Thursday, December 31, 2009 | Last Updated Friday, February 12, 2010 15:03 Pacific/Honolulu
TechKnote #0601002
Performance Management: Powerful Reporting
by Donny C. Shimamoto, CPA.CITP
Donny has a BBA in Accounting and MIS. He gained a broad range of experience in financial & systems auditing, business process redesign, technical project management, and application development & integration, while working at PricewaterhouseCoopers LLP. In 2001, he founded IntrapriseTechKnowlogies LLC—dedicated to enabling small and medium-sized organizations to leverage enterprise technology and knowledge management strategies.
1 Introduction
Reporting is one of the key responsibilities of a CFO. Whether it’s the end of the month or ad-hoc analyses, business units rely upon the services of the CFO and the Finance department to provide them with quick and accurate financial reports and managerial analyses. This is why reporting is often one of the first projects undertaken in a business performance management (BPM) initiative.
1.1 Add Power Behind Existing Spreadsheets
Many organizations already have a set of spreadsheets that are used to support their standard reports (e.g. end of month financials, variance analysis, consolidation, cash flow). Data is often downloaded from the general ledger (GL) system into a spreadsheet and then massaged or linked into report templates before being printed or distributed via e-mail.
Most BPM systems (BPMS) address this specific need using a database server. Data can be imported from the GL system, or multiple GLs if you have multiple entities using different systems, on a scheduled basis. Data from operational systems can also be imported to support assumption or business driver analysis. Existing spreadsheet templates can be leveraged for presentation of the data, and new reports can be easily created using BPMS-specific spreadsheet functions or add-ons.
While the GL system may have a reporting function, BPMS excel over GL systems in that they can capture non-financial data and also usually have a lot of flexibility in terms of reporting formats and querying (both standardized and ad-hoc). The technology they use (sometimes called OLAP or data cubes) is also superior and much more efficient in querying compared to the GL—allowing reports to be more flexible and generated must faster. This is due to a fundamental difference in their purposes: the GL is designed to record transactions, whereas BPMS are designed to support hierarchies and perform computations quickly—just think of them as spreadsheets on mega-steroids.
1.2 Enable Flexibility and Security
Flexibility comes in the form of several functions that support standard requests in reporting: drill-down, drill-across, and drill-through. In a BPMS reports can be derived by aggregating detailed data into summarized reports. Because the detail is stored in the same system, a user can double-click on a cell that is the sum of the detail and be automatically taken to another template that displays the detail. Access can be controlled at various levels so that users are limited to only the reports, divisions or accounts that they need to see.
For example, if a user were looking at company-wide net revenue on a profit and loss (P&L) report, a drill-down on the number would show a report with only the components of net revenue: gross revenue, discounts, returns and allowances; totalling to the net revenue number. A drill-across would show the P&L report with each of the divisions within the company side-by-side; totaling to the company-wide P&L.
Once the user gets to the lowest level of detail within the BPMS, that’s when the drill-through function is invoked. This normally takes the form of a link back to the original transactional system that the data came from (e.g. the GL system), showing the actual transaction(s) that generated the lowest-level detail entry in the BPMS. This assumes that the user has access to the transactional system and the access required to view the transaction; if they don’t, they would simply get an access denied error message.
2 Summary
A BPMS can help make report generation and distribution more efficient, flexible, and secure. No longer will CFOs have to generate separate reports for every possible drill-down or drill-across that may be requested—get rid of huge paper “report books”! Just load the data into the BPMS, link the appropriate templates to the drill-down and drill-across functions, and users can pull their own reports (based on their access rights). The end result—secure self service reporting!