Which Management Reporting Approach? A Simple Decision Framework

Sep 1, 2015

In my last post, we looked at a novel, yet time-honored approach to management reporting – using an Excel-based application for that task even when the enterprise uses a high-end ERP system for its accounting and other administrative systems. In truth, you have many choices for slaying this dragon, including: 

  • Build your reports in Excel (or use an Excel-based application)
  • Write custom code in-house
  • Use the report-writing capabilities of your ERP system (e.g., Oracle, SAP)
  • Use special-purpose planning & budgeting software (e.g., Adaptive, Intacct)

They all have their strengths and weaknesses. This is a complex, difficult, and expensive decision, and every one of your colleagues, friends, and relatives will have an opinion. So here’s a process that will help you make the right decision for your enterprise:

  1. List the Attributes important to your enterprise, such as cost, flexibility, and security.
  2. Assign an Importance value to each attribute. (The actual scale you choose isn’t important – what IS important is the Importance values relative to each other.)
  3. Assign a Score for each attribute, for each alternative you’re considering implementing. (Again, the scale you choose isn’t important, but remember that “better” Scores should always be higher than “worse” scores – e.g., for the “Cost” attribute shown above, a Score of 5 means least expensive and 1 means most expensive.)
  4. The resulting Overall Average Score for each implementation alternative is the average score for that alternative, weighted by the Importance of each Attribute.

DON’T CHEAT! Finish Step 1 before going to Step 2, and Step 2 before going to Step 3. And form your own opinions – don’t let software vendors dictate the relative Importance of the Attributes, or the Scores. Here’s an example of what the resulting analysis might look like:

Management reporting decision template

There’s nothing fancy about the spreadsheet or the computation methodology. And the Values and Scores I’ve assigned above are just “serving suggestions;” they’re generally plausible, but mostly intended to ensure that the Overall Average Scores are roughly similar, since I’m trying to be ecumenical here. But when you go through this exercise for your enterprise, you may be very surprised at what you learn.

“Painting with Numbers” is my effort to get people to focus on making numbers understandable.  I welcome your feedback and your favorite examples.  Follow me on twitter at @RandallBolten.

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