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Key performance indicators must be shared

Companies that fail to share data will find themselves at a distinct competitive disadvantage

Finance directors are at risk of missing business opportunities their boards expect them to raise and exploit because they are failing to properly analyse the data they gather or share it throughout the organisation, research carried out by Financial Director in association with Oracle has found.

According to the research, key performance indicators (KPIs) used to monitor and manage decision making are not being shared with the right people, while businesses may not be measuring their performance appropriately because they have not agreed to a single set of metrics that everyone in the organisation understands.

Less than one-third of respondents to the survey reported that every person in their business has visibility of these KPIs, while the overwhelming majority said that only senior managers or executives and board members see them. Perhaps most worryingly, most believe that the finance function is largely reporting just financial metrics to the business, and ignoring non-financial metrics.

Presenting the results of the survey at Financial Director’s inaugural Technology Forum in November, Mark Wilkinson, vice president of UK applications at Oracle, said that sharing data – financial and non-financial metrics to interpret that information – is crucial if organisations want to ensure that they are well governed and that management can develop whatever business opportunities it can find within the reporting process.

Wilkinson said the key goal for organisations is “management excellence”, which is reliant on the organisation’s processes and information being “smart, agile and aligned”.

Management excellence “is dependent on good-quality data being sent to the right people in the organisation, who are then able to drill down into the information and act upon it to achieve a competitive advantage”, Wilkinson told delegates. All organisations have access to the same kind of data. But it is how that data is used that distinguishes one organisation from another and gives it proper insight. “To get the best results, all the key company data has to be aligned so that everyone in the organisation has access to the same information and understands how that data should be used. This means it has to be rationalised, integrated and shared,” he added.


There are opportunities for finance to take a leading role in helping their companies achieve management excellence, by embracing non-financial reporting and applying the same governance as financial reporting; driving the integration of management processes and reporting to achieve “insight to action”, as Wilkinson called it, helping define and manage one version of information for reporting and analysis that is used throughout the whole organisation. In reality, many SME FDs still use Excel for KPIs and data gathering, so one version of the truth is impossible to broadcast to the business.

Fifty-three percent of respondents felt their finance department could add value to the business with regard to supporting strategic decision making by creating scenario models to assess and analyse the impact of different strategic options. More than two-fifths believe that the finance department helped by ensuring the accuracy and consistency of all metrics or KPIs that were being used across the business.

Communication problems

These all require finance to work closer with IT – which currently seems to be a step too far for some organisations. According to the survey, just over a third of respondents say their chief information officer (CIO) always asks for the finance department’s input when delivering non-financial and operational KPIs and analysis to the business. Half said that the CIO seeks some support from finance “from time to time”, while 10.5 percent said that they never seek finance’s input.

Experts say that there needs to be much greater collaboration between the IT and finance departments to ensure that accurate financial and management information is being processed and is made available to those who need it. But they add that this is being hampered for several reasons.

First, they cite “communication problems” between the FD and the CIO as neither can understand the needs – or language – of the other. Second, some experts believe that the relationship between the FD and CIO has been soured because of the continued rise of the IT department and its move away from being a support function to being a customer-focused business operation. Chief investment officers believe that they are not being given due credit, and some resent having to report to the CFO rather than the CEO directly. FDs, on the other hand, feel that the CIO might be encroaching on their territory with regards to planning business strategy.

Mark Kobyashi-Hillary, a technology consultant, believes finance departments need to recognise that technology is not only enabling the business, but driving it. Kobyashi-Hillary told delegates at the Technology Forum that “technology has changed the ways that businesses operate. Take airlines as an example. If you asked British Airways what it thought its greatest investment had been in the past 10 years, the company would probably say its website because it is now the first point of customer sales.”

As he points out, the finance department may sell such strategies to the board, bankroll them and count the profits made from them, but it is the IT department that is implementing them and enabling sales. And FDs have to embrace that reality.

Strange and bizarre

There are other concerns, particularly about the tools being used to analyse crucial financial and non-financial data. The majority of organisations are still too reliant on using Excel spreadsheets to analyse business performance, even though there are more advanced – and better-performing – tools available.

“Spreadsheets have to go,” said Wilkinson. “The fact that so many people are still reliant on using them for reporting work in this day and age – despite technological advances and increased awareness of the associated risks in using Excel packages – is very strange and concerning.”

Dennis Keeling, chief executive of Business Software Intelligence, an IT consultancy, agrees that the reliance on spreadsheets for reporting is worrying.

“Excel does not provide an audit trail for anyone to check the integrity of the data that has been inputted, which means that the data could be wrong or that potentially fraudulent behaviour is being disguised,” he says. “The fact that organisations are using spreadsheets more to report all kinds of data and to measure performance is bizarre.”


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