Is it possible to have internal real-time financial reporting?
Nick Gomersall, senior vice-president worldwide sales, The GL
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
Does a move to real-time reporting need management buy-in?
Adam Pryke, information systems manager, Sinclair International
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
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
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
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.
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