The latest FSN research The Future of Financial Reporting 2017 (you can get your copy here) shows that boardroom confidence has been dented by doubts over data quality, the inability to make decisions on the spot and an incomplete picture of enterprise performance. Indeed, 40% of CFOs fret that their data is not always trustworthy and only 50% say ad-hoc questions about performance can be answered immediately in the board meeting.
The board pack is the product of a monthly process that starts with the financial close in reporting entities and ends up on the board room table. But it’s a linear process that can only travel at the speed of the slowest link in the chain. Furthermore, any errors that arise, are propagated perfectly along the reporting supply chain until they end up at the corporate centre where they are difficult to resolve. These two issues taken together illustrate why a piecemeal approach to process improvement is unlikely to improve matters in the boardroom.
At the heart of the problem is a lack of data governance. For example, FSN’s research highlights an unhealthy dependency on spreadsheets fuelled by inflexible ERP and CPM systems that are impermeable to change. Hard-pressed IT functions unable to modify reports in acceptable timescales, unwittingly encourage the introduction of even more spreadsheets to ‘paper over the cracks’ leading to a Spreadsheet-Spiral™ of ever-increasing proportions.
But the challenge of managing data is set to become even more testing. The days when the most valuable data came directly from the general ledger have gone. In a period of rapid change, it is new data sources (social media analytics, web statistics, customer behaviour, CRM, supply chain statistics and other operational data) on the fringes of the organisation that hold the key to competitive advantage. But finance functions that remain shackled to fractured legacy systems neither have the time nor the capability to exploit it.
For most the way forward it means a step-change to a unified decision-making platform in the cloud. Indeed, FSN reports that the cloud is an accelerant, allowing businesses to quickly standardise and automate their core financial processes while creating a more agile environment for the future. Three decades of tinkering at the edges of group reporting shows that it does not deliver sustainable improvement in board room reporting. On the other hand, the latest FSN research identifies how a more joined-up approach in the cloud enables organisations to make enduring change for the better and sets the groundwork for a future of real-time, self-service reporting.