Is it possible to have internal real-time financial reporting?
Nick Gomersall, senior vice-president worldwide sales, The GL Company
Enterprise resource planning software (ERP) systems are designed to handle transactional processing and for entering big volumes of data, the worst type of design for reporting.
So companies with very big ERP software struggle to do reporting because it is just not designed to get data out.
The big issue is that you have to transfer the data from one system to another, which is a process that can take potentially 24 hours, it means that you can’t do real-time reporting and that is the fundamental issue.
People spend ages putting security into an ERP system, only to dump the data into a database or warehouse that has a totally different level of security.
What happens is that 41% of business intelligence and warehouse systems fail. People don’t get information out of that.
One thing helping people undertake real-time reporting is a thing called a shadow data system lots of IT directors don’t even know that these exist.
What you find is lots of accountants and middle-management are giving up on their central IT and they are actually doing it themselves, building home-grown Excel-based management information systems with no security the shadow data system. Business-savvy accountants will build this and then could potentially leave no back-up systems.
With Sarbanes-Oxley [controls regulation], Excel is something that people shouldn’t use for reporting and this is causing a big problem.
Big companies and the big business intelligence software providers are not acknowledging that there is a problem. If any IT director actually looked, they would be horrified at how management information is being accumulated and passed around.
Does a move to real-time reporting need management buy-in?
Adam Pryke, information systems manager, Sinclair International Limited
Reporting was quite a hot topic for us. If we were to do it all again, I would start by implementing an ERP system and asking: ‘What do you want in your report, what information do you want to run your business?’ That would be first and foremost.
We have been very successful in achieving a lot of that. Although we probably didn’t go as far as we could have done.
The second point is that, I work very closely with the financial people. I report directly to the CFO and my counterpart, the financial controller, here in the UK we worked very closely on this.
We are very keen to standardise our reporting, that is one point, another key point is that you can have all your information in a central location and for us being a small to medium-sized company it is not too bad, you can distribute that information through reports, through a variety of different tools pretty quickly, but one of the things that I’m really keen on is empowering the users to extract the information in a controlled way.
To be honest, at that level the board were used to receiving information in paper form in their board packs and how that got produced was not really of much interest to them, believe it or not. It was an internal issue in terms of how can we make that process more efficient, save time on that process and meet the deadlines faster.
Being the security officers for our ERP system, it is vital that we control who has the data, when they can see it and what they can see. If we can achieve that then I am happy to empower users to basically use the system.
Now they can get instant information, the dynamics of the business are changing. If we didn’t have those tools that allow the users to do that I think we would still be struggling to put people in the position to make dynamic decisions quickly to avoid problems.
Can you improve reporting while handling compliance and regulatory issues?
James Barbour, director of accounting and auditing, ICAS
If you are meeting compliance it is going to lead to better reporting and better information on which to base decisions, then it has to be welcomed and our members will appreciate that. We really need the business case to be put forward and appreciated by the board.
What are the big advantages here if we move to this? If they can’t be explained then there is a problem, but there are benefits to be had and I think a properly prepared business case to the board would be welcomed.
It’s those businesses, of any size and sector, that are looking to have the best information available through which they can seek a competitive advantage and for them to go forward.
While I am in support of [internal real-time financial reporting], there are factors which have to be considered for real-time external reporting. Is this what the investment community wants? Would they want real-time reporting? I’m not convinced about that at this moment in time.
If you decide to have information on a daily basis, for example, how would people react to investors who potentially missed some announcement that could have a major impact on a share price, and didn’t see it until a few hours later? There are so many variables that we don’t see external reporting as part of this real-time system at the moment.
These are the issues that will develop over time but from the internal point of view, yes, internal management should want the most up-to-date information they can have.
Chaired by Kevin Reed
Watch the events and sign up at www.insiderbusinessclub.com
