88 Careers 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
Join a company that’s going places We’ve partnered with a leading global aircraft leasing company, to build a first class accounting and finance team in Dublin. If you’re a blue sky thinker, a play maker and a high achiever, this is an opportunity not to be missed. So get in touch if you’re: • 3-5 years post qualifiied in a large structured company • A recently qualified accountant • A part qualified accountant or accountant technician ...and we will take it from there. t: 01 477 3463 e: lhughes@barden.ie
Change language