CPA Congress- 2009

Knowledge � Experience � Insight

Designing an effectivereporting system that

supports decision making

John Corrigan

November 2009

Designing an effective reporting system that supports decision making 2

Session outline

1. Changing environment

2. Identifying management needs and expectations

3. Key success factors

4. Technology considerations

5. Aligning to organisational objectives

6. Value and impact

7. Concluding comments

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Reporting alert !!!

Rule of thumb: 20% – 70% of your reporting is:

� Unnecessary

� Ineffective

� Does not add value

� Does not improve decision making

It can and should be eliminated

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Story of Tom

� Technical rather than information focus

� Worked in a silo...not seen as part of the business

� Did not understand and sell his value

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Changing Environment

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Challenges

� Globalisation� Technology� Greater demand forinformation

� Speed / accuracy /relevance

� Constant change� Professions / businessmodels

� Focus on compliance

� Greater accountability� Complexity of business� Competitiveness� Diversity of demand� Knowledge base� Information availability� Information users at alllevels

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Finance’s primary objectives

FinanceProviding theright servicesfor the rightcosts

20%

50%

30%50%

$30%

Insight

Reporting & Control

Transaction Processing

20%

20%

50%

30%50%

$30%

Insight

Reporting & Control

Transaction Processing

20%

Optimisinggovernanceand control

BusinessProcesses

Risk managementSustainableperformance

Financialmanagement

Shareholderinvestmenttime horizon

Current state

Future State

Long term

Short term

Information expectationsFocused Wider

Shareholderinvestmenttime horizon

Current state

Future State

Long term

Short term

Information expectationsFocused Wider

Valuecreation

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Direction of best practice

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Identifying Management

Needs and Expectations

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Where are we now?

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Management reporting demands

� Issues� Ad Hoc� Regular / business reporting� Inform� Investment� Compliance

Each demand requires a different understandingand approach

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Management receive a variety of information

External

Management

Internal

Vision Customer

satisfaction

SEND RECEIVE

Reporting must support each of these areas with the information available

at the right times to support timely management decisions

Industry trends

Macroeconomic

indicators

Indication of

future performance

Current results

and likely outcomeStrategic thrusts

Investment

rationale

Current performance

and forecasts

Risk status

Strategic initiatives

Co-ordination

& comms

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Understanding your audience

� Who are they?� What their needs?� What do they understand?

� Financial knowledge vs. business understanding� Financial vs. non-financial measures

� What is the best medium to communicate with them?

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Reporting emphasis depends on culture

“Cheers Mate”

There’s a calculationerror on page 1357

Engineering Firm ‘Arty Pharty’ Firm

Our Mission

market shareholder returnsmproving a global portfoliomargin, knowledge-intensive,ofessional services businesses.

-100,000

100,000

300,000

500,000

Jul Aug

“Fabbo Darling”

Can we soften some of thecolours

High Tech ‘Geek’

“Awesome Dude ... Likewicked”

But I cant download it on myBlackberry

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Audience focus

FOCUS on NEEDS not WANTS

Too much time and effort is spent on meetingunnecessary wants and not the critical needs of thebusiness

�Less is more – quality over quantity

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� Limit its use� Do not assume knowledge and understanding� Intimidates� Complicates and confuses

Terminology

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Key Success

Factors

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4 Ps of reporting

Where are your reporting issues ?

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Information components

�Material�Relevant�Reliable & Credible�Comparable�Understandable

Source: Adapted from CIMA Performance reporting to Boards – A Guide To Good Practice

Focus should be on Quality not Quantity

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Data /Information confusion

� What do you mean by:» data» information

� How do you use them?

Beware‘Data Swamp’ - Technology drowns you in data /measures

If it does not lead to decision making – you should bequestioning why is it being collected and its use

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Strategies - 11. Match your reporting format to the level ofunderstanding

2. Mix and Match reporting styles(graphical/numeric/analysis etc.)

3. Combine both financial and non-financials, strategicand operational

4. Self service capability– be available on demand

5. Layer reports

6. Structure flexibility

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Strategies - 2

7. Implement a process for new report development

8. Develop a report DNA database

9. Focus on exceptions not the norm

10. Give analysis & recommendations – not description

11. Focus on forward trends/projections than past

12. Educate your audience on how to use your reports

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Variance analysis / exception

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Sales competition (retail race)

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Technology

Considerations

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Shifting focus: decision platform

Single Platform for Decision MakingSingle Platform for Decision Making

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Technology� Current technology systems will primarily determinethe shape and efficiency of your reporting system

� Critical as an enabler but is not the solution - If you donot address the fundamentals correctly, technology willnot solve it

� Your reporting should not be a slave to it� Systems need to be integrated as much as possible� Minimise reliance on Excel – if you are a heavier userfor your reporting you should look at more analyticalsoftware to deliver it

� Develop ‘one source of the truth’

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Caution - dashboards

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Drill Down Capability

Still Fully Interactivewithin each section,

Slice and Dice, DrillThrough, Nest

Dimensions, Drag andDrop, Graph, Create

calculations

Data Entry andwrite back

capabilities fromwithin Report

Card

“My Analysis” Link forbuild your own

interactive analytics

2 Clicks to select anemployee and thewhole report card

refreshes

Drill down capability

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Aligning to

Organisational Objectives

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Process

� Understand what are the objectives� Identify the information that best measures thoseobjectives

� Identify the data sources to provide the basisfor that information

� Assess how each report meets /supports thoseobjectives

� Eliminate or change where necessary

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Success

� Establish a high level summary report that clearlylinks objectives to critical measures / KPIs

� All other critical reports should compliment/supportthat summary report

� All key reports should have a focus/link (specificreference) to the key objective(s) that it issupporting or reporting on

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KPI’s and strategy map

Page 37

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Value and

Impact

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Feedback� Ask our audience for feedback and input� Carry out a reporting audit

� Quantification� Effectiveness� Efficiency

� Determine how management see / use your reports� Frequency that they act on the reports

� What do they need in the reports to help them� How do they respond to your reports

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Need to review

� Ensure consistency of information� Improve decision making capability� Improve discipline of your reporting process� Increase understanding and knowledge� Reduce build-up of unnecessary reports� To reflect changes occurring in the business

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Impact

� Increased reliability of information� Improved reporting timelines� Increased business understanding� Improved controls� Reduced costs� Increased partnering opportunities

An improved reporting system will lead to moreeffective decision making process for yourbusiness

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Concluding Comments

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Remember Tom?

Has not changed

But what will you do differently... now?

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Concluding comments

� Focus on what you users need to know vis-a-vis wantto know

– Continually reassess if your reporting is satisfying your audienceneeds

� Educate your audience� Monitor and control your reporting process� Keep reporting simple but effective� Focus on quality not quantity� Be innovative and adaptable, always looking toimprove

� Continually reassess your value to the business

Never, Never, Never, ... assume understanding!

CPA Congress- 2009

Knowledge � Experience � Insight

THANK YOU

John Corrigan

0416 209 997

jcorrigan@moorestone.com.au