With so much of data being generated, it is a common perception that preparing reports would be a simple exercise thanks to all the technology tools available today. The reality however, is quite different. Reporting on operations and performance is now facing new sets of challenges.
By Ajay Kumar
Organisations of all sizes and across all industries are churning data at a speed never before witnessed. With so much of data being generated, it is a common perception that preparing reports would be a simple exercise thanks to all the technology tools available today. The reality however, is quite different. Reporting on operations and performance is now facing new sets of challenges, these are the main four:
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Regulations are on the rise across the globe. In the U.S., for instance, bank regulators are currently proposing stricter regulations on large financial institutions to mitigate the risk of cyber-attacks or high-tech system failures. At the same time, China is imposing new regulations on its growing online finance sector to root out fraud. In the wake of demonetization, India is going through a transformation as well. The manner in which reporting will be done will see a paradigm shift thanks to the new market realities in which we exist. In addition, tax regulation and reporting is growing worldwide.
Because of increased regulation, businesses everywhere must manage more complexity in reporting—which puts a strain on existing systems and resources.
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Increased collaboration on dispersed devices and networks has heightened the risk of financial data exposure during report authoring, contributing and reviewing processes. Yet narrative reporting remains largely manual and time consuming, lacking process rigor and collaboration. Compiling proprietary data from disconnected spreadsheets and documents introduces auditability concerns and weak security.
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Need for intangible value – The flip from capital-based value creation to digital value creation has necessitated more narrative reporting to explain how the business is creating intangible value.
Over the years, the contribution made by tangible assets in total corporate value has seen a dip. In 1975, tangible assets such as plants, property and equipment made up 80% of total corporate value on the S&P 500. In 2015, those tangible assets constituted just 13% of corporate value, compared with 87% of the value created by intangible assets such as customers, talent and intellectual property. The valuation of these intangible assets is done differently. These intangible assets need new key performance indicators and better explanation, because their value is not as easily understood as tangible assets.
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We are using more data to inform, but data alone can’t tell a story.
It needs context and elaboration that is targeted for specific stakeholder groups. The “narrative” part of narrative reporting is critically important.
What’s Wrong with How We’re Doing Narrative Reporting?
Though there is a clear need for increased commentary in reporting, most narrative reporting processes remain manual and ad-hoc. It is a monthly or quarterly fire drill to get the reports completed and delivered. The disconnected nature of the process means it is difficult to bring in subject matter experts for centralized commentary on content, and it is hard to track progress and who is currently responsible for individual areas of content. Finally, there are auditability concerns and weak security around supporting “need to know” access to content.
The entire process is manual and time consuming, lacking process rigor and security. These shortcomings can prove to be costly for the organisations—literally. The constant back-and-forth of multiple documents among multiple users allows mistakes to creep into the data, leading to error-prone reporting.
Getting narrative reporting right is important because the quality of reporting can impact the perception of a company.
On the flip side, if employees, investors, board members, donors or any other supporters don’t fully understand how an organization is achieving its mission, they’ll become less supportive. In a PwC survey of 85 investment professionals from around the world, respondents agreed that management teams should clearly show how the financial results relate to the business model, identifying risks and company strategy.
How the Cloud Has Changed Narrative Reports
The cloud has made it possible to improve the narrative of the reporting as the data is centralized, secure, always up-to-date and accessible. In a complete, connected cloud environment, multiple applications draw from the same standardized set of data—so at any given time, report collaborators are working with the same version of the truth.
This is a huge improvement over existing practices, where report collaborators are copying and pasting data from spreadsheets, word documents, or whatever other sources are readily available.
The cloud also streamlines and accelerates narrative reporting processes, because it allows for simultaneous reviews and on-demand access, so that the workflow is no longer a thread of stops and starts.
While we all understand that narrative reporting is a necessity, we should also know that it doesn’t have to be a task. It’s also more important than ever to assess your narrative reporting processes for their efficiency, scalability, security and effectiveness.
Modernizing how narrative reporting is done can not only save resources, it also can make your company’s story shine—no matter who your audience is.
The author is national sales consulting director – ERP at Oracle India.
