance
departments seem to have forgotten that
the point of the analysis is to explain the
‘why’. You will need to consider:
• How to define the key drivers
underlying profits, working capital
and cash to understand how the
figures are evolving (in terms of
volume, price and efficiency effects,
days’ credit, meaningful cash flows
and so on); and
• How to automate the production of
these variance analyses so that they
become embedded in the culture and
are used by management.
Why me?
As a Chartered Accountant, you are
well-positioned to become a real business
partner. Your listening skills, logical
approach and data management ability
combine to produce creative solutions.
Your rigour, innate sense of value for
money and healthy cynicism ensure
that these solutions are viable. And your
tenacity, sense of humour and teambuilding
skills ensure they are accepted.
What issues will I encounter?
Things to watch out for include:
• Initial suggestions made by
others of how to improve things
will be unrealistic. They will be
too expensive, take too long to
implement, or fail to solve the
problem (or create others);
• Management won’t know how
business processes actually work
anymore, so spend more time
listening to the people who do –
those who use them, day in, day out;
• Excel is not the panacea, but it is
really hard to wean people off it once
they have it; and
• You will need to keep challenging the
status quo, and you will constantly
face resistance.
Looking at things from an operator’s
viewpoint, rather than that of the finance
function, greatly increases your chances
of becoming a real business partner.
PETER GILLESPIE
Peter Gillespie FCA is founder of Meaningful
Metrics. He worked in manufacturing and
services in several countries for 30 years.
ACCOUNTANCY IRELAND
APRIL 2017