In search of the holy grail of financial reporting, exploring and finding what works best for you or your organisation at a point and stage in time will always be the question.
F R (Rhys) Robinson provides his perspective.
While spreadsheets allow for the easy design of extensive financial reports with a wide range of analysis and design options, they do have notable limitations.
This is particularly the case when an organisation grows in size and complexity, and you are still required to use spreadsheets for the main function of consolidation and reporting of financial results. Here what should be simple becomes overly complicated, and you inevitably start looking at alternatives, such as software solutions to replace your current legacy and/or manual processes.
However, this in itself can be a challenge. Here many solution providers or advisors will try and convince organisations to implement complex, time-consuming and overpriced solutions, mainly because the reporting requirement is not clearly defined upfront.
In this article I will highlight some key elements to consider to ensure an effective, speedy and cost efficient way of implementing a consolidation solution. One that will provide you with all the necessary automation, analysis, reporting capabilities and database security your organisation requires.
I am often asked what type of reporting solution is best. However, this is always a difficult question to answer. The reality is that many software vendors tend to sell their products and time based on fear, complexity and over-complicating the scope of one’s business environment.
In my experience, many vendors also up sell the extras or ‘nice-to-have’ features. These are, however, in most cases completely unnecessary. In addition, these nice-to-have features are also often impractical to maintain and end up slowing down the end solution, which certainly doesn’t translate to efficient reporting.
Here are some of the available scenarios to assist you in clarifying your financial reporting options.
Employing the services of a software development company to design a tailored software solution normally takes a considerable amount of time to implement with many tweaks and fixes in between. An additional challenge is that by the time you have a workable system, your initial requirements most certainly would have already changed.
This means you will inevitably opt to extend the services of the software consultants in order to make the necessary software and reporting changes. However, remember that these software development companies often rely on additional billable hours derived on a ‘time and material basis’.
This means that in all likelihood the final cost of implementation is well above the initially quoted project fee. One can argue that a bespoke system can be more cumbersome to maintain.
While certain top-tier solutions do cater for budgeting and forecasting capabilities in the form of specific functional modules, in most cases you will require the services of a software consulting team. Here the consultant or team of consultants will then take up a considerable amount of time and company resources to complete the additions. Important to note here is that the business reporting requirements regularly evolve and changes in the system should be real-time, leading to immediate reporting results.
Here you have several options available to you. These include software applications, which form part of many offerings provided by top tier companies. Seriously considering niche players in this field, possibly even a local solution provider may be the best overall decision due to their core focus. For all these scenarios, remember to pay attention to these key points:
While some service providers may quote you a fixed cost for implementation, in most cases the end cost of the project will more than likely be well above the initial quoted fee, as the requirements, time and project scope grows. In most cases, a project exceeding six months will impact the business reporting requirements in some way.
Solution providers that charge an hourly fee for the implementation of software often rely on the complexity and naturally will require more time, resources and money to complete the assignment.
Companies that work on a fixed cost and fixed time on the other hand usually utilise their resources more effectively in order to complete the project on time and in scope as this is their business model.
When it comes to the dynamic finance function, most organisations aren’t equipped to modify their existing reporting solutions to cater for the immediate change in requirements.
This means that should there be changes to for example, IFRS requirements, new reporting line items, new cost centres, or new reporting formats, they are potentially reliant on the service provider who did the original implementation to make these basic changes for them.
However, in certain instances even if the system is designed in a selfmaintainable way, which will allow you to make the changes, you may still want the option to contract a consultant to perform the work due to internal time constraints.
Having this option available is valuable at times. However, if this is the case, the organisation will know exactly how long it will take to effect the necessary changes, leading to controlling the reporting output, minimising cost and managing risk.
The golden rule is that the faster the implementation, the more likely the adoption and success of the consolidation solution.
In summary, finding the right balance for your financial reporting requirement is subject to key considerations:
Automating and streamlining your financial consolidation process is much simpler than one thinks. Whether your organisation uses spreadsheets or legacy systems (or a hybrid of these) the main purpose of this article is to offer guidance for any organisation to find the ‘right balance’ in addressing and implementing a more efficient, holistic and sustainable reporting environment.
By now the penny should have dropped …