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Reporting Strategy: More than a Slimmed Down Report Stack
On July 1, 2016 / By Brenna O’Hara

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reporting strategy

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 that 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.