Interactive Data Reporting: A Model for Smart Financial Management

Posted by Steve Berry

Jul 24, 2018 8:45:00 AM

Interactive Data Reporting

Over 40 years ago, Saudi Oil Minister Sheikh Yamani was quoted for this insightful thought on global development: “The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.”The world economy now turns on something more valuable than petroleum: DATA. Unlike oil, data isn’t in jeopardy of depleting. Over the last 20 years, enterprises of all types have faced an ever-growing wave of data growth – with many just trying to stay ahead of that wave by capturing and storing it. The idea of actually making use of it has been an evolving challenge. This blog post explores the evolution of interactive data reporting and modeling.

The Evolution of Interactive Data Modeling

The first baby steps into enterprise data interactivity took the form of adding drill-down capability to financial applications. This simple step forward added data transparency and efficiency to the financial close process and enabled variance analysis (budget/forecast vs. actual) to make leaps forward.

Historically, ERP’s were summaries of summaries from disparate systems or ledgers. Answers to what made up the financials were buried, if not effectively lost, once the books were closed. Today, the core value to having all of this very detailed, transaction-level data is that every “big” number on the financials is in a very real way the sum of thousands, millions, maybe even billions of individual transactions. Each transaction has its own specific characteristics.

The next step – and really the impetus to where were are today – was online analytical processing (OLAP) which took data elements of “like” kind and joined them into multi-dimensional cubes that could then be related to other cubes – eventually representing the complete chart of accounts of an enterprise.

For example, an enterprise might have a sales cube. This cube would be comprised of the invoice line items of every sale and customer credit the company generates. Then the enterprise would have a cost of sales cube, similarly detailed with every line item used to fulfill every invoice.

Imagine the power of relating these two cubes! Exact gross margin by invoice. Summarized, direct gross margin by customer. Or cut another way, direct margin by SKU (Stock Keeping Unit). This is the power of interactive data reporting.

Now add an administrative expense cube – detailed by invoice, expense reports, payroll detail, etc. Break it out by function – Accounting, Sales, Marketing, Executives, and Individual Cost Centers.; Now allocate these costs to reflect how they individually support sales. Total profitability by each product you sell. And, all of these packaged interactive cubes of transaction-level data are then fed up to your balance sheet and income statement. Every number explainable down to each individual transaction. Now that’s efficient!

The old challenge was to get the numbers correct during a financial consolidation and close process –month end, quarterly or annually. There seemed little time for the real value-add which was analyzing the numbers to tell the true story of what happened. With the proliferation of Big Data-enabled engines, business intelligence (BI) layers that add unlimited scalability on cube-based analytics, and now AI enabled predictive analytics that can see patterns more efficiently than humans can, we are truly in an age where interactive data capabilities enable smarter financial management.

Advances in business technology since the advent of the PC have had exponential effects upon how entities budget, plan and report. What is the effect when you bring AI and predictive analytics to EPM?

So how do we make this new interactive data modeling capability actionable?

Start with recurring issues from your financial close, and build checklists and calendars around them. Doing this will allow you and your team to anticipate issues, identify them early and begin fixing underlying process control weaknesses. Look, you’ve improved operational transparency through interactive data management! And now your numbers will not only be correct at month end, but also in real-time as they are booked. This not only gives you more time to analyze results during the month end close, but it enables more frequent financial reporting for the internal customers that use the data.

Imagine getting to a point where by using interactive data reporting and eliminating process errors, your organization can publish daily sales reports. Imagine the power you would put into the hands of your sales and marketing team. Imagine the benefit to your executive team in having visibility to these sales number every day. The ability to see what customers and products are represented in that number and plan to execute against other prospective sales in the pipeline would be invaluable.

When it comes to EPM, the old adage, “You only get what you pay for” doesn’t apply. You can actually get a lot more — if you move your on-premises EPM (or your Hyperion finance) solution to the cloud.

Interactive data reporting and management is an evolving process within an organization. It begins by instilling a culture of using the data to analyze your processes, evaluating them, refining them, and continuing that loop. It is part of the doctrine of continuous improvement process (CIP).

By building this culture of CIP through the use of interactive data reporting, your underlying data becomes more robust and reliable over time. This then allows you to open up greater access to the data to those in your enterprise that can use it in real time. It’s safer. It requires fewer layers of people to explain how or why a number must be “asterisked”. With greater reliability, comes greater power to make decisions and predict the results. Congratulations, you’ve empowered your finance team and improved enterprise performance.

At Strafford, we provide our clients with powerful tools that help address the increasing complexity of financial consolidation, close and reporting. Our EPM solutions provide increased ease of use, better access to data, improved data and process management, and reduced cycle times for a faster, more compliant close.

Are you ready to push boundaries and converge strategy with technology? Contact us or give us a call (1-603-434-2550) so we can help you reach your goals.

Topics: Consolidation and Close, Budgeting and Forecasting, Finance Best Practices, Finance Operations