Once you have researched reporting processes, evaluated process enablers, and determined where and what kind of improvements to make, you’re ready to take a look at how the new process will work. This usually means charting the whole process again, taking into account savings in time and personnel resources you expect to achieve.
In this chapter, we’ll revisit the example process described in Chapter 16. To that end, we assume the following improvements have been made in relevant process enablers:
• Human Resources. You have:
• Trained finance staff on analytics applications.
• Conducted an ongoing series of training sessions for accounting staff on those types of G/L and subledger transactions that have been identified to be the most problematic during period close.
• Presented a two-hour seminar to department managers on their operating state- ments and accounts payable and general ledger procedures that affect their cost centers.
• Technology. You have:
• Implemented an analytics application that now automates a number of the re- porting and consolidation tasks that were previously done manually.
• Integrated the reporting system with G/L and A/P accounting system modules to allow managers to browse their departments’ financial transaction detail online.
• Best Practices. You have documented procedures for allocations, eliminations, currency translations (and translation adjustments), and consolidations, as well as a clear audit trail within the reporting system for each of these steps. Controller now receives Flash reports throughout the months so that significant budget vari- ances can be spotted and corrected before period close. This shaved two days off the financial review period.
• Workflow. You have targeted steps that introduced the most significant delays and errors. These determined the choice of technology and training initiatives in which to invest.
To represent this future state graphically, you can follow the same workflow charting conventions that you used to frame the as-is process. Exhibits 20.1 and 20.2 are examples of how processes might change as the result of a BPI initiative. Before and after examples are put side by side (these examples are slightly simplified in order to meet space constraints).
SUMMARY
You can improve business processes by strengthening the enablers that make these processes possible. During the research and planning phases of your reporting BPI project, concentrate on your company’s people, training, strategy, best practices, and information technology infrastructure to the extent that these factors have a direct impact on reporting processes and tasks. Charting the workflow of your reporting processes is a useful exercise that can help you determine where these enablers fail
EXHIBIT 20.1 Reporting Financial Position Analyst
Translate to base currency.
Run report package.
Reporting System
Controller
Update allocation
bases, exchange
rates.
Eliminate Inter- company transactions.
Calculate and store allocations.
Consolidate.
Prepare alt.
views.
Analyst
Controller B
E F O R E
A F T E R
Print statements
for each ERP legal
entity.
Translate to base currency.
Book Elimination
Entries
Book Allocations
Reprint statements, consolidate.
Prepare alternative views (quarterly comparison, etc.).
Review report package, distribute to management.
Prepare notes and commentary.
Review report package, distribute to management.
Draft and revise notes
and commentary.
Receive periodic FLASH updates throughout the
month.
to live up to their full potential. By identifying weak points in the process—those tasks where errors and delays are introduced—you can identify the enablers involved in those tasks and start thinking about ways to enhance them.
Always weigh the payoff as you rank potential reporting BPI initiatives. Every company has a threshold beyond which incremental improvements will take on costs that outweigh the value of increased efficiency. What is the advantage of reducing your closing cycle to one day? Is it worth the effort and cost of achieving that goal?
It may be relatively easy to reduce the closing cycle from 14 days to 5 days, but the work, training, and system enhancements required to get from that point to a two-day close may not offer sufficient payback. Where this threshold lies depends on your organization’s needs and innate competencies. Ask: What information do we need and when do we need it? What information technologies do we know well, and how can we take advantage of that knowledge? High-tech companies such as Cisco and Motorola tend to have a higher comfort level with automation and are therefore bet- ter equipped to achieve a one-day close. The push for lasting and continual process improvement must be balanced with what is realistic and necessary to achieve the op- erating results you are looking for. Remember that the goal of process improvement is to get maximum value from the work performed by people and systems, not to beat specific and arbitrary deadlines.
Reporting System
Call accounting for G/L detail or copies of
invoices.
Accouting
Department Manager
Department Manager Administrative Assistant B
E F O R E
A F T E R
Print cost center reports.
Generates scheduled cost center reports and distributes as spreadsheet
attachement by e-mail.
Distribute reports.
Research budget variances?
Follows hyperlink
to online G/L detail.
Invoice detail needed?
Follows hyperlink
to A/P detail.
Research budget variances?
Print G/L detail and A/P record, copy invoices.
Send copies to manager.
Rekey printouts into
spreadsheet model.
EXHIBIT 20.2 Reporting for Cost Control