Reporting Strategy: More than a Slimmed Down Report Stack

Our research indicates management in large organizations can spend up to 50% of time developing, modifying and reviewing reports. For a company with over $1B in revenue, the quantity of reports can stack higher than the empire state building.  In many cases, the general perception is more information is better.  However, too many reports can have an adverse effect on overall efficiency.

The problem of excess reports is more common in publicly traded companies with complex structures, multiple lines of business and global operations. Organizations should seek to eliminate unnecessary reports and focus on enhancing the value of remaining reports by following three simple rules:

  1. Standardize data definitions. The root cause of inconsistent data definitions begins at the bottom of an organization.  Business functions tend to act in silos when defining metrics and reports for analyzing the business.  Employees are more concerned with supporting their own responsibilities instead of seeking to understand the other business functions. For example, operations classifies a hose and a coupling as two distinct products categorized in two separate product lines.  At the same time, the commercial team classifies the combined product, a hydraulic hose, in yet a third product line.  Inconsistent product line definitions force the operations and commercial management teams to create two reports to account for the difference in production and sales numbers.  A company must develop a cross-functional team to create standard data definitions and a global data model with consistent dimensions for analyzing the business, such as geography, division, customer or product line.                                                                                                                               
  1. Align shared processes. When more than one business function is involved in the same process, such as Sales and Operations Planning, common information is not always leveraged. For example, base numbers for revenue and capacity planning might be calculated differently. The sales team develops a revenue forecast to help the organization understand growth opportunities and the demand planners engage sales and marketing to develop a product demand plan to provide capacity requirements.  Additional reports are developed by finance to bridge the forecast gaps.  Two separate processes are driving the need to create multiple reports that likely only reconcile with heavy manual manipulation.  Alignment should begin at the process level with defining a standard, integrated process for shared information, communicating the changes and implementing policies and controls to ensure the new process is followed.
  1. Challenge reports. Often a one-time, ad-hoc request for information becomes an institutionalized report and added to a formal reporting process.  Employees fall victim to the ‘I’ve always done it this way’ syndrome and mindlessly create the same report over and over without questioning the value. Time and resources could be focused on value-added but are often wasted.  For example, the Treasury organization created a daily cash position report distributed to over a hundred managers. The value of the report was questionable. The Treasury manager decided to test the value by not sending the report for a week.  Nobody complained of a missing report.  If the purpose of a report cannot be explained and the report is not useful for business decisions, stop creating it.

A company can improve efficiencies and the effectiveness of its management team by streamlining the reporting process.  This is achieved by aligning data definitions and processes, as well as, eliminating valueless reports. Trenegy is a Management Consulting Firm that helps companies solve complex business problems and improve efficiencies by helping with Reporting and ERP Strategy, Business Process and Organizational Alignment and Internal Controls.

Is Your Cost Accounting System Draining Resources?

Manufacturing companies struggle to effectively and efficiently design a cost accounting system to properly value inventory, provide data for profitable and competitive product pricing and enable operational control of costs.  As such, these companies find themselves unable to explain root causes of variances, lose business to competitors because of overpricing, lose money on sales due to underpricing and fail to accurately value inventory because of woefully inaccurate standards.

However, we have found many companies in this position are unwilling to modify their costing system.  After wrapping-up a recent assessment of a manufacturing company’s financial systems and processes, it finally struck me there was one common message received from the client after this assessment and the dozen I have done before it (and I’m paraphrasing): “Don’t touch my costing system.”

Regardless of the talk of change and blowing-up the status-quo, the costing system of yesteryear seems to always be off-limits, even though it fails to meet its primary objectives.  Why is this the case?

Primary Objectives

Let’s attempt to answer the question by acknowledging the primary objectives of any costing system:

  1. Produce financial and tax statements: Properly state inventory values and recognize costs of goods sold (at actuals) per GAAP at the end of a reporting period (may require manual allocations depending on costing approach used).
  1. Control costs: Enable cost visibility at the cost center and/or activity level to promote operational control of production related expenses.
  1. Capture product costs for pricing: Capture all relevant product costs throughout the value stream (e.g. design, manufacturing, marketing, back office support, etc.).

The vast majority of costing systems being utilized address one, maybe two, of the primary objectives, but very rarely all three.

Assessing

The most common mistake companies make is to accept the inefficiencies within the costing system to get the costing information required by the business.  Therefore, the assumption is the cost accounting system is functioning as designed. This is a false assumption.

Instead, companies need to delve a level deeper to understand the true accuracies (or inaccuracies) of the system and resources (time and money) required to maintain the system.  To do so, we ask our clients to complete the following survey:

cost accounting form 2

The output of this survey helps to shed light on where deficiencies may exist within the cost accounting system and creates the start of a business case for challenging the entire process.

Overhauling

Performing an adequate assessment of the costing system will help pinpoint weaknesses needed to be addressed.  There are times where a tweak here and there can address the gaps; however, a complete overhaul of the system is oftentimes required.

So where to begin?  Start by following these four steps:

  1. Gather requirements: Invest time to inventory and document the requirements for stakeholders and internal customers of the costing system. Take advantage of this opportunity to also standardize metrics used across the functions.
  1. Design from scratch: Design the costing process from scratch, assuming no constraints (e.g. technology), taking into account the requirements obtained from step one. Determining the right costing methods (standard, actual, average, activity based, etc.) should be evaluated during this step.  Note: More than one process or system may be required to fulfill all of the primary objectives.
  1. Align roles and responsibilities: Identify the roles within the organization who will be supporting the costing process and delivering information and communicate appropriately. Expected services to be delivered by the costing system should also be clearly defined and communicated.
  1. Create an implementation roadmap: The suggested approach for implementing a new costing system is to identify and prioritize all of the initiatives required to address existing gaps and meet the future state requirements. Breaking the implementation into smaller, more manageable projects, allows for the organization to attain benefits along the way. And it is often times easier for the business to absorb the changes.

It’s time to let go of the costing processes providing little to no value.  An effective costing process can provide a significant competitive advantage for the business.  Furthermore, the right costing process can act as a catalyst to break down organizational silos between the accounting, operations and commercial teams.  Trenegy has assisted a number of companies with implementing an effective and efficient costing system. For additional information, please contact us at: info@trenegy.com.

 

3 Warning Signs of a Never-Ending ERP Project

This article first appeared on Peter Purcell’s blog, Tech and the Business of Change, on CIO.com.

Enterprise Resource Planning (“ERP”) implementations are never easy. Many projects start with excitement and high levels of participation but quickly devolve into run-on projects that are over budget and rife with change orders. Team members are deflated and often feel as if the project will never end.

Recovering and bringing the project to completion often costs as much as the original budget and end users do everything to work around the new system. ROI is nowhere near what was originally promised, key stake holders lose their jobs and the system is universally hated.

There are three warning signs that an ERP project is starting to spin out of control. Addressing them quickly helps avoid going through a project recovery cycle. The warning signs include:

  • Steering Committee Apathy
  • Out of Date Project Plan
  • Inconsistent Issue Tracking and Status Reporting

IT will have visibility to these signs long before key stakeholders become aware that a problem exists. IT needs to take responsibility to notify business partners and help make sure the weaknesses are addressed quickly and effectively.

1. Steering Committee Apathy

A steering committee comprised of key stakeholders with P&L responsibility provides a company-wide perspective when considering recommendations from project team members. The Committee needs to meet on a regular basis throughout the project to ensure the project stays on track.

The euphoria of creating a steering committee and kicking off a long-term ERP project is often replaced by indifference and apathy. Key stakeholders who were very active in the ERP selection and project kick off phases stop coming to meetings. Critical decisions made by the remaining attendees are second guessed. The steering committee no longer has power over the project and becomes ineffective.

Steering committee disengagement is a clear sign the project is at risk. The project team members will do their best to make business decisions, often in a silo. As a result, change orders will be generated on a regular basis, processes will not be efficient and end users will not be eager to accept the resulting changes in how day-to-day activities will be performed.

2. Out of Date Project Plan

Good project managers create an overall plan and budget at the beginning of the project then parse out one or two week chunks of work to responsible team members. The plan and budget is updated and communicated throughout the project to ensure team members understand how tasks are interrelated and do no lose sight of the overall end-goal. Most importantly, an updated plan and budget helps the team identify issues and road blocks early, preventing unnecessary surprises.

On many projects the overall plan and budget stop being updated on a regular basis as the manager starts focusing on managing day-to-day activities. Issues logs, team and company politics, status reporting, and integrator delivery problems take up the bulk of a project manager’s day, leaving little time to update the plan.

A lack of an updated project plan is a second sign the project will not be completed on time or on budget. Project team members will get lost focusing on tactical day-to-day activities that may not be necessary. Critical tasks are overlooked and the project seems to go on forever. Worse, third party participation never seems to end – the consultants just do not go home.

3. Inconsistent Issue Tracking and Status Reporting

Issue tracking and status reporting is a key tool for clear communications among all impacted by the ERP project. Steering committee members are kept up to date on key issues requiring decisions. Team members understand where to focus efforts to keep the project on track. Roadblocks are tackled as a team and the project is kept on track. End users clearly understand when to participate in the project and plan accordingly to help minimize overload.

Project issues logs and status reports can be tedious to create and can be easily overlooked when the steering committee loses interest in the project. Project managers expect issues to be resolved once identified and rely on ‘word of mouth’ to keep team members up to date. End users lose interest in the project.

Critical issues, configurations, enhancements and reports seem to get stuck at 80% and never get ‘complete’ when issues are no longer tracked. Project team members become frustrated because solving one problem creates another elsewhere. The systems integrators focus on completing simple configuration and development tasks, leaving critical project components incomplete.

Completing the Never-Ending Project

The three warning signs need to be addressed by revamping the overall project governance model to ensure project success. The project manager should start by updating the project issues log while gathering the latest status for on-going tasks. This information is then used to update the project plan, considering tasks that are behind schedule and the impact on project budget.

The team should use the updated information as a way to reengage the steering committee. The first sets of meetings should focus on confirming or redefining the meaning of success, and obtaining approval to necessary changes to the project budget and schedule. Once the changes have been approved, the Committee members need agreement on continued participation through project completion. Most importantly, the Committee members need to agree on a protocol to hold each other accountable going forward.

Don’t Let Your Major Capital Project be Like the Song that Doesn’t End

When my kids were little we used to sing “The Song that Doesn’t End” together at the top of our lungs (much to the chagrin of their mother). If you don’t know the song, the lyrics at the end of the verse run into the lyrics at the beginning so that you can keep singing the song forever.

A recent study of energy “megaprojects” shows that 64% run over budget, and 73% have schedule delays.   But this doesn’t have to be the case if one follows some simple (although difficult to implement) rules.

1. Choose a prime contractor wisely.

Most companies do not have the expertise to manage a project with internal resources.  A prime contractor engages with the project owner and executes the project’s primary scope either by themselves or by hiring and managing sub-contractors.

Whether you are choosing a shipyard for a major rig upgrade, or a company like Trenegy for a major IT project, choosing the right prime contractor is key.  In this important role, picking the lowest bidder is not always the best choice.

Would you hire a company to install a pool in your backyard based strictly on price?  If you would not do that, why would you choose a prime contractor for your company’s major capital project that way?  You would be surprised how many companies take this approach and end up paying more in the long run.

2. Have a well-defined plan.

Have you ever started a home project only to find yourself making six trips to Lowe’s to get the right parts to finish the job? I know I have. Making a good plan prior to starting the “honey-do” project would have probably eliminated the additional time and cost.  Now multiply that effect by a thousand (or a million…or more!). That’s the effect of a poor plan on a major capital project.

A good plan should include some basic concepts:

  • A realistic time and cost estimate free of optimism bias. These estimates should include the possible effects (both positive and negative) of risks and opportunities identified during the risk assessment (see below).
  • A comprehensive risk assessment to identify potential risks and opportunities that could affect the project’s schedule and cost.
  • A detailed inventory of resources required to complete the project (including resources that may be needed to address the risks identified above) and a plan of how to acquire them.

3. Make sure your capital project is a capital project.

Many companies fall into the trap of accumulating deferred maintenance as they prepare for a capital project.  They think, “this small maintenance item won’t interfere with the project’s critical path, and we’ll have more time during the project than during operations.”  This line of thought is a fallacy. When possible, maintenance is better performed during operations.  Consider this example:

A home owner decides to change the air conditioner air filter while a contractor is in to do a major kitchen remodel.  He thinks, “I’ll be at home then and it is such a small project that it won’t affect the kitchen remodel.”  While the remodel is going on, the homeowner borrows the ladder to install the air filter – which forces the kitchen contractor to delay the installation of a cabinet and causes a day’s delay.  A few days later, the kitchen contractor paints the whole kitchen, fouling the air filter the home owner just installed (and causing the home owner to have to install another one after the project).

Although this example is extreme, it illustrates that the scope of capital projects should include only the capital work scope for which the project was planned.

4. Know where you are (and where you are going).

Great real-time tracking is necessary to ensure course corrections can be made during a project so it ends on time and under budget.  To know if your tracking is effective you should know the answer to these questions at any point during project execution:

  • Where are we today (against the schedule, the scope, and the budget)?
  • How much longer will it take to complete the remaining scope?
  • What will it cost to complete the project?

If you cannot answer these questions confidently, then your tracking needs to be improved.

5. Be complete at completion.

Almost everyone who has bought a new home has developed a list of “punch list items” (quality deficiencies or incomplete scope) to be corrected or completed by the home builder before closing on the home.  Many home owners have allowed these “punch list items” to roll past the closing date with the promise of the builder completing them sometime in the future.  If you have been in this situation, which of these “punch list items” was the builder more motivated to complete?

Your original plan and continuous tracking should include provisions for completion of “punch list items” during the planned execution of a major capital project. It is more likely that the prime contractor will act on these items prior to the project end date.  A project should be as complete as possible by the completion date.

Although these rules seem simple, they are not easy to implement and require discipline and a deliberate approach to realize the desired results.

This is the fourth in a series of articles on operational excellence. Trenegy helps companies successfully manage operational excellence using a proprietary methodology. We help our clients get value of out their new programs quickly and relatively painlessly.

5 Tips for Managing Projects With Tight Budgets and Strict Deadlines

No project exists without a firm deadline or a specific budget, and if yours does then you can stop reading here. But in today’s economic and competitive environment, tackling a major project is more difficult than ever. So how can a company take on a capital-intensive project? Whether a project is in the planning phase or the deadline was yesterday, these tips can help any project reach the finish line:

1. Develop a master plan.

At the center of every new project should be a master project plan. A good project plan is complete prior to starting and includes detailed tasks, resources responsible for those tasks, expected start and completion dates, and up-to-date statuses. Enable project resources to regularly update their tasks and assign realistic deadlines for each one. Doing so will allow a project manager to accurately track the timeline of the project.

Once a project plan is complete, identify tasks that can be accomplished prior to kickoff. If budgets are set, this may be executing contracts or locating project space. In an ERP implementation, begin collecting data sets for conversion, setting up new environments or writing test scripts. For acquisition integration, start gathering and mapping current and future state roles. There is usually an opportunity to complete work ahead of schedule. Find the tasks that do not have dependencies or may require a long lead-time. These will allow the opportunity to get a head start.

2. Open the lines of communication.

It’s a given that tensions will be high when a deadline is looming on a project team. Don’t let high stakes or emotions impede on open lines of communication. The result of bringing an issue to light should be praise and gratitude. The sooner an obstacle is identified, the faster the project can move forward.

Communicating to the right people is equally important as the communication itself. Create a project governance model to establish lines of communication to key resources. Without structured communication, the organization will not view the project as significant. Management will miss steering committee meetings and team members will sit in meetings saying “no update.” Keep the project under control and lines of communication open by setting monthly or quarterly updates for steering committees and weekly status updates with the project team. Doing so will provide clarity into project progress without spending too much time catching people up on unnecessary details.

3. Build in flexible decision-making.

A byproduct of open communication and key stakeholder involvement is flexibility in decision-making, which is vital to moving a project forward. When both are established correctly, issues/roadblocks will be addressed promptly. Set guiding principles early and allow key project members to make decisions and purchases. Often, executing a contract to make a small purchase can be the bottleneck in a much larger process. By setting appropriate delegation of authority limits and approvals, project team members can quickly gather necessary resources to keep the project moving forward.

While all decisions are not created equal, it’s important to identify and document those of high priority. Documenting a decision and the parties responsible holds department leads accountable. When clearly documented, a decision becomes more tangible and serves as a point of reference for future questions around the decision. A detailed decisions log may take time initially, but will save debate or disagreement going forward.

4. Prioritize compliance.

Regulatory and compliance-related tasks should be at the top of every project manager’s list. While deadlines and budgets are much easier to forecast and change, failure to meet regulatory/compliance requirements can lead to serious problems. Prioritize compliance portions of the project and track their dependencies to control risk.

What often leads to missed deadlines and over-spending are project additions that were not part of the initial plan. Once a project has begun, it seems easy to expand the scope and improve other areas. If the resources are already there and funds are available, why not make a bigger impact? Say no! With any project, there are necessities and nice-to-haves. As simple as it sounds, identifying each one can be the difference between success and failure.

After audit risks, identify the key components for day-to-day operations. If there are items that can be completed once the project is finished, determine the implications and likelihood of completion.

5. Have a contingency plan.

There is a pivotal point in every project where a go/no-go decision must be made. If the project is going to exceed the given timeline or go over budget, it’s critical to communicate this at the earliest sign and plan accordingly. Even before a project reaches this point, it’s important to identify what causes this to happen in the first place. More frequently than not, external factors set a contingency plan in motion. Project team members will be pulled back into their day jobs and project tasks will no longer be a priority. Prevent these distractions where possible by transitioning or backfilling these tasks.

The Keys to Construction Audit Success

As companies continue to face tighter budgets, shorter construction cycles and rising labor and material costs, it is even more important to implement clearly defined functional controls. The construction audit helps companies quickly identify control and process issues and implement long term solutions.

A well-designed construction audit examines past, present and future projects for cost overruns, schedule discrepancies, documentation deficiencies, incomplete or inaccurate contracts, and incomplete tasks. The construction audit reviews current controls and, based on the findings, documents controls deficiencies, creates new controls, and develops an implementation plan to mitigate risks for future construction projects.

The construction audit focuses on five distinct development phases: plan, bid, design, construct and operate.

1. Plan

The construction audit begins with the planning phase.  A high level review of the feasibility study and business case is completed to ensure they are based on accurate, complete and timely cost estimates. A review of the baseline project plan will examine the completeness and accuracy of project budgets, timelines, and labor requirements.

Primary Focus: Feasibility Plan

  • Are feasibility studies and business cases complete and accurate?
  • Does the feasibility study include known factors which will impact project schedule and cost?

2. Bid

All bids packages are reviewed to ensure contractors prepare cost and timing estimates based on complete and clearly defined bid packages. A bid review ensures contracts are awarded based on pre-set, defined, selection criteria with clear terms and conditions.

Primary Focus: The Bid Package

  • Is the RFP process clearly defined and are changes / revisions released to all bidders in a timely manner?
  • Is the RFP package complete? Are bids based on information accessible to all bidders?
  • Do selected bid packages address the entire project and are exact specifications referenced?

3. Design

The design phase ensures that a complete project scope, plan, and budget (including contingencies) are developed and approved before construction begins. Additionally, the design phase will establish the change order and draw processes (including approval levels and workflows).  A signed contract completes the design phase.

Primary Focus: Final Project Budget

  • Was the budget set and approved before construction began?
  • Does the budget contain the proper amount of contingencies?
  • Can revised budgets be easily tracked to the original budget?

Primary Focus: The Bid/Contract

  • Does the contract include exact bid quantities, timeframes, specifications, and prices?
  • Does the contract clearly lay out the change order process and approval requirements?
  • Is the draw process clearly defined and based upon measurable milestones?

4. Construct

The construct phase of the construction audit examines progress reports, adherence to financial controls (draw requests, approvals, contractor payment processing), and complete and accurate status reporting. Critical to any successful development is a well-defined and followed change order process. As part of the construction phase, adherence to change order creation, approval and processing is reviewed for completeness. Finally the construct phase ends with the close out process. Key elements include the creation and completion of the final construction punch list (and contingencies) and the collection and maintenance of warranty information.

Primary Focus: Project Payments

  • Are payments based on pre-defined milestones and made only after the proper draw requests have been approved and submitted?
  • Have all change orders received proper approvals?
  • Are change orders incorporated into the original budget? Are revised budgets distributed?

5. Operate

A property will be put into operation once the certificate of occupancy documentation has been obtained.  Final punch list items will be completed and the property will be transitioned to property management or turned over to a third party.

Primary Focus: Punch List / Punch List Contingencies

  • Has a final project punch list and contingency been created?
  • Are charges correctly tracked and allotted to the closeout process?
  • Is the final project budget complete?

The ultimate goal of the construction audit is to address the causes of past deficiencies and create repeatable processes and controls to minimize project risks going forward.

Trenegy encourages clients to use the construction audit as a mechanism to ensure sound financial controls are implemented and followed to maximize profitability and reduce project risks.

Master Data Management: the Good, the Bad and the Ugly

When Master Data Management is brought up as an action item on the company to-do list, it is often met with a room full of heavy sighs and groans. Management teams understand that not having an MDM process has negative effects, (severe delays in daily processes, lack of confidence in master files and uncertainty in providing regulatory reporting) but nobody jumps at the chance to put one in place.

In an era where mergers and acquisitions are on the rise, organizations must put in the time to get MDM in check to minimize the impacts of unreliable master data.

The Good: You want reliable data? You got it.

Hands down, having an MDM process in place makes life easier. MDM encompasses the procedures and technology put in place to maintain and protect the integrity of critical data sets. A well-defined process helps facilitate the distribution of shared attribute data between source systems, providing one version of the truth. Quality control checks embedded in data management practices instill confidence in data used by the business for day-to-day operations. They ultimately minimize the confusion that comes with data inconsistencies.

Proactively managing master data also has a positive, direct impact on company reporting. Having access to reliable and timely data reduces hours spent researching data idiosyncrasies in order to provide accurate asset counts and regulatory information.

The Bad: Managing master data is not free or easy.

While there is no question the benefits of having MDM controls in place, investing in and developing a process is not free. In order to realize results, businesses must create a well-defined process for the entire lifecycle of the data sets being used. Additionally, they must budget for a dedicated team of resources to manage the flow of data. This team should be carefully selected as it is critical they are familiar with all data elements.

After solidifying processes and selecting an MDM team, master data files must be analyzed and cleansed. This exercise can be painful and time consuming depending on the state of the data, but is necessary to see positive results. Custom built reports can be created to quickly identify data discrepancies for cleanup.

It is important to note, even after all master files are scrubbed, data gaps will be an ongoing issue. Sometimes specific data points, such as legacy effective dates and pre-acquisition contact information, are not available or do not exist. Implement an MDM organization now to avoid creating unnecessary data gaps in the future.

The Ugly: Not managing master data is worse than the difficulties of managing it.

For organizations operating without a formalized way to manage company master data files, getting information is ugly. Think of unorganized vendor files causing payments sent to incorrect addresses and contradictions in product codes living in multiple systems. Without a clean foundation of master data and a process to manage updates, day-to-day business operations become sluggish. The lack of confidence in data often results in users working in offline, self-managed workbooks.

Too many organizations are struggling to conduct standard business processes due to lack of access to reliable master files. This issue is only magnified as acquisitions are made and customer bases grow.

Regardless of industry, all organizations are susceptible to the nightmare of disorganized master data. If businesses identify lack of critical data as a pain point now, it will only become more problematic in the future as data grows. Stop perpetuating the cycle of bad data and implement MDM comprised of a robust process, clean master data, and a team that knows what they’re doing.

6 Common Mistakes to Avoid When Hiring a Consulting Firm  

The basics of hiring a consulting firm remain constant: get multiple proposals and talk to previous customers of all the firms you’re considering. Yet, it’s amazing how often senior executives neglect these basic precautions.

Unfortunately, there are several common mistakes between the preliminary search and final hiring of a consulting firm. While no criteria is foolproof, you’re more likely to make a wise hiring decision by avoiding these common problems:

1. NOT hiring a consulting firm.

It’s the classic blunder. Many major projects may appear to be well within the realm of your team’s capability. But before you know it, they’ve morphed into monstrous initiatives that burn out your best employees and require you to hire a consultant to clean up the mess. It’s usually less expensive if you hire the right firm from the outset.

2. Waiting until you are desperate.

Waiting until things catastrophically fail can increase the cost of a remedy or worse, lead to irreparable damage. A minor customer service process issue can turn into a BIG issue if sales increase. As soon as you see signs of trouble, begin engaging with consulting firms to see how you can head off a major complication.

3. Muddled communication.

Open communication includes asking straightforward questions and clearly delineating what you want and expect from a consulting firm. Put verbal communication in writing.

4. Being enticed by low or high bids.

Be wary of bids that are outliers – substantially higher or lower than the competition. Make sure each bid accounts for the same services and can be compared realistically. Read the fine print.

Lower bids might mean part-time resources that are stretched thin between competing priorities. They may assume internal employees will be responsible for day-to-day activities with minimal oversight from the consulting firm.

Higher bids rarely reflect higher standards of service. It may be as simple as out-of-town travel expenses billed to a project, or a firm with a full workload only seeking work with high profit margins.

5. Choosing a consulting firm that never says “No.”

A consulting firm that says “Yes!” to everything is probably too good to be true. Either they are desperate for business or aren’t really listening to your needs. In a good consulting relationship, the firm will serve as a trusted advisor who may occasionally have a differing opinion.

6. Hiring a firm to fix a problem without assessing it.

Don’t hire consultants to fix a problem without asking them to first gauge the issue. This doesn’t necessitate binders full of analysis or months-long studies on the topic. However, it does require the consulting firm to take a broad view of your situation and provide straightforward answers about your current approach and their proposal.

On the flip side is the consultant who wants to sell more work than is actually needed. To avoid this, ensure the consulting firm provides you with a project plan with an exit strategy. Any deviations from the agreed upon timeline should be made upfront and well in advance.

It’s easy to be enticed by a low price,  propensity for a “yes” answer to everything, or always being told what you want to hear. Stop, take a minute and make sure the consulting firm will tell you what needs to be said and can solve your problem. There is not a one-size-fits-all solution to every issue. It’s important to assess all of the options and ensure the consultants you hire will deliver what they promise.

 

 

 

Advantages of a Cloud-Based Financial Reporting Tool

Using the cloud is an everyday occurrence in our personal lives. We demand the ability to store information where we can access it anytime, anywhere. Whether we’re posting photos of our family vacation on Facebook or accessing documents from Dropbox, most of us take full advantage of the cloud in our personal lives. The real question is: Why haven’t our business lives caught up?

At work, we accept we can’t get instantaneously updated information, have to be logged in to the network to gain access to reports, and must have IT’s help to get information from the system. It’s time for a change; we need to make our business data as efficient and accessible as our personal data.

The use of Excel in financial reporting is common, but leaves companies in the dark ages. Users spend more time dealing with data and worksheets than actually analyzing the data. While other companies use expensive and cumbersome bolt-on apps with their ERP system, cloud-based financial reporting tools are relatively inexpensive to implement and combat the disadvantages of hardwired financial reporting systems. Implementing cloud-based financial reporting tools can bring analog companies into the 21st century.

Cheaper Than a Data Center

The cloud is a cost effective solution for multiple reasons. It requires less infrastructure, reduces the burden on internal IT, and reduces the size of the company’s data center. Companies are able to use a smaller data center because, unlike the hardware of a traditional system, cloud storage does not take up physical space. Using a cloud-based system cuts IT’s cost as well. The burden of constant maintenance and upkeep of cloud based systems falls on the supplier, not internal IT. Cloud-based systems don’t require an in-house system expert, which frees up the IT department’s time and budget, allowing them to move into an administration and security role.

Faster Implementation

Cloud-based systems are more dynamic than traditional systems, allowing for increased productivity and a quicker implementation. Multiple resources can work simultaneously on the build. During the implementation, the project team can test the system as they build, and address problems before reaching user acceptance testing. Validating data and tackling major hurdles ahead of time results in a smoother user acceptance testing process. Addressing issues during the implementation allows the project to stay on track and decreases the risk for major system rework.

Finance and Accounting Take Ownership of the System

With cloud-based systems, the supplier maintains and updates the system instead of IT. Because the end-user can take ownership of the system, it creates a more autonomous relationship between accounting and IT. No technical or coding knowledge is required. IT handles the system security and user profile maintenance while accounting handles data updates.

Easy Transition from Excel

Many businesses have grown accustomed to Excel’s ease of use and flexibility. Making the switch to the cloud is easy because, similar to Excel, cloud-based systems are intuitive. All the features an end user needs are in one location, so users no longer have to dig through hierarchies only programmers who built the code understand.

Easily Scalable

Businesses can scale their company quickly using cloud-based systems. They have flexible interfaces, making it easy to scale the system as a company grows. The end user can add a legal entity or a new account without going through rigorous hoops and can see information updated instantaneously. This gives companies more time to analyze financial data and perform scenario analyses.

Cloud-based financial reporting systems decrease costs, speed up the implementation process, create an autonomous relationship between IT and accounting and are easy to learn.